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Novex Biotech, LLC v. Chromadex, Inc.

United States District Court, D. Utah, Central Division

December 18, 2019

NOVEX BIOTECH, LLC, Plaintiff and Counterclaim Defendant,
CHROMADEX, INC., Defendant and Counterclaimant.

          Jill N. Parrish, District Judge



         District Judge Jill N. Parrish referred this case to Chief Magistrate Judge Paul M. Warner pursuant to 28 U.S.C. § 636(b)(1)(A).[1] Before the court is Plaintiff Novex Biotech, LLC's (“Plaintiff”) Short Form Discovery Motion for Protective Order to Maintain “Attorney Eyes Only” Designation of Produced Documents (“Motion”).[2] The court has carefully reviewed the written memoranda submitted by the parties. Pursuant to Civil Rule 7-1(f) of the Rules of Practice for the United States District Court for the District of Utah, the court has concluded that oral argument is not necessary and will determine the Motion on the basis of the written memoranda. See DUCivR 7-1(f). For the following reasons, Plaintiff's Motion is GRANTED.


         Plaintiff and Defendant ChromoDex, Inc. (“Defendant”) both sell dietary supplements.[3]Plaintiff sells Oxydrene Elite (“Oxydrene”) and Defendant sells Tru Niagen.[4] In general, both products claim to, inter alia, enhance energy and physical performance.[5] Plaintiff contends that Defendant, a direct competitor of Plaintiff, made false, misleading statements about Tru Niagen in its advertisements which diverted sales from Oxydrene and created an unfair advantage.[6]Plaintiff filed suit against Defendant for false advertising and unfair competition under the Lanham Act, [7] and Defendant filed counterclaims for false advertising under the Lanham Act and state law, and unfair competition under state law.[8]

         Plaintiff produced certain discovery documents to Defendant marked as “Attorneys Eyes Only” (“AEO”) under the terms of the Standard Protective Order (“SPO”) entered in this case.[9]Defendant asked Plaintiff to remove the AEO designation from documents produced in discovery, specifically NOVEX00425 thru 1067.[10] In response, Plaintiff filed the instant Motion to retain the AEO designation. Plaintiff asserts the documents are properly designated as AEO pursuant to the SPO because they contain competitive business and product information not generally known within the industry to which disclosure could impact its competitive position in the marketplace.[11]

         Defendant maintains the AEO designation should be removed because the documents consist of journals, articles, textbook chapters, and governments reports that are readily available to the public.[12] Defendant argues the AEO designation “hampers [it]s ability to prepare and litigate the case”[13] because counsel is unable to “share[] the documents with in-house scientific experts.”[14]


         The Motion before the court relates to discovery. “The district court has broad discretion over the control of discovery, and [the Tenth Circuit] will not set aside discovery rulings absent an abuse of that discretion.” Sec. & Exch. Comm'n v. Merrill Scott & Assocs., Ltd., 600 F.3d 1262, 1271 (10th Cir. 2010) (quotations and citations omitted).

         The SPO sets forth certain designations for categories of information and documents to help facilitate discovery. The AEO designation may only be used for the following types of past, current, or future protected information:

(1) sensitive technical information, including current research, development and manufacturing information and patent prosecution information, (2) sensitive business information, including highly sensitive financial or marketing information and the identity of suppliers, distributors and potential or actual customers, (3) competitive technical information, including technical analyses or comparisons of competitor's products, (4) competitive business information, including non-public financial or marketing analyses or comparisons of competitor's products and strategic product planning, or (5) any other PROTECTED INFORMATION the disclosure of which to non-qualified people subject to this Standard Protective Order the producing party reasonably and in good faith believes would likely cause harm.[15]

         The producing party has the burden of proving the designation is proper. See SPO § 9(c). Thus, the burden is on Plaintiff to maintain the AEO designation of the documents presently at issue. “The court must balance the need for trade secrets against the claim of injury resulting from disclosure.” Centurion Indus., Inc. v. Warren Steurer & Assocs., 665 F.2d 323, 326 (10th Cir. 1981). It is within the sound discretion of the court to decide if the information sought is relevant and necessary, and whether the need outweighs the harm of disclosure. See id. Likewise, if the information is deemed relevant and necessary, the appropriate safeguards that should attend their disclosure by means of the protective order are also a matter within the court's discretion. See id.

         The documents Plaintiff seeks to remain designated as AEO consist of all the studies and publications that make up the claim substantiation file for Oxydrene.[16] A claim substantiation file is the collection of materials used by a company to support and validate claims made about its product on its label and in advertising materials.[17] Plaintiff avers that, although the studies and publications are in the public domain, “the compilation of those specific studies, and their support of Oxydrene, is not public information.”[18]

         While, in general, matters of public knowledge cannot be categorized as confidential, a compilation of public information which incorporates the information in a unique way is, nonetheless, protectable information. See Computer Care v. Serv. Sys. Enters., Inc., 982 F.2d 1063, 1074 (7th Cir. 1992) (“A trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process design and operation of which in unique combination affords a competitive advantage.”); see also Daniels Health Scis., L.L.C. v. Vascular Health ...

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