Full opinion text
MEMORANDUM OPINION AND ORDER PATRICK J. SCHILTZ, District Judge. Plaintiff Northbrook Digital, LLC (“Northbrook”) brings suit for patent infringement against defendant Vendió Services, Inc. (‘Vendió”). Northbrook is a one-man operation run by Mark A. Wolfe. Wolfe wears many hats: He is the named inventor of the patents in suit; he is an attorney licensed to practice before the United States Patent and Trademark Office (“PTO”) and prosecutes his own patents (including the patents in suit and related continuation patents); he is the owner of Northbrook and a handful of other small entities; he plans to testify both as an expert witness and as a fact witness at trial; and he has entered an appearance as litigation counsel on behalf of Northbrook. Vendió is a small company that makes software related to internet sales and advertising. Vendio’s software product, Dealio, is a “toolbar” that integrates with web browsers such as Microsoft’s Internet Explorer and Mozilla’s Firefox. Dealio offers end users quick access to sales (“deals”) offered by online merchants. Dealio is free for end users; Vendió makes its money from online merchants, who pay Vendió commissions related to ads distributed and sales made through the Dealio software. Three motions are now pending before the Court: (I) Vendio’s motion to dismiss for lack of personal jurisdiction and improper venue or, in the alternative, to transfer [Docket No. 24]; (2) Northbrook’s motion to amend or correct its complaint [Docket No. 35]; and (3) Vendio’s motion for a protective order [Docket No. 34]. The Court referred Vendio’s dispositive motion (the motion to dismiss or transfer) to Magistrate Judge Jeanne J. Graham for a report and recommendation (“R & R”) under Rule 72(b)(1) of the Federal Rules of Civil Procedure. Because the other two motions are nondispositive, they were assigned to Judge Graham to be heard in the first instance pursuant to Rule 72(a). Judge Graham issued a lengthy and careful R & R addressing all three motions on April 4, 2008 [Docket No. 59]. Judge Graham recommends denying Vendio’s motion to dismiss or transfer. Vendió has not objected to this recommendation, and the Court therefore adopts it and denies Vendio’s motion. Judge Graham also recommends granting North-brook’s motion to amend or correct its complaint. Again, Vendió has not objected to this recommendation, and the Court therefore adopts it and grants North-brook’s motion. The remaining disputes relate to Vendio’s motion for a protective order. Vendió argues that, although Wolfe has entered an appearance as an attorney representing Northbrook, Wolfe should nevertheless be denied access to certain of Vendio’s confidential information designated “Confidential — Attorneys’ Eyes Only.” Vendió also argues that Wolfe’s participation as a member of North-brook’s litigation team must be limited in light of the Minnesota Rules of Professional Conduct. Judge Graham recommends granting Vendio’s motion for a protective order and denying Wolfe access to Vendio’s confidential documents unless Northbrook can demonstrate that Wolfe needs access to certain documents because he has “specialized knowledge about the patented technology” and his access is “essential to Northbrook’s preparation of its case.” R & R at 33. Judge Graham also recommends that Northbrook be ordered to show cause why Wolfe should not be disqualified from representing Northbrook under Rule 3.7(a) of the Minnesota Rules of Professional Conduct, which generally forbids a lawyer from “actfing] as advocate at a trial in which the lawyer is likely to be a necessary witness.... ” Minn. R. Prof. Conduct 3.7(a); R & R at 35-39. Northbrook objects in part to the R & R. PI. Obj. R & R [Docket No. 61]. Northbrook registers its disagreement with Judge Graham’s analysis of Rule 3.7(a) but “does not formally object” to that portion of the R & R. Id. at 12 n. 2. Instead, Northbrook has addressed the concerns raised by Judge Graham over the conflict between Wolfe’s role as litigation counsel and his role as a trial witness by agreeing to limit Wolfe’s activities as litigation counsel. Specifically, Northbrook promises that Wolfe will not serve as Northbrook’s trial counsel and “will not act as Northbrook’s attorney in any pretrial proceedings, either.” Id. at 12. Because the Court will hold Northbrook to its promise, Wolfe will not “act as advocate at a trial,” and thus Wolfe’s further participation in this litigation will not violate Rule 3.7(a). The Court therefore finds that further briefing on this issue is unnecessary, and the Court declines to adopt the R & R to the extent that it recommends that the Court order Northbrook to show cause why Wolfe should not be disqualified as litigation counsel. Northbrook does strenuously object to Judge Graham’s recommendation that a protective order be entered in this case under which Wolfe would be denied access to Vendio’s confidential information designated “Confidential — Attorneys’ Eyes Only.” The Court agrees with Judge Graham that Wolfe should not have unfettered access to all of Vendio’s confidential information. But the Court’s reasoning differs somewhat from Judge Graham’s, as do the limitations that the Court finds to be appropriate under the circumstances. The Court therefore adopts the R & R only in part, as will be described below. Before turning to the merits, though, the Court must comment on a troubling aspect of Vendio’s response to North-brook’s objection to the R & R. Vendio’s first response grossly exceeded the 3,500-word limit set forth in Local Rule 72.2. Because the mistake was inadvertent and because Vendió promptly admitted its error, the Court permitted Vendió to file a substitute response. Order May 6, 2008 [Docket No. 75]. Vendió promptly submitted such a response, and it certified that the response was 3,485 words long, just under the 3,500-word limit of Local Rule 72.2. Cert. Compliance May 7, 2008 [Docket No. 76 Attachment 1]. In fact, though, Vendió violated the spirit, if not the letter, of Local Rule 72.2. Vendio’s certificate of compliance affirms that “[p]er the word count feature” of its word-processing program, its memorandum is 3,485 words long. But to reduce the number of words counted by its word-processing program, Vendió hyphenated things that are never hyphenated: Instead of “Docket 59,” for instance, Vendió writes “Docket-59”; instead of “Nichols Decl.” and “Tautkus Deck,” Vendió writes “Nichols-Deck” and “Tautkus-Decl.”; instead of “Northbrook Obj.,” Vendió writes “NBObjeetion.” The first two types of hyphens appear at least nineteen times in Vendio’s substitute response. Thus, if Vendió had not manipulated the word-counting feature of its word-processing program through improper hyphenation, Vendio’s word-processing program would have counted many more words, and Vendió would have once again violated the word limit imposed by Local Rule 72.2. This Court makes plenty of inadvertent errors itself, and thus this Court generally overlooks inadvertent errors, as it did with respect to Vendio’s first violation of the rule. Had Vendió confined itself to using improper hyphenation in its substitute response, the Court might again have overlooked Vendio’s conduct, even though this time the conduct was almost surely not inadvertent. But Vendió has cheated the word limit not only by using hyphens improperly, but by referring to Judge Graham, at least twenty times, simply as “Graham.” The Court commends the practice of referring to parties and witnesses by last name only. See Bryan A. Garner, The Winning Brief 266 (2004) (“Generally, dispense with Mr., Mrs., and Ms.; use last names alone after the first mention of a party’s or witness’s name.”) (emphasis added). But this Court cannot recall reading a motion, brief, or other paper — even from the most hapless of pro se litigants— that referred to a federal magistrate judge by her last name only. No one does this because it is disrespectful to the magistrate judge. Surely one of the six lawyers at the three prestigious firms representing Vendió could have figured out a way to squeeze twenty words from a 3,500-word memorandum without being disrespectful to Judge Graham. The Court understands that Judge Graham’s R & R raises complicated issues, but Northbrook’s counsel were able to address those issues in 3,500 words without playing games with hyphens or being disrespectful to Judge Graham. If Northbrook can properly object to an R & R in 3,500 words, then surely Vendió can properly respond to that objection in 3,500 words. Vendio’s counsel — who now have two strikes against them — should take great care to comply with both the spirit and letter of this Court’s rules in the future. I. LEGAL PRINCIPLES A. Standard of Review The only matter before the Court is Judge Graham’s recommendation with respect to Vendio’s motion for a protective order. Because a motion for a protective order is nondispositive, this Court will modify or set aside those aspects of Judge Graham’s R & R relating to the protective order only to the extent that they are “clearly erroneous or ... contrary to law.” Fed.R.Civ.P. 72(a). B. Protective Orders in Patent Cases Rule 26(c)(1) of the Federal Rules of Civil Procedure governs protective orders in civil cases and provides: “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense....” Fed.R.Civ.P. 26(c)(1). The party seeking the order — in this case, Vendió — bears the burden of establishing the requisite “good cause.” Protective orders are a common feature of patent cases because the parties are often competitors who understandably are reluctant to disclose trade secrets and other confidential information to each other (and to the public). The basic principles governing protective orders in patent cases derive from the Federal Circuit’s opinion in U.S. Steel Corp. v. United States, 730 F.2d 1465 (Fed.Cir.1984). U.S. Steel itself dealt with the narrow question of whether in-house counsel for one party should be always be excluded from access to an opposing party’s confidential documents. Id. at 1467. U.S. Steel rejected any such categorical rule, holding that “access by retained as well as in-house counsel should be governed by the facts.... ” Id. at 1468-69. In reaching this holding, the Federal Circuit said: “In a particular ease, e.g., where in-house counsel are involved in competitive decisionmaking, it may well be that a party seeking access should be forced to retain outside counsel or be denied the access recognized as needed.” Id. at 1468. Further, U.S. Steel held that in gauging whether allowing one party’s lawyers access to its opponent’s confidential information would create an unacceptable risk that the confidential information would be inadvertently disclosed, the risk must be assessed “on a counsel-by-counsel basis....” Id. These principles have subsequently been applied in numerous patent cases. Not surprisingly, given the fact-intensive nature of the U.S. Steel analysis and the fact that discovery issues are largely within the discretion of district courts, cases with apparently similar facts often come out differently. Nonetheless, certain themes recur. First, the key issue in many cases is whether the litigants are direct competitors and whether the people who would be denied access to information under a protective order are involved in a party’s competitive decisionmaking. Second, some courts distinguish between financial information and technical information, because the two types of information do not necessarily raise the same concerns. And third, courts differ over the extent to which involvement in patent prosecution is treated as competitive activity for protective-order purposes. All three themes are present in Safe Flight Instrument Corp. v. Sundstrand Data Control Inc., an oft-cited case from the District of Delaware (a district with a significant patent docket). 682 F.Supp. 20 (D.Del.1988). The defendant, Sundstrand, sought a protective order forbidding plaintiff Safe Flight’s founder, Leonard M. Greene, from seeing Sundstrand’s confidential documents. Greene was “a preeminent aeronautic engineer, having received more than sixty aeronautic patents.” Id. at 21. The court granted the protective order, finding that such access would pose a competitive threat because “Greene actively plies aeronautic engineering” and the two companies “directly compete in the market for avionics equipment....” Id. After citing numerous cases supporting the proposition that “proper safeguards should attend the disclosure of trade secrets,” the court went on to say that “[t]his line of precedent implicitly recognizes that courts often afford fuller protection to technological information than that extended to ordinary business information.” Id. at 22. The court did, however, allow Safe Flight’s in-house counsel to have access to Sundstrand’s confidential technical information, finding that the in-house lawyers would be “segregated” by Safe Flight to minimize the risk that Safe Flight would misuse the information. Id. at 28. The court also noted that the in-house lawyers, unlike Greene, were officers of the court who were bound by a code of professional responsibility. Id. But at times even in-house lawyers have been denied access to an opposing party’s technical information. In Brown Bag Software v. Symantec Corp., a case involving alleged copyright infringement of software code, the Ninth Circuit affirmed a district court’s protective order denying the plaintiffs in-house counsel access to defendant Symantec’s trade secrets, which included source code and information about development of the allegedly infringing software. 960 F.2d 1465, 1471 (9th Cir.1992). In Vardon Golf Co. v. BBMG Golf, Ltd., the district court affirmed a magistrate judge’s protective order forbidding access to a defendant’s confidential information by Vardon Golfs sole employee, a one-man band who (like Wolfe) was his company’s president, engineer, patent attorney, and trial counsel. No. 91-C-0349, 1991 WL 222258, at *2 (N.D.Ill. Oct.24, 1991). Similarly, in IP Innovation L.L. C. v. Thomson, Inc., the plaintiffs principal, an inventor with several issued and pending patents, was forbidden from having access to the defendant’s confidential information for reasons like those given in Safe Flight. No. 1:03—CV-0216, 2004 WL 771233, at *3 (S.D.Ind. Apr.8, 2004). Other courts have granted protective orders directed at a party’s outside patent-prosecution lawyers. In Motorola, Inc. v. Interdigital Technology Corp., the court granted a protective order with respect to a law firm that was the defendant’s trial counsel and that, during the course of the suit, became its patent-prosecution counsel. No. 93-488-LON, 1994 WL 16189689 (D.Del. Dec.19, 1994). The firm, Dick-stein, Shapiro & Morin, was defendant Interdigital’s patent-prosecution counsel for at least four patent applications that were continuations or divisional applications of the patents in suit. Id. at *1. The court held: [T]he [Dickstein, Shapiro & Morin] attorneys who have received confidential information from Motorola under the protective order shall not prosecute any [Interdigital] patent applications relating to the broad subject matter of the patents in suit during the pendency of this case and until one year after the conclusion of the present litigation, including appeals. Id. at *3. Where a party’s outside patent-prosecution firm has not yet had access to the other party’s confidential information, the firm may be prospectively forbidden from having such access. In Mikohn Gaming Corp. v. Acres Gaming Inc., a magistrate judge granted a protective order forbidding one of two firms that had entered an appearance as defendant Acres’s trial counsel from (1) having access to plaintiff Mikohn’s “sensitive technical information ... such as software codes and hardware electrical designs” and (2) attending depositions. 50 U.S.P.Q.2d 1783, 1784 (D.Nev.1998). The firm, called “the Marger firm” by the court, was prosecuting patent applications for Acres that were “the very subject matter” of the suit at the same time that it had entered an appearance as trial counsel. Id. In granting Mikohn’s motion for a protective order, the court rejected Acres’s argument that because Acres “would not be allowed to amend claims or add new claims regarding matters that were not already disclosed in its original patent application,” the Marger firm’s patent-prosecution activities were not a competitive threat to Mikohn. Id. at 1785. Instead, the court found that the Marger firm was “prosecuting patent applications that are ... part of the very core of this suit” and therefore “in light of the claims made in this lawsuit, the advice rendered by the Marger firm is intensely competitive.” Id. A similar result was reached by the court in In re Papst Licensing, GmbH, Patent Litigation, in which the court held: [I]t is clear that the advice and participation of the Papst parties’ counsel in preparation and prosecution of patent applications related to the patents in suit is an intensely competitive decisionmaking activity and would be informed by access to the Non-Papst partiesf] confidential information. Counsel’s ability to file new claims in existing and pending patents based on the confidential information discovered during the course of this litigation poses an unacceptable opportunity for inadvertent disclosure and misuse. Although the Court is confident that counsel for the Papst parties maintains the highest ethical and professional standards, the risk of inadvertent disclosure and misuse and the difficulty of distinguishing the source of the Papst parties’ basis for filing new claims are great. No. MDL 1278, 2000 WL 554219, at *4 (E.D.La. May 4, 2000). Protective orders issued by this Court in other patent cases have likewise recognized that attorneys who are directly involved in patent prosecution may be subject to greater restrictions than other • attorneys. In Medtronic, Inc. v. Guidant Corp., Magistrate Judge Jonathan G. Lebedoff recognized that “prosecuting patents is distinct from other legal duties and presents unique opportunities for inadvertent disclosure.” Nos. Civ. 00-1473 & Civ. 00-2503, 2001 WL 34784493, at *4 (D.Minn. Dec.20, 2001). He therefore granted a protective order that prohibited disseminating certain confidential information to attorneys who, during the suit or in the year following its conclusion, “actually draft patent applications, claim language for patent applications, or arguments made in support of patent applications related to the treatment of abnormal cardiac rhythms.” Id. at *5. Judge Lebedoff did, however, permit attorneys who only supervised patent prosecution activities to have access to the disputed confidential information. Id. This is not to say that courts have universally prohibited lawyers and inventors involved in patent prosecution from having access to opposing parties’ confidential information. In particular, in Avocent Redmond Corp. v. Rose Electronics, Inc., the court refused to bar plaintiff Avocent’s patent prosecutors from having access to defendant Rose Electronics’ technical information, holding that “[d]efendants have not offered any evidence that suggests that ... Avocent’s patent prosecutors advise Avocent in its ‘competitive decisionmaking.’ ” 242 F.R.D. 574, 579 (W.D.Wash. 2007). Similarly, in AFP Advanced Food Products LLC v. Snyder’s of Hanover Manufacturing, Inc., the court rejected defendant Snyder’s motion for a protective order that would have prohibited plaintiff AFP’s patent prosecutors from having access to Snyder’s confidential information. No. Civ. A. 05-3006, 2006 WL 47374 (E.D.Pa. Jan.6, 2006). The order sought by Snyder and denied by the court resembled the order granted by Judge Lebedoff in Medtronic: Snyder wanted to forbid any of AFP’s lawyers who were given access to Snyder’s confidential information from prosecuting patents during the course of the suit or for two years after-wards. Id. at *2. The court held that Snyder had not presented particularized evidence of the need for such an order. Id. Avocent and AFP Food Products represent a minority view, however. As discussed above, many courts recognize that patent prosecution can pose the type of competitive threat that justifies a protective order. And cases other than Avocent and AFP Food Products that have held that lawyers or inventors involved in a party’s patent-prosecution activities could have access to the other party’s confidential information tend to involve unusual factual situations. For instance, in Medtronic Sofamor Danek, Inc. v. Michelson, the defendant inventor, Michelson, was allowed access to plaintiff Medtronic’s confidential information. No. 01-2373-GV, 2002 WL 33003691 (W.D.Tenn. Jan.30, 2002). Medtronic Sofamor Danek was unusual in two respects: First, the protective-order dispute was over whether Michelson could have access to the technical information of his licensee, Medtronic. Id. at *3 (“Medtronic initiated this lawsuit, seeking a court to declare that patents and methods designed by none other than Dr. Michelson now belong to it pursuant to the various agreements in dispute.”). Second, Medtronic had voluntarily given Michelson access to its confidential information in earlier cases in which he had served as an expert for Medtronic. Id. In a different case, Trading Technologies International, Inc. v. eSpeed, Inc., the court refused to restrict the patent-prosecution activities of a plaintiffs attorney who had access to confidential information, but the court found that the attorney was “primarily a litigator” who was only “incidentally involved in patent applications....” No. 04-C-5312, 2004 WL 2534389 (N.D.Ill. Sept.24, 2004). Finally, as noted at the outset, when litigants compete in output markets' — i.e., when they sell similar products to similar customers — courts routinely grant protective orders forbidding access to confidential information by people, including attorneys, who are involved in competitive decisionmaking apart from patent prosecution. See, e.g., Highway Equip. Co. v. Cives Corp., No. C04-0147, 2007 WL 1612225 (N.D.Iowa May 15, 2007); Probatter Sports, LLC v. Joyner Techs., Inc., No. 05-CV-2045, 2006 U.S. Dist. LEXIS 74219, 2006 WL 5278236 (N.D.Iowa Oct. 11, 2006); Intel Corp. v. VIA Techs., Inc., 198 F.R.D. 525 (N.D.Cal. 2000). II. ANALYSIS A. Competition in Output Markets Generally, competitors in the business world compete in output markets for customers: Coca-Cola competes with Pepsi; McDonald’s competes with Burger King; Toyota competes with General Motors. Northbrook, however, does not compete with Vendió for customers, because the two companies are in different businesses. Northbrook, to the extent that it sells anything, sells the right to use its patented technology — i.e., it sells patent licenses. Vendió, for its part, sells advertising and marketing services. As far as the record shows, Northbrook sells nothing except patent licenses. It does not sell advertising or marketing services, or know-how, or anything else. Similarly, as far as the record shows, Vendió sells nothing except advertising and marketing services. It does not sell licenses to its technology, or know-how, or anything else. Northbrook and Vendió thus sell entirely different products to entirely different customers. Judge Graham nevertheless found that, because Northbrook and Vendió have a “shared interest in a single patented technology,” they are competitors. R & R at 28; PI. Obj. R & R at 6. Northbrook objects to this finding, arguing that such a definition of competition is too broad “because patent litigants always have a shared interest in the relevant patented technology....” PI. Obj. R & R at 6. The Court agrees with Northbrook that the notion of “competition” underlying the R & R is too broad. The R & R is clearly erroneous because it is based on the assumption that Wolfe (as Northbrook’s principal) should not have access to Vendio’s financial and customer data because Northbrook, as a result of its licensing activity, competes with Vendió in output markets. As described above, that is just not true. This is not to say that Northbrook has no interest in Vendio’s business. North-brook does have an interest, but its interest is as a supplier of inputs to Vendió, and not as a competitor. If Vendió is indeed infringing Northbrook’s patents, then Vendió is using inputs (intellectual property) that do not belong to it, and Northbrook has a right to be compensated for (or to stop) Vendio’s use of Northbrook’s resources. Suppose, for example, that Northbrook owned a gold mine, and Vendió was a retail jeweler that was secretly stealing ore from the mine and turning it into rings. Northbrook and Vendió would not be competitors in any output market, because Vendió would not sell ore, and Northbrook would not sell jewelry. Northbrook would have an interest in Vendio’s business, but not as a competitor. It is true, as Judge Graham notes, that the value of what Northbrook sells — licenses to its patents — is a function of the value of the business of a potential licensee such as Vendió. R & R at 27. But this is not a reason to prevent Northbrook from learning about Vendio’s costs, customers, or profitability. Northbrook cannot steal Vendio’s customers, because Northbrook does not sell anything to Vendio’s customers. At most, Northbrook can use information about Vendio’s costs, customers, or profitability to determine what price it should charge Vendió for a license to its patents. In the context of patent litigation, however, determining what price to charge an accused infringer for a patent license is equivalent to assessing the value of the case itself. And every litigant in every case seeks to assess the value of its case: Defendants want to estimate their potential liability, and plaintiffs want to estimate their potential recovery. In commercial cases between competitors, it makes sense to restrict each competitor’s direct access to the other’s customer and financial data, because one competitor could use its opponent’s information to compete unfairly in the marketplace. Case valuation in such cases must be done by outside attorneys and experts, who can report estimated damages figures to their clients. Those clients, in turn, can use that information in determining whether (and on what terms) to settle the litigation. But in a case such as this — a case brought by a supplier of inputs (North-brook) against an alleged consumer of those inputs (Vendió) — there is no reason to prevent the supplier from having access to the consumer’s financial or customer data. Northbrook alleges that Vendió is infringing its patents. Until Vendió wins the case on the merits, Northbrook must assess the value of its case, as must any litigant. There is no reason why North-brook, through Wolfe, should have to rely solely on outside attorneys and retained experts to assess the portion of the case’s valuation that turns on Vendio’s financial and customer information. Northbrook cannot use that information to compete unfairly with Vendió for Vendio’s customers because Northbrook does not serve those customers. Northbrook can only use Vendio’s financial and customer information to determine what to charge for a license, i.e., to determine the settlement value of this case. That is an entirely legitimate use of the information. B. Competition in Input Markets As noted above, Northbrook is more like a supplier to Vendió than a competitor, because Northbrook and Vendió do not compete in the same output market (i.e., the market for internet advertising and marketing services). But there is a very limited sense in which Vendió and Northbrook compete in the input market of intellectual property used for internet advertising and marketing. Vendió uses certain software products and business methods to run its business; those products and methods are the inputs that Vendió transforms into a sendee that it sells to advertisers and marketers. Vendió, like any business, must decide whether to make or buy its inputs. When a business chooses to buy an input that it used to make, we call it “outsourcing”; when a business chooses to make an input that it used to buy, we call it “vertical integration” (or taking an operation “in house”). Suppose that there were two different ways that Vendió could deliver its service: (1) by using methods covered by North-brook’s patents; and (2) by using confidential methods developed in-house by Vendió and not covered by Northbrook’s patents. If Vendió chose approach (2), it would be in effect choosing to make an input in house rather than to buy the input from Northbrook. Vendió would thus be competing with Northbrook in the input market for software products and business methods — Vendió would be both the maker and the consumer of those inputs. This would be very limited competition, however, over a single customer — Vendió. Because Vendió does not itself license its technology, Vendió and Northbrook do not compete in the broader market for intellectual property. Now suppose that Vendio’s confidential software and business methods are not covered by the claims of the asserted patents, but could be covered by claims in patents issued to Northbrook in the future if Northbrook knew enough about Vendio’s operations to draft claims to cover Vendio’s software and methods. If that happened, Vendió would no longer be able to choose to make its inputs. Rather, Vendió would have to buy the inputs from North-brook (because, by hypothesis, Northbrook would have patented them). Vendió would be eliminated as Northbrook’s competitor in the single-customer (Vendió) input market for the software and business methods underlying Vendio’s business. Moreover, this elimination of Vendió would be unfair, because (again, by hypothesis) it would have been possible only because North-brook had access to Vendio’s confidential software and business methods. Vendió asks for a protective order in part to prevent Wolfe from gaining access to Vendio’s confidential technical information and using that information in the course of patent prosecution. See Def. Letter Mot. [Docket No. 34] at 3 (“Granting Mr. Wolfe access to Vendio’s on-going research and development ... would allow Northbrook, to alter its technology development. It would also facilitate amending claims in pending applications by Mr. Wolfe to mirror Vendio’s technology.”). This is a legitimate basis for preventing Wolfe from having access to Vendio’s technical information. Vendió and Northbrook compete, in a limited way, in the input market for software and business methods to facilitate online advertising and marketing, and Vendió has a legitimate interest in preventing Northbrook from competing unfairly in that market by drawing patent claims more precisely to Vendio’s methods than Northbrook would be able to do without access to Vendio’s confidential technical information. Judge Graham discounted this rationale, however, because she found that “North-brook is not currently engaged in patent prosecution.R & R at 27. The Court agrees with Vendió that this factual finding is clearly erroneous. See Def. Subst. Resp. at 6-8 [Docket No. 76]. Judge Graham’s error is, however, understandable in light of how Wolfe and Northbrook’s outside counsel characterized Wolfe’s patent-prosecution activities. Wolfe submitted a declaration that misleadingly minimizes the scope of his activities before the PTO. Wolfe says that all of his pending patent applications “are simply continuations of the original applications filed years ago,” that they “do not disclose any new or recently-developed subject matter,” and that he is not undertaking “development of new technology relating to defendant’s business.... ” Wolfe Decl. ¶ 10 [Docket No. 46]. Further, Wolfe says that he “no longer devote[s] time to developing and implementing new ideas, products, and/or inventions relating to the patents in suit, relating to anything remotely relevant to defendant’s business, or even relating to the consumer Internet in general.” Id. ¶ 8. Northbrook’s outside counsel amplifies Wolfe’s argument, saying that “because federal law forbids introducing ‘new matter’ into a continuing application,” it is “an impossibility” for Wolfe to “take Vendio’s confidential information and add it to a continuing patent application, or otherwise alter Northbrook’s ‘technology development.’ ” PI. Mem. re Prot. Order at 10 [Docket No. 45]. It is, of course, literally true that a continuation application cannot introduce “new matter” to a patent application in the sense that it cannot claim anything not disclosed in the original application from which the continuation application stems. Donald S. Chisum, 4A Chisum on Patents § 13.03[2] (“A continuation application is a second application that contains the same disclosure as the original application. It may not contain anything that would be considered ‘new matter’ if inserted in the original application.”). But a continuation application can include new claims, as long as the claims are supported by the disclosure in the parent application. See R. Carl Moy, 1 Moy’s Walker on Patents § 3:54 at 3-165 (4th ed. 2007) (“The modern continuation practice can thus be taken as providing the applicant with essentially the same degree of freedom to obtain claims in the continuation that he or she enjoyed in the parent.”). And if the claims in the parent application claimed only a portion of what the specification discloses, then the new claims will broaden the effective reach of the patent even if they do not introduce “new matter.” See, e.g., Central Sprinkler Co. v. Grinnell Corp., 897 F.Supp. 225, 227 (E.D.Pa.1995) (“A continuing application is one that makes explicit a claim that was inherent in a previously filed application. It contains no new information.”) By emphasizing that Wolfe cannot introduce “new matter” in his continuation claims, Wolfe and Northbrook’s counsel understate the scope and significance of his vigorous continuation practice. Further, by saying that he is not devoting time to “developing and implementing new ideas, products, and/or inventions relating to the patents in suit,” Wolfe creates a misleading impression that he is not currently engaged in any significant activities before the PTO that are related to the patents in suit. Wolfe Aff. ¶8. Wolfe’s statement is literally true if one focuses on the words “new ideas, products, and/or inventions” and assumes that, although a continuation application can include new claims, it cannot include “new ideas, products, and/or inventions” because those would be “new matter” unsupported by the specification. But a claim itself is an idea — a specific idea about how to describe the general invention disclosed in a patent’s specification. In fact, it is apparent from the record that Wolfe, in his continuation practice before the PTO, is devoting significant time to securing new claims related to the patents-in-suit. In connection with its motion for a protective order, Vendió submitted three published patent applications by Wolfe that are currently pending before the PTO. Def. Letter Mot. Exs. B-D. One of these, application number 11/552,519, was filed in October 2006 as a continuation of a different application filed in September 2006. Id. Ex. C. A second of these, application number 11/624,817, was filed in January 2007 as a continuation of a different application filed in May 2006. It is apparent from these two applications alone — which date back to applications filed in the mid-1990s — that Wolfe’s current practice before the PTO is not nearly as limited as he and Northbrook’s counsel imply. A fuller picture of the scope of Wolfe’s activities before the PTO emerges from the materials submitted by Vendió in response to Northbrook’s objection to the R & R. Public records show that Wolfe has a total of fifteen patent applications related to the patents in suit currently pending before the PTO. See Tautkus Decl. Exs. F-L & V. [Docket No. 77]. Of these fifteen applications, at least seven were filed after Northbrook filed this suit. When a plaintiff in a patent case is involved in prosecuting patents that are related to the defendant’s business, federal courts routinely limit the plaintiffs access to the defendant’s technical trade secrets. Here, Wolfe is actively involved in prosecuting patent applications that relate to Vendio’s business and to the patents in suit. This analysis is not changed by the fact that Wolfe is currently prosecuting continuation applications rather than original applications. Indeed, the vigorous scope of Wolfe’s continuation practice, which has been going on for over a decade and which has resulted in multiple different patents that relate back to the same original applications, belies any suggestion that his practice is insignificant and could not result in patents with new claims that relate to Vendio’s business. Accordingly, Wolfe’s activities before the PTO in prosecuting continuation applications related to the patents in suit are not compatible with allowing him to review, either as an attorney or as an expert witness, Vendio’s confidential technical information. The Court therefore grants Vendio’s application for a protective order with respect to Vendio’s confidential technical information. Northbrook contends that denying Wolfe access to Vendio’s technical information will work a great hardship upon it. The Court finds that, based on the record so far, the competitive threat to Vendió posed by Wolfe’s access to Vendio’s confidential technical information substantially exceeds the hardship to Northbrook from limiting that access. That said, the Court agrees with Judge Graham that Northbrook is entitled to try to show, with respect to specific information provided by Vendió, that the hardship imposed on Northbrook by denying access to Wolfe outweighs the competitive threat to Vendió that would result from such access. The Court also agrees with Judge Graham that Northbrook will need to make a significant showing of need to meet this standard. Contrary to Northbrook’s assertion, Judge Graham did not clearly err in placing a heavy burden on North-brook to justify Wolfe’s access to Vendio’s confidential information. Rather, that heavy burden recognizes that Vendió has already established that giving Wolfe access to Vendio’s confidential information poses a significant competitive risk. Put another way, whether to give Wolfe access to Vendio’s information depends on the result of a balancing test — but Vendió has already established that the potential competitive harm weighs heavily on one side of the balance. In short, given that Wolfe is extremely active in prosecuting multiple continuation applications related to technology at issue in this suit, Northbrook will have to make a strong showing that Wolfe requires access to Vendio’s confidential technical information before such access will be allowed by the Court. Requests for such access must be particularized and must be made to Judge Graham. Given that technical experts other than Wolfe can readily assess whether Vendió is infringing Wolfe’s patents — the function of a patent, after all, is to put the public on notice of what is patented — the Court anticipates that Northbrook will have great difficulty making the requisite strong showing. C. Terms of Protective Order Northbrook asks the Court to enter the district’s standard protective order in patent cases, Form 5 of the Local Rules. PI. Obj. R & R at 14. For its part, Vendió says that “[a]t all times Vendió has been willing to use this District’s Form 5 protective order, with the understanding that Wolfe would not be permitted to access Vendio’s confidential information.” Def. Subst. Resp. at 11. Northbrook accuses Vendió of having changed its position with respect to adopting the district’s standard protective order, and says that this change suggests “Vendio’s strategic motivation....” PI. Obj. R & R at 11. In fact, contrary to North-brook’s assertion, Vendió has never really changed its position on this issue. That Vendió seems to have done so demonstrates only that Form 5 is inartfully drafted, not that Vendio’s motivations are suspect. Paragraph 4 of Form 5 creates, for protective-order purposes, up to seven categories of people, labeled (a) through (g). Optional category (e) includes specified “inside counsel”; optional category (f) includes specified parties’ employees other than inside counsel. Mandatory category (b) includes “Attorneys and their office associates, legal assistants, and stenographic and clerical employees”; the word “Attorneys” is defined in Paragraph 1 as “counsel of record.” Under Paragraph 5 of Form 5, documents designated as “Confidential — Attorneys’ Eyes Only” may not be disclosed to parties’ employees (people in category (f)) but may be disclosed both to people in category (b) — i.e., “Attorneys” and their staff — and to “inside counsel” listed (if any are) in category (e). On the most natural reading of Paragraph 4 itself, the class of “Attorneys” in category (b) would not include inside counsel, since there is a separate category— category (e)■ — that covers only inside counsel. This is apparently how Vendio’s out-of-town counsel read Paragraph 4, and thus they were willing to adopt Form 5, since Wolfe is Northbrook’s inside counsel and (on this reading) would not be one of the “attorneys” in category (b). See Tautkus Deck Ex. Q at 3. Northbrook’s counsel interpret the form differently and think that “Attorneys” in category (b) means “outside attorneys plus any inside attorneys who are counsel of record.” See id. at 2. Northbrook’s counsel’s interpretation is an unnatural reading of Paragraph 4 standing alone, but it is defensible because the term “Attorneys” is defined in Paragraph 1 as “counsel of record.” This means that inside counsel can join the class of attorneys entitled to see material designated “Confidential — Attorneys’ Eyes Only” in one of two ways: either (1) by entering an appearance as counsel of record, or (2) by having themselves listed in category (e) of Form 5. There is no logical reason for Form 5 to provide these two different methods when the second one is entirely sufficient. For purposes of this case, the Court will enter a protective order based on Form 5 with modifications consistent with this opinion. First, the term “Attorneys” will be defined as “counsel of record, excluding Mark A. Wolfe.” Second, because of the limited nature of the competition between Vendió and Northbrook, Vendio’s in-house lawyers as a group will be designated as “inside counsel” under category (e) and will therefore have access to Northbrook’s “Confidential” and “Confidential — Attorneys’ Eyes Only” documents. Third, Wolfe will be designated as a Northbrook employee and included in category (f) as someone with access to “Confidential” documents but not “Confidential — Attorneys’ Eyes Only” documents. Fourth, Paragraph 5 of Form 5 will be modified to permit the parties to designate technical information only as “Confidential — Attorneys’ Eyes Only.” By default, Wolfe will not be permitted access to such information. He can gain access to that information only by making a sufficient showing of necessity, as described above. ORDER Based on the foregoing and on all of the files, records, and proceedings herein, the Court OVERRULES IN PART North-brook’s objection [Docket No. 61] and ADOPTS IN PART Judge Graham’s Report and Recommendation [Docket No. 59] to the extent that it is consistent with this Memorandum Opinion and Order. Accordingly, IT IS HEREBY ORDERED THAT: 1. Defendant Vendió Services, Inc.’s motion to dismiss or transfer [Docket No. 24] is DENIED. 2. Plaintiff Northbrook Digital, LLC’s motion to amend or correct its complaint [Docket No. 35] is GRANTED. 3. Defendant Vendió Services, Inc.’s motion for a protective order [Docket No. 34] is GRANTED as follows: The Court will enter a protective order patterned on the district’s standard order for patent cases but modified in accordance with this memorandum opinion and order. REPORT AND RECOMMENDATION JEANNE J. GRAHAM, United States Magistrate Judge. This matter came to the undersigned on March 6, 2008 on defendant Vendió Services’ motion to dismiss or in the alternative to transfer venue (Doc. No. 24) and its application for a protective order (Doc. No. 34); and on plaintiff Northbrook Digital’s motion to amend its complaint (Doc. No. 35). Peter M. Lancaster, Esq., appeared on behalf of Northbrook Digital (North-brook). Rita E. Tautkus, Esq., and Felicia M. Boyd, Esq., appeared on behalf of Vendió Services (Vendió). The motion to dismiss was referred for a report and recommendation in accordance with 28 U.S.C. § 636 and Local Rule 72.1(b). I. BACKGROUND In this patent infringement litigation, Vendió moves to dismiss for lack of personal jurisdiction, or in the alternative, that venue be transferred to the Northern District of California. It separately brings a motion for a protective order, asking that its confidential information be protected from disclosure to Mark A. Wolfe, Esq., who is evidently both the sole stakeholder in Northbrook and one of its attorneys of record here. Northbrook brings its own motion to amend its complaint. Opposing this motion, Vendió renews the jurisdictional arguments from its motion to dismiss, and thus contends that the motion to amend is futile. As Vendió does not raise any other arguments against Northbrook’s motion to amend, the outcome of this motion to amend accordingly depends on the ruling for the motion to dismiss. The motion to amend, therefore, is properly considered in this report. In brief, the patents-in-suit teach methods for search and retrieval of data over computer networks such as the internet. Vendió developed and distributed software, called Dealio, which allegedly includes a search feature that infringes these patents. Dealio software is a toolbar application that operates in conjunction with web browsing software. (Exh. 1.) While a user is browsing the internet, Dealio software downloads links to the toolbar from Vendio’s servers. (See. Exh. 1; Exh. 2 at 2.) The links advertise bargains from merchants. If a user clicks on a link, the web browser navigates to a page on the merchant’s website, where the user may buy directly from that merchant. (See Exh. 1; Exh. 8 at 2; Exh. 4 at 3.) And Dealio software includes the accused search feature, allowing a user to search for bargains online. (See Exh. 1.) For links or searches on Dealio software to function, there must be a connection via the internet between the user’s computer and Vendio’s servers. (Exh. 2 at 2.) The links shown on Dealio software are typically refreshed once every fifteen minutes, based on a signal or “ping” that Dealio software transmits to Vendio’s servers. (See Exh. 1; Exh. 2 at 2; Exh. 5 at 4.) All users of Dealio software receive the same links; the offers linked on Dealio software are not customized from data received from users, except for when the search feature is used. (See Exh. 5 at 4.) Dealio software is available for free download from Vendio’s website. In order to use Dealio software, the user must register online and then activate the software on the user’s computer. (Exh. 2 at 2.) To register, the user need only provide a username, a password, and an e-mail address. Vendió thus does not request information about the physical location of Dealio software users. (See Exh. 1; Exh. 2 at 2.) One key factual dispute in this matter is whether Dealio software users are located in Minnesota. As there is no direct information from users regarding their location, the parties have looked at other ways to answer this question. One is premised on the assumption that, of downloads within the United States, a certain proportion is likely to be from Minnesota. Because recent census data indicates that 1.7% of the United States’ population are residents of Minnesota, and because about 225,000 domestic users have downloaded Dealio software, it may be estimated that about 3,800 users of Dealio software are residents of Minnesota. (Exh. 2 at 3; Exh. 5 at 3; Exh. 6 at 21, 29.) Another method is to track the physical location of users by looking at their IP addresses. From IP addresses that Vendió received when Dealio software users activated the search feature, Vendió determined that 389 residents of Minnesota used Dealio software over a two-month period. (See Exh. 5 at 4; Exh. 6 at 29; Exh. 7.) From this figure, it may be estimated that 2,300 Minnesota residents have used Dealio software in a year. And when this figure is compared with the previous estimate of downloads, it is reasonable to infer that Minnesota users of Dealio software number in the thousands, or at least are on that order of magnitude. Aside from usage of Dealio software itself, the parties raise some additional questions about the revenues that Vendió earns from the software. Because the software is available for free, Vendió does not directly generate cash from its users. The record implies that in certain circumstances, when a user activates the search feature — and then presumably purchases something — Vendió is directly paid a fee or commission. According to Vendió, it earned $700 in a two-month period as a result of such activity by Minnesota users. (Exh. 8.) This revenue, however, is apparently only part of the revenue that Vendió earns from Dealio software. Another source is derived from advertising by merchants whose links are displayed through Dealio software. A complicated series of transactions controls how this advertising is generated and how Vendió ultimately collects advertising-related revenues. Vendió does not directly acquire advertising from merchants. The merchants instead give the right to distribute such advertisements to brokers, which the record opaquely refers to as “affiliate program administrators.” These administrators evidently offer portfolios of advertising to websites or shopping utilities that display the links. No money changes hands, however, until a user clicks through a link and buys something from the merchant. After the sale, the merchant pays a commission to the affiliate program administrator, which in turn pays a share to the entity that actually displayed the link. (See Exh. 3 at 2, 5; Exh. 4 at 2-3; Exh. 6 at 11-12, 21.) The record indicates that Dealio software displayed links from two major retailers whose principal place of business is in Minnesota, among other large retailers with nationwide operations. These retailers have made their links available for distribution through affiliate program administrators whose operations are based in New York and California. So when users of Dealio software click through links and buy from Minnesota merchants, Vendió receives its commission from New York and California rather than from Minnesota. (See Exh. 6 at 11-12, 21.) The record does not meaningfully explain how these revenues, or similar commissions earned from other affiliate program administrators, may be connected to Minnesota. But Vendió contends that in 2007, its total revenue from Dealio software was $135,000. (Exh. 5 at 3.) It may be inferred that this figure includes earnings for both the search feature activity and for advertising commissions. And as noted earlier, only a tiny fraction of Dealio software users are Minnesota residents. From the small amount Vendió collected due to their search feature activity, it is reasonable to infer that a similarly small amount of advertising commissions can be connected to Minnesota users. Northbrook counters that Vendió has at least $300,000 in revenues, in 2007, which may be traced to customers in Minnesota. There is no reason to doubt that this figure is correct. (See Exh. 9.) But this accounting does not itemize what part of the revenues, if any, can be attributed to Dealio software as opposed to Vendio’s other business operations. II. ANALYSIS A. Personal Jurisdiction The initial question here is whether it is appropriate to exercise personal jurisdiction over Vendió. When examining personal jurisdiction in patent litigation, the law of the Federal Circuit applies. 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376 (Fed.Cir.1998). 1. Standard of Review Although the parties have not specified the standard of review in this context, it merits discussion here. According to case law from the Federal Circuit, the standard of review depends on whether the parties have conducted jurisdictional discovery and whether a party has requested an evidentiary hearing. As a general rule, where there is no jurisdictional discovery, the plaintiff need only make out prima facie evidence for personal jurisdiction, meaning that factual conflicts in the record are resolved in the plaintiffs favor. See Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1282-83 (Fed.Cir.2005); Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed.Cir.2003). The prima facie standard still controls when the parties provide documentary evidence beyond the allegations in the complaint. Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348-49 (Fed.Cir. 2003). But where jurisdictional discovery is complete and the parties advise that no evidentiary hearing is necessary, the plaintiff is put to proof and must show personal jurisdiction by a preponderance of the evidence. Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334 (Fed.Cir.2001). Northbrook has undertaken some jurisdictional discovery here, including limited time for deposition that this Court authorized by an order on January 18, 2008. Relying on information from this discovery, Northbrook argues there is personal jurisdiction over Vendió here. Neither party represents that jurisdictional discovery is complete, however, or advises that an evidentiary hearing is needed. Without further guidance from the parties, this Court concludes that the prima facie standard applies to the current motion. 2. General Principles A federal court cannot exercise jurisdiction over a nonresident defendant unless it has personal jurisdiction over that defendant. Two components are essential to personal jurisdiction: whether service may be accomplished under the long-arm statute of the forum state, and whether exercise of such authority comports with due process. Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed.Cir.2006). As Minnesota’s long-arm statute generally permits personal jurisdiction to the extent allowed by due process, these components merge and only the limits of due process are germane here. See Minn.Stat. § 543.19; Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359-60 (Fed.Cir.2001); Guinness Import Co. v. Mark VII Distributors, Inc., 153 F.3d 607, 614 (8th Cir.1998). To decide whether personal jurisdiction comports with due process, a court must evaluate whether the defendant has sufficient contacts with the forum state. There are two theories for determining the sufficiency of such contacts: general personal jurisdiction and specific personal jurisdiction. Each requires independent discussion here. 3. General Personal Jurisdiction Under the theory of general personal jurisdiction, the inquiry is whether the defendant has continuous and systematic contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416-18, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). It is not enough for the defendant to sell or distribute its products or services in the forum state, even where revenues from that activity are substantial. See id. at 416-18 (concluding that, where a helicopter servicing company earned over $4 million in seven years’ activity in forum state, contacts were not sufficient to establish general personal jurisdiction). There must also be extensive facilities for service or distribution within the forum state, which ordinarily consist of substantial premises or operations there. See LSI Indus. Inc. v. Hubbell Lighting, 232 F.3d 1369, 1375 (Fed.Cir.2000) (upholding general personal jurisdiction where defendant had millions in sales and a “broad distributorship network” in the forum state). The record shows that Vendió earns substantial revenues, at least $300,000 in 2007, from customers in Minnesota. But there is no indication that, to provide service for these customers, Vendió maintains ongoing business operations in Minnesota. Vendió has no premises located in Minnesota and it is not licensed to do business there. (Exh. 2 at 1.) Nor is there the sort of broad sales or distribution network that would establish systematic and continuous contacts. For these reasons, this Court concludes there is no basis to exercise general personal jurisdiction here. Cf. Hockerson-Halberstadt, Inc. v. Propet USA, Inc., 62 Fed.Appx. 322, 337 (Fed.Cir.2003) (ruling that $32,000 in internet sales to forum state was not enough to show general personal jurisdiction). 4. Specific Personal Jurisdiction For the theory of specific personal jurisdiction, it is sufficient for the defendant to have minimal contacts with the forum state, so long as the plaintiffs claim arises from those contacts. The Federal Circuit has formulated a three-part standard for determining whether the exercise of specific personal jurisdiction is appropriate, asking if (1) the defendant purposefully directed its activities at the forum state; (2) the plaintiffs claims arise from those activities; and (3) litigation of such claims in the forum state comports with fairness and substantial justice. Akro Corp. v. Luker, 45 F.3d 1541, 1545 (Fed.Cir.1995). a. Activities Directed at Forum State i. Internet Contacts and the Zippo Standard In the context of the current litigation, the first element of this standard largely depends on the quality of Vendio’s internet contacts with Minnesota. The Federal Circuit has yet to offer much guidance in this area. Cf. Multi-Tech Sys., Inc. v. VocalTec Communications, Inc., 122 F.Supp.2d 1046, 1049 n. 5 (D.Minn.2000). Perhaps the strongest indication may be taken from its decision in Trintec Industries, Inc. v. Pedre Promotional Products, Inc. 395 F.3d 1275 (Fed.Cir.2005). The court noted that a defendant advertised over the internet, but it did not analyze the impact of this fact, and instead remanded to the district court for jurisdictional discovery. Id. at 1281-83. But in dictum, the court mentioned a leading case on the internet and personal jurisdiction, the decision of the Western District of Pennsylvania in Zippo Mfg. Co. v. Zippo Dot Com, Inc. 952 F.Supp. 1119 (W.D.Pa.1997). The Zippo court proposed a sliding-scale standard for evaluating the quality of internet contacts. At the top of this scale, where personal jurisdiction is appropriate, are situations where a defendant is buying or selling over the internet. At the bottom, where personal jurisdiction is inappropriate, are situations where a defendant posts information but does not allow interaction by internet users. As the level of interactivity or commerce increases, however, it becomes more likely that internet activity will supply sufficient contacts for personal jurisdiction. Id. at 1224. There are several reasons that the Zippo standard is not entirely helpful here. One is that Zippo is sometimes criticized for focusing too much on the internet operations of the defendant, without examining the relationship between those operations and the forum state. See Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 452 (3d Cir.2003) (noting that post-Zippo decisions “have made explicit the requirement that the defendant intentionally interact with the forum