## Facts

- Prism Technologies, LLC (Prism) sued Adobe Systems Inc. and several other software companies in the District of Nebraska, alleging infringement of U.S. Patent No. 7,290,288, which involves controlling access to protected computer resources using two-factor authentication that includes a “hardware key.”
- Prism’s complaint alleged infringement by “making, using, selling, or offering to sell” accused products and related systems, rather than limiting the case to a single distribution method or a single act of infringement.
- Early in the case, the court addressed claim construction of “hardware key” (and treated “access key” as having the same meaning), construing “hardware key” as an external hardware device or object from which a predetermined digital identification can be read.
- After claim construction and as discovery moved forward, Prism served broad discovery requests directed to defendants’ activities and accused products.
- Defendants moved for a protective order under Federal Rule of Civil Procedure 26(c), arguing Prism’s discovery should be narrowed because Prism allegedly had limited its infringement theories to (i) scenarios involving a CD-ROM and (ii) infringement occurring only through sales of accused products.
- Defendants also argued Prism’s discovery should be limited to the products Prism identified in its first interrogatory responses (or products “reasonably similar” to those), and asked the court to impose structured patent-discovery limits similar to those used in districts with local patent rules.
- The court found that Prism’s complaint, interrogatory responses, and statements to the court did not show Prism had restricted its infringement theories to CD-ROM-based implementations or sales-only conduct, and noted that patent discovery in the District of Nebraska was not governed by local patent rules.

## Issues

1. Whether defendants showed good cause under Rule 26(c) to limit discovery to alleged infringement involving CD-ROM-based implementations.
2. Whether defendants showed good cause to restrict discovery to sales-based infringement theories, excluding other pleaded acts such as making or using.
3. Whether discovery had to be limited to the products Prism identified in its initial interrogatory answers (or only “reasonably similar” products).
4. Whether, in a district without local patent rules, the court should impose external patent-discovery frameworks to narrow or sequence discovery.

## Decision

- The court granted the motion only in limited part to the extent needed to manage discovery and reduce undue burden, but rejected defendants’ requested categorical limits.
- The court declined to confine discovery to CD-ROM-related infringement theories.
- The court declined to limit discovery to sales-only infringement theories where the complaint alleged infringement by making, using, selling, or offering to sell.
- The court declined to restrict discovery to only the products identified in Prism’s first interrogatory responses (or “reasonably similar” products) as a hard boundary at that stage.
- The court declined to impose patent-discovery rules or frameworks from other districts as binding limits in this case, relying instead on the Federal Rules and case-specific management.

## Legal Principles

- Discovery under Rule 26(b)(1) reaches nonprivileged matter relevant to any party’s claim or defense, and the court evaluates relevance in light of what is pleaded and genuinely disputed in the case.
- A party seeking a protective order under Rule 26(c) bears the burden to show good cause with specific facts; generalized burden arguments are not enough.
- The court may manage discovery to avoid undue burden or expense, but a protective order is not a substitute for narrowing claims or forcing a party to abandon pleaded infringement theories without a clear, binding limitation by that party.
- Where a district has no local patent rules, discovery proceeds under the Federal Rules and the court’s case-management orders, rather than imported patent-rule regimes.

## Conclusion

In this patent-infringement action, the District of Nebraska refused to rewrite the case through a protective order by limiting Prism’s discovery to CD-ROM scenarios, sales-only infringement, or a short product list drawn from early interrogatory responses; because Prism’s complaint and record did not restrict Prism’s theories in that manner and Nebraska had no local patent rules imposing such limits, the court allowed discovery consistent with the pleaded “making, using, selling, or offering to sell” allegations while permitting only conventional, case-management measures to control burden.


Prism Technologies, LLC v. Adobe Systems, Inc., No. 8:10-cv-220 (2011)