This is an appeal by Heat & Control, Inc. from a May 22, 1985, order of the United States District Court for the Northern District of West Virginia, 1 quashing a deposition subpoena issued by the same court on February 8, 1985. We vacate the order and remand the case to the district court for further proceedings.
BACKGROUND
Heat & Control’s patents relate to an apparatus (a convection oven termed a “counterflow oven” (“CFO”) by the parties) and method for cooking solid food products in circulating steam. 2
Hester Industries, Inc. (“Hester”) is a small corporation in Moorefield, West Virginia (within the jurisdiction of the Northern District of West Virginia), which commercially processes chickens. The processing includes cooking and freezing. Stein Associates, Inc. (“Stein”) manufactures and sells CFOs.
When Heat & Control’s oven and process inventions were being developed in 1972-73, an employee, Loew, was privy to information concerning the design, construction, and operation of Heat & Control’s oven. Loew’s employment was subsequently terminated, and he thereafter formed a company which manufactured ovens for commercial use. Hester contracted with Loew to manufacture, at its request, steam-circulating ovens. However, before they were manufactured, Loew’s business went bankrupt. Hester then contracted with Stein, who purchased the assets of Loew’s company (including the drawings and designs for the Hester oven), to construct the oven designed by Loew. In 1982, Stein manufactured two CFOs, which were delivered and installed at Hester’s plant. Both allegedly infringe Heat & Control’s patents.
Stein filed a declaratory judgment action against Heat & Control in the United States District Court at Toledo, Ohio. Heat & Control counterclaimed for infringement, and the action was later transferred to the United States District Court at San Francisco, where it is now pending. Stein seeks,
inter alia,
to have declared invalid Heat & Control’s patents. A preliminary skirmish in the form of an appeal taken by Stein from an interlocutory order of the California District Court, denying Stein’s motion for a preliminary injunction, is reported at
Heat & Control sought discovery, in the United States District Court in West Virginia, from Hester concerning the operation of the CFOs it purchased from Stein. In February, 1985, Heat & Control was issued a subpoena by the district court for deposition of Hester’s officers and production of documents related to the allegedly infringing ovens.
Hester filed a motion to quash and both in its memorandum in support and at the hearing on the motion, argued that (1) the information sought constitutes proprietary trade secrets, the disclosure of which would seriously harm its business and (2) that the information sought was more conveniently available from other sources. Hester moved and argued in the alternative for a protective order under Fed.R.Civ.P. 26(e). Heat & Control opposed the motion to quash the subpoena, asserting that discovery was relevant and necessary to the main (infringement) suit pending in California, because Heat & Control needed to *1020 know the operating conditions in order to determine whether they fall within the Heat & Control patent claims and to assess damages if the ovens infringe. Counsel for Heat & Control also suggested to the court the issuance of a protective order.
The hearing on the motion to quash was held by a conference call on May 3, 1985. After the parties had argued, the court concluded the hearing by vacating the subpoena. The court stated that, on a matter ancillary to the main litigation in another forum, it should be hesitant to decide what constitutes relevant evidence under Fed.R. Civ.P. 26(b)(1). It analyzed Fed.R.Civ.P. 26(b)(1), as amended in 1983, and concluded that the rule requires that “use of discovery methods ... be limited by the court if it determines the discovery is obtainable from some other source that is more convenient and less expensive and less burdensome.” Although the court recognized the possibility of granting a protective order under which discovery could proceed, as an alternative to the grant of the motion to quash, it did not fully explore that possibility-
In its order to quash, the court stated that the information sought by discovery could be obtained from other sources more conveniently, less burdensomely, and less expensively; that the deposition posed a serious threat to the “processes” of Hester; and that Hester had shown good cause to have the subpoena vacated.
ANALYSIS
A. Jurisdiction and Appealability
The jurisdiction of the West Virginia district court is based on 28 U.S.C. § 1338. Subject matter jurisdiction in this court under 28 U.S.C. § 1295(a)(1) is not contested by the parties. However, generally an appellate court lacks jurisdiction to review an order granting a motion to quash a subpoena, because the order would be reviewable for error after final judgment on the merits.
Title 28 United States Code, section 1295 (with pertinent language identical to that found in 28 U.S.C. § 1291 covering appeals from the geographical circuits), provides that “[t]he United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction — (1) of an appeal from a
final
decision of a district court” in a case involving a patent (emphasis supplied).
Panduit Corp. v. All States Plastic Co.,
Appealability of orders is not decided by rote.
Horizons Titanium Corp. v. Norton Co.,
[T]he order must [1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be *1021 effectively unreviewable on appeal from a final judgment.
Coopers & Lybrand,
A discovery order incident to a pending action is ordinarily not subject to appeal, and an order quashing a subpoena is typically not a final judgment.
Ariel v. Jones,
Prior to creation of the Federal Circuit, an order by the West Virginia district court quashing a subpoena for discovery would have been appealable to the Fourth Circuit, as is now the procedure where the order is not related to a patent infringement case. Because such an order is appealable as a final disposition of the only proceeding in the ancillary court, we are satisfied that it does not matter that the Federal Circuit is the same appellate court that would possess jurisdiction over an appeal from the California district court’s final action on the merits. The California court has no jurisdiction over Hester, a nonparty to the main infringement action, and Heat & Control has no other means of effectively obtaining review than by appealing the West Virginia court’s order, necessarily to this court. Thus, the West *1022 Virginia court’s order is appealable, and this court possesses jurisdiction to hear it.
B. Propriety of the Order Quashing Subpoena 4
1. Standard of review
Hester argues (and Heat & Control controverts) that Heat & Control has the burden of proving that “clearly erroneous” findings of fact leading to the judgment were made “leaving this Honorable Tribunal with the definite and firm conviction that a mistake has been committed.” In support, Hester cites this court’s opinion in
Raytheon Co. v. Roper Corp.,
An abuse of discretion occurs when (1) the court’s decision is “clearly unreasonable, arbitrary or fanciful”
(Northrop Corp.,
2. The District Court’s Order
The Order of the district court stated, inter alia,
*1023 1. That the discovery sought by the defendant of Hester Industries, Inc., can be obtained from other sources that are more convenient, less burdensome and less expensive;
2. That the deposition poses a serious threat to the processes of Hester Industries, Inc.;
3. That good cause has therefore been shown by Hester Industries, Inc., for the vacating of said subpoena;
4. That the subpoena to depose Hester Industries, Inc., which is dated February 8, 1985, and which was served on Hester Industries, Inc., on February 14, 1985, is hereby vacated and Hester Industries, Inc., shall not be required to submit to said deposition.
During the hearing on Hester’s motion, the court stated that it, as a court ancillary to another in which the main action was progressing, should be “especially hesitant” in determining what constitutes relevant evidence under Fed.R.Civ.P. 26(b)(1) 6 in light of the 1983 amendment to the rule. 7 The court recognized that it must balance the inconvenience and costs of piecemeal review against the danger of denying justice by delay and concluded that other sources of the information possessed by Hester “would be not only more convenient for the discovery process, but would be less burdensome for all of the parties and would certainly be much less expensive for all of the parties.” Also, it emphasized its concern for Hester’s business should the company’s valuable trade secrets be disclosed.
Heat & Control argues that the district court abused its discretion and erred in concluding (1) that Hester carried its burden to demonstrate that the subpoena was unreasonable and oppressive, (2) that the information sought could be obtained from other sources, and (3) that Hester’s trade secrets warranted absolute protection from discovery (without explaining how this could be done if the information was obtained from other sources).
Under Fed.R.Civ.P. 45(b)(1), a district court may quash or modify a subpoena if it finds that to grant such discovery would be “unreasonable and oppressive.”
Ariel,
Made explicit in the first sentence of Rule 26(b)(1) is the policy that, generally, discovery is to be sufficiently broad to reach “any matter, not privileged.”
Deitchman,
The commentators state that “[t]he objective is to guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry.” With respect to Rule 26(b)(l)(i), the commentators note that it “is designed to minimize redundancy in discovery and encourage attorneys to be sensitive to the comparative costs of different methods of securing information.” However, the commentators caution that “the court must be careful not to deprive a party of discovery that is reasonably necessary to afford a fair opportunity to develop and prepare the case.” Fed.R.Civ.P. 26(b)(1) Notes of Advisory Committee on Rules, 1983 Amendment. Thus, the factors required to be balanced by the trial court in determining the propriety of a subpoena are the relevance of the discovery sought, the requesting party’s need, and the potential hardship to the party subject to the subpoena.
Deitchman,
Hester contends that Heat & Control has not demonstrated that the information it seeks is relevant. Relevance under Rule 26(b)(1) has been construed more broadly for discovery than for trial.
Centurion Industries, Inc.,
The information sought from Hester regarding the CFOs and their operation appears to be highly relevant to Heat & Control’s infringement action. Moreover, facts regarding Hester’s activity in the design and development of the CFO and its purchase and operation of the first and original version of the CFO from Stein would appear to be uniquely available from Hester. Heat & Control has alleged in its infringement action that Stein had actual knowledge of Heat & Control’s patents through Loew, Heat & Control’s trusted employee during the period it designed and developed the CFO and process of the patents in suit; that Loew was provided with confidential designs, specifications, and drawings of Heat & Control’s oven and process; that after Loew’s termination, he was requested to return the confidential documents, but did not do so;, and that Loew “embarked upon a program of designing equipment, including the infringing CFO oven which was designed by Mr. Loew for STEIN, using the confidential technical and business information of H & C.”
Although Hester argues that this information is available from other sources, it has not supported the argument with specific evidence. No other purchaser of a CFO appears to have participated in the production of the CFOs as Hester did. Moreover, even if similar information were available from other purchasers, 10 use of the discovery rules avoids the necessity of pursuing each alleged infringing purchaser in the hopes that one would provide the information necessary to support the allegations of infringement against the seller. Accordingly, we conclude that, on the record before us, the district court’s determination that the information in the posses *1025 sion of Hester is available from other sources is erroneous.
Hester argues that the discovery, should it be permitted, would destroy its commercial viability by indiscriminately revealing to the market its trade secrets, so that the subpoena is “unreasonable and oppressive.” Hester argues further that Heat & Control has not demonstrated that the information it seeks, in the nature of trade secrets, is necessary; also, that the discovery requested by Heat & Control is too extensive and unmanageable for a company the size of Hester. The burden of proving that a subpoena is oppressive is on the party moving to quash and is a heavy one.
Northrop Corp.,
In Centurion Industries, Inc., a leading case on discovery involving trade secrets, the Tenth Circuit stated:
“[Tjhere is no absolute privilege for trade secrets and similar confidential information. To resist discovery under Rule 26(c)(7), a person must first establish that the information sought is a trade secret and then demonstrate that its disclosure might be harmful. If these requirements are met, the burden shifts to the party seeking discovery to establish that the disclosure of trade secrets is relevant and necessary to the action, The district court must balance the need
for the trade secrets against the claim of injury resulting from disclosure. 6 If proof of relevancy or need is not established, discovery should be denied. On the other hand, if relevancy and need are shown, the trade secrets should be disclosed, unless they are privileged or the subpoenas are unreasonable, oppressive, annoying, or embarrassing.
We agree with the Tenth Circuit and we believe that, should the Fourth Circuit speak, it would also follow the logical approach of the Tenth Circuit on this issue: that the selective disclosure of protectable trade secrets is not per se “unreasonable and oppressive” when appropriate protective measures are imposed.
We are satisfied, as indicated above, that the information sought by Heat & Control is relevant and necessary, although the district court is required to balance those factors with the potential hardship to Hester should the information sought be provided Heat & Control. Hester, however, has not thus far established that the discovery Heat & Control seeks would be burdensome to it. Moreover, we are not persuaded that Hester has sufficiently described the nature of the trade secrets it desires to protect to warrant total nondis *1026 closure, 12 or has shown why a proper protective order would not adequately protect its trade secrets. In view of the foregoing, we hold that the district court abused its discretion by failing to seek accommodation of the interests of the parties as required by the Federal Rules.
The order quashing the subpoena is vacated and the case is remanded to the district court for further proceedings in accordance with this opinion. If the court determines that Heat & Control is entitled to discovery, the court may impose any limitations or conditions upon discovery that it deems appropriate, including the issuance of a protective order.
VACATED and REMANDED.
Notes
. Stein Associates, Inc. v. Heat & Control, Inc., No. Misc. 85-313-E (N.D.W.Va.1985).
. Patent Nos. 3,947,241, issued March 30, 1976, and 4,167,585, issued September 11, 1979, both to Caridis and Benson.
. The First Circuit has recently interpreted
Cohen to
mandate a fourth criterion for appealability: that the order "must present a serious and unsettled question.”
In re San Juan Star Co.,
. On questions relating solely to procedural matters, such as this, that do not directly address issues of patent law, the Federal Circuit has consistently held that the policies promoting certainty in the law and
stare decisis
mandate that the court follow the law of the regional circuit.
Panduit Corp.,
. We have found few cases that so define an appellant’s burden for overturning a district court's decision on a discovery matter.
E.g., Horizons Titanium Corp.,
. This rule is set forth in note 7, infra.
. The relevant portion of Rule 26 is set forth below, with the additional language from the 1983 amendment underscored:
(b) Discovery Scope and Limits. Unless otherwise limited by order of the court in accordance with these rules, the scope of discovery is as follows:
(1) In General. Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery____ It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.
The frequency or extent of use of the discovery methods set forth in subdivision (a) shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive____
. See note 11, infra.
. “[T]he Federal Rules ‘permit the broadest possible scope of discovery and leave it to the enlightened discretion of the district court to decide what restrictions may be necessary in a particular case.’ ” (Citations omitted.)
. The position Hester takes with respect to this information is inherently contradictory. How can information, for which Hester claims trade secret protection, see infra, be at the same time available from other sources? We need not address this paradox in light of our discussion and holding.
. At least one circuit has concluded that "good cause” requirement Rule 26(c)(7) is satisfied by facts supporting the "relevance and need” standard in former Rule 30(b).
Centurion Industries, Inc.,
"The need for accommodation between protecting trade secrets, on the one hand, and eliciting facts required for full and fair presentation of a case, on the other hand, is apparent. Whether disclosure should be required depends upon a weighing of the competing interests involved against the background of the total situation, including consideration of such factors as the dangers of abuse, good faith, adequacy of protective measures, and the availability of other means of proof.” Advisory Committee Note to Rule 5-08 of the proposed Federal Rules of Evidence, 46 F.R.D. [161] at 271.
. See note 10, supra.
