Federal Circuit Upholds Protective Orders in Source Code Discovery Amid Patent Litigation

In a significant development for patent and high-tech intellectual property litigation, the Federal Circuit has reinforced the principle that courts require credible evidence of risk before denying access to source code discovery. Mere speculation about potential misuse does not suffice to block production.

On February 26, 2025, the Federal Circuit denied Micron Technology’s petition for a writ of mandamus seeking to overturn a Northern District of California order compelling the production of 73 pages of confidential source code to Yangtze Memory Technologies Co. (YMTC), a Chinese state-owned company. Micron argued that the source code represented its "most secure and sensitive" information and that disclosure posed a "very real" threat of theft, citing a prior incident involving a Taiwanese company. Micron also contended that the district court failed to adequately consider national security and foreign policy concerns, given YMTC’s status on a restricted export list.

The Federal Circuit disagreed, finding that the district court reasonably concluded YMTC’s discovery request was neither excessive nor unreasonable. The court emphasized that the agreed-upon protective order imposed stringent safeguards, including limiting access to a select group comprising outside counsel, experts, and court personnel, while expressly prohibiting employees and officers of the parties from viewing the source code.

Further protections mandated that source code inspection occur on secure computers, restricted printouts to what was "reasonably necessary" for litigation purposes, and capped printed pages at 1,500 with no more than 30 consecutive pages. The order also required maintaining detailed records of individuals who inspected the code, secure storage of paper copies to prevent duplication or unauthorized access, and destruction of copies when no longer needed.

The Federal Circuit underscored that without concrete evidence that YMTC’s counsel would violate these provisions, Micron’s concerns amounted to unsupported speculation. The court noted, "the protective order prohibits YMTC from viewing the material," and found the safeguards sufficient to prevent unauthorized duplication or access.

This ruling aligns with other recent decisions highlighting the importance of early, strategic management of source code discovery. For example, in In re Anonymous Media Research Holdings, LLC, the Federal Circuit denied a writ of mandamus challenging a district court’s transfer of a patent infringement case based largely on the location of the source code and the engineering team responsible for it. The court found that because the accused infringer’s engineering team with access to the source code resided in the transferee district, the transfer was appropriate.

Similarly, the Fifth Circuit reversed a district court’s denial of a venue transfer request, emphasizing the centrality of source code location and accessibility in venue determinations. The court found that the district court had failed to properly weigh these factors, given that no personnel with access to the source code resided in the original forum.

In another notable case, Mod. Font Applications LLC v. Alaska Airlines, Inc., the Federal Circuit dismissed an interlocutory appeal challenging a district court’s confidentiality order that restricted access to Alaska Airlines’ source code. The protective order designated certain source code files as "CONFIDENTIAL INFORMATION – ATTORNEYS’ EYES ONLY," barring the plaintiff’s in-house counsel from access due to concerns about inadvertent disclosure, given their status as competitive decisionmakers.

These cases collectively illustrate that while source code discovery is now routine in many patent and high-tech IP disputes, managing it effectively requires a strategic and disciplined approach. Key considerations for litigants include:

- Collaborating with opposing counsel, technical experts, and clients to narrow source code requests to relevant versions and modules tied to asserted claims.

- Negotiating strong, tailored protective orders that limit access to outside counsel, experts, court personnel, and jurors, while defining strict inspection procedures and restrictions on copying, printing, and transporting source code.

- Utilizing secure review environments with dedicated, non-networked computers and logging mechanisms to prevent unauthorized copying or transfer.

- Supervising source code review sessions, often with attorneys overseeing opposing counsel’s access.

- Considering the location of source code and responsible personnel when selecting a venue for patent or high-tech IP litigation.

Proper planning and protective measures can significantly reduce the volume of source code disclosed and alleviate fears of improper disclosure, safeguarding a company’s most sensitive intellectual property throughout litigation.