usps-workerA patent holder of a return mail solution service brought suit against the United States for infringement, and sought compensation for the alleged unauthorized use and manufacture by or for the U.S. Postal Service (USPS) of certain methods and systems for providing address change service. The U.S. filed motions to disqualify the plaintiff’s proposed financial expert witness, a former USPS executive, and for a protective order preventing expert’s access to protected information.

Senior Judge Merow of the Court of Federal Claims held that USPS did not establish that relevant confidential, proprietary, or privileged disclosures were made to the expert, that he was privy to confidential or privileged attorney/client discussions concerning “intellectual property strategy,” or that any confidential disclosures addressed the “particular matter” now in litigation.

The plaintiff’s expert retired in March of 2010 as an executive with USPS after 29 years of service, culminating as the Manager of Finance Administration in Washington, DC.  He was in this position from 2000 to 2010, and “overs[aw], manage[d] and coordinate[d] the administrative operations of the [USPS’s] Chief Financial Officer.”

Despite earlier indications to the contrary, the plaintiff represented that the expert witness would not be offering expert testimony at the Claims Construction Hearing, but might offer expert testimony in subsequent proceedings in the case.  This required a resolution of the disqualification issues. He was listed as a possible witness in the plaintiff’s Initial Disclosure of Experts for Claim Construction.

The plaintiff had a registered trademark, which was an address change service implemented by a system known as the Postal Automated Redirection System (PARS).  The plaintiff claimed that the Postal Service infringed on this patent.  USPS denied infringement and asserted several affirmative defenses, including that the claims of the patent-in-suit were invalid in view of prior art. Plaintiff stated that USPS met with its representatives several times to discuss licensing plaintiff’s process, but no agreement was reached.  According to plaintiff, USPS sought to invalidate plaintiff’s patent by instituting what was an unsuccessful ex parte reexamination proceeding at the Patent and Trademark Office (PTO).  Instead, the PTO issued a Reexamination Certificate, which certified as patentable 25 claims, some of which were asserted in this case.

Within this dispute over this technology, the parties differed on whether a confidential relationship existed between the expert and USPS.  The Postal Service did admit that the standard for determining the existence of a confidential relationship is objective—whether it was objectively reasonable for USPS to conclude a confidential relationship existed.  Nonetheless, USPS argued that plaintiff’s expert—in his important positions at the Postal Service—was privy to confidential and/or privileged information relevant to this case that precluded his expert testimony for the return mail service and his access to protected information.  Alternatively, the Postal Service contended that if the expert was not disqualified, he should be prohibited from examining the protected information.  Plaintiff said that USPS failed to satisfy the extensive burden on disqualification and did not point to any specific disclosure of confidential, proprietary, or privileged information related to this case.  Any data that the expert witness would rely upon for his expert opinions would be public, plaintiff said.

As to whether USPS disclosed any confidential or privileged information to the expert that was relevant to the issues in this case, Judge Merow stated that, although it was not addressed by the parties, relevance appeared to be limited to his expertise and expert opinion, rather than to matters for which he could be a fact witness.  It was his presumptive expert opinion that was the subject of the disqualification motion.

Judge Merow wrote that USPS’ burden could not be met with generalities, and cited cases that held that disqualifying an expert was denied where the moving party did not identify specific information which it claimed was confidential.  Neither was USPS’ burden met by the presence of USPS counsel at the IP Board meetings the expert witness attended.   Quoting a California district court decision, Judge Merow said that discussions between counsel and experts do not carry the presumption that confidential information was exchanged.  The judge said that conclusory statements that “there were confidential disclosures of invention technical minutia of matters that ‘related’ to the alleged infringement by USPS service or system” was not enough.

The Court adopted the rationale contained in a line of cases that there was a distinction between “confidential” and “privileged” information.  The difference here was that the plaintiff’s expert was not the inventor of the alleged infringing service or system but, his focus was on the “derivative product from a revenue perspective.”  If he was aware of confidential technical, privileged or proprietary information, “that bell cannot be unrung.”  However, the extent and source of that information can be explored through discovery and/or cross-examination.

The plaintiff’s expert was allowed to be tendered as an expert witness, but the extent to which his testimony would be afforded evidentiary weight could be addressed in a subsequent hearing.  If USPS established that his testimony or expert opinion violated 18 U.S.C. § 207 or that any testimony or opinion was based “in more than an insubstantial way on any relevant confidential, privileged or proprietary information” disclosed to him by USPS, the question whether the testimony could be utilized as a basis for a finding of fact could be addressed in subsequent argument.  As a result, USPS’ Motion to Disqualify plaintiff’s proposed expert witness and Motion for a Protective Order preventing his access to protected information were denied.

107 Fed.Cl. 459 (Filed Under Seal Oct. 22, 2012, Reissued Nov. 16, 2012)

By Kurt Mattson, J.D. LLM