United States District Court, W.D. North Carolina, Charlotte Division
C. MULLEN UNITED STATES DISTRICT JUDGE.
MATTER is before the Court on its own motion.
this Court's Order on Defendants' Motion to Dismiss,
the following claims remain at issue: (1) Plaintiff's
Count I, alleging copyright infringement by both Defendants,
(2) Plaintiff's Count II, alleging misappropriation of
trade secrets by both Defendants, (3) Plaintiff's Count
III, alleging computer trespass by Defendant Szabo, and (4)
Defendant Arp Engineering's counterclaim for declaratory
parties' certification of initial attorney conference and
discovery plan, Defendants request that the discovery process
proceed in two stages with respect to both the copyright
infringement and misappropriation of trade secrets claims.
Plaintiff opposes a two-staged discovery plan on both issues.
Rule 26 of the Federal Rules of Civil Procedure allows all
parties to “obtain discovery regarding any
nonprivileged matter that is relevant to any party's
claim or defense.” However, discovery is not limitless
and the Court has discretion to set appropriate limits in the
scope and timing of disclosures. See Fed. R. Civ. P.
as Plaintiff's Statement in Opposition points out, there
is no authority supporting Defendants' claim that
discovery in a copyright dispute should be bifurcated to
first address the element of ownership and then to address
the element of infringement. All of the cases cited by
Defendants-except one where a bifurcation among elements was
agreed to by the parties- involve a bifurcation of liability
and damages. And as the Middle District of North Carolina
held, there is no authority supporting “the view that
the ‘ownership' element of a copyright infringement
claim constitutes a ‘threshold' issue that would
warrant the Court restricting discovery as Defendant
proposes.” Persian Carpet, Inc. v. L & J.G.
Stickley, Inc., No. 1:09CV991, 2010 WL 1052266, at *3
(M.D. N.C. Mar. 19, 2010). Accordingly, the Court orders that
discovery on both elements of liability proceed
there is ample support for bifurcating discovery between the
issue of liability and damages. And the Court finds that the
issue of damages will likely overlap regarding each of the
claims at issue. Accordingly, the Court orders discovery to
proceed first on the issue of issues relating to liability,
and then to the question of damages on all pending counts.
also requests specific disclosure of viable trade secrets
from Plaintiff prior to making its discovery disclosures. In
support of this disclosure, Defendants argue that “a
trade secret defendant is protected from discovery until the
claimant has made a pre-discovery identification of the trade
secrets involved.” See Lwin Family Co. v. Aung Min
Tun, No. 2012 WL 11922875, at *1 (W.D. N.C. Oct. 11,
Plaintiff has alleged that its CAD Files contain protected
“files that contain individual design details . . .
that may be used in future drawings.” (Compl., ¶
11). Defendants claim that without further particularly, this
opens all of their confidential drafts and drawings to a
fishing expedition by Plaintiff. Accordingly, Defendants
request Plaintiff to first produce “(1) all CAD files
constituting or containing trade secrets, (2) the remainder,
if any, of the ‘Hunter CAD Files' referenced in the
Complaint, (3) documents into which any trade-secret portion
of the CAD files have been incorporated (such as drawings)
and (4) other documents constituting or containing trade
secrets at issue in this case.” Defendants further
request that Plaintiff be required to describe what
“design details” and “engineering
elements” in the CAD files make them a trade secret.
Court agrees with Defendants that there is a need for greater
particularity in Plaintiff's alleged trade secrets before
Defendant can be required to turn over confidential
documents. However, Defendants requests are unreasonably
burdensome and do not promote efficiency in resolving this
matter. Accordingly, the Court finds that an order for
Plaintiff to file a more detailed statement of the alleged
trade secrets that have been misappropriated will provide
Defendants with adequate notice of the scope of relevant
discovery. After Plaintiff submits this filing, both parties
shall proceed with discovery on the issue of liability
the Court hereby ORDERS:
1. Discovery on the issue of liability on all pending counts
shall precede discovery on the issue of damages on ...