Key Points

• Courts may craft a Discovery Confidentiality Order (DCO) to permit disclosure to in-house attorneys where appropriate safeguards and limitation of access do not create an unacceptable opportunity for inadvertent disclosure.
• Efficiencies gained by plaintiff’s unfettered cross-sharing of defendants’ confidential information are generally outweighed by loss of defendants’ individual ability to control disclosure of their confidential information, in particular among direct competitors.

Crafting a Discovery Confidentiality Order

A patent holder's senior IP officer may serve as an in-house designee authorized to receive competitors' confidential discovery materials if robust safeguards are in place, a New Jersey federal magistrate judge has ruled. But that patent holder cannot freely share one defendant group's confidential information with competing defendant groups without consent, the Court ruled.

In his May 20, 2026 decision in In re Viloxazine, U.S. Magistrate Judge Michael A. Hammer addressed two recurring flashpoints in multi-party Hatch-Waxman litigation: who inside a company gets to see what, and whether consolidated proceedings justify cross-disclosure among competitors.

The disputes arose during the parties’ efforts to agree upon and draft a Discovery Confidentiality Order (DCO) in patent litigation involving Supernus’s ADHD drug Qelbree®. Such disputes are not uncommon, as parties are justifiably concerned about limiting disclosure of their confidential information, and we have written about them before here and here.

Eight Defendant Groups

The consolidated actions in In re Viloxazine involve patent infringement claims under the Hatch-Waxman Act brought by Supernus Pharmaceuticals, Inc. (Supernus) against eight groups of defendants, referred to by the Court as Appco, Apotex, Aurobindo, Zydus, Creekwood, MSN, Zenara, and Macleods.

The defendant groups each filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to market generic versions of Qelbree® (viloxazine extended-release capsules), an FDA-approved treatment for ADHD in adults and children aged 6 and older.

In-House Designee

The first dispute concerned whether Supernus could designate Dr. Padmanabh P. Bhatt, its Senior Vice President of Intellectual Property and Chief Scientific Officer, as an in-house designee authorized to receive confidential discovery materials under the DCO.

All defendants except Apotex consented to this designation. Apotex argued that Dr. Bhatt's status as a named inventor on several asserted patents and his participation in related patent prosecution created an unacceptable risk that confidential information could compromise his testimony or influence future work.

Apotex further noted that Dr. Bhatt is not an attorney and therefore is not subject to professional disciplinary rules governing misuse of confidential information.

Supernus countered that Dr. Bhatt had received confidential information in prior cases without any issues, does not participate in competitive decision-making but rather oversees litigation (and has overseen all of Supernus’ patent litigation for over a decade without incident); that he will not participate in patent prosecution related to the case; and that his access to confidential material would be limited to defendants’ ANDAs and related technical materials.

The Court rejected Apotex's arguments and permitted Dr. Bhatt to serve as Supernus's in-house designee.

In reaching this conclusion, the Court applied the "good cause" standard under Federal Rule of Civil Procedure 26(c) and Federal Circuit law (as defendants sought to include a patent prosecution bar in the DCO), under which the party seeking to restrict disclosure must demonstrate that disclosure would result in a specific and serious injury. The Court explained that the “central question is whether Bhatt’s access to Apotex’s confidential materials would pose an unacceptable opportunity for inadvertent disclosure.”

The Court identified several factors that minimized the risk of inadvertent disclosure. First, Dr. Bhatt's role was limited to overseeing and managing Supernus's patent litigation and coordinating with outside counsel — functions akin to litigation management rather than competitive decision-making. Second, Supernus agreed to a broad patent prosecution bar, preventing Dr. Bhatt from prosecuting any patents relating to this action. Third, Dr. Bhatt's access was limited to Apotex's ANDA and related technical materials; he would not have access to Apotex's confidential business or commercial information. Fourth, Dr. Bhatt had previously served as Supernus's DCO designee in numerous patent litigations without incident, and seven of the eight defendant groups had consented to his designation (including Apotex itself in a prior case under substantially similar circumstances).

The Court found the safeguards analogous to those found sufficient in British Telecommunications PLC v. IAC/InterActiveCorp, 330 F.R.D. 387 (D. Del. 2019), where an in-house attorney was permitted access to highly confidential information when his role was limited to litigation supervision and he was barred from patent-prosecution or patent-selection decisions.

The Court concluded that the balance weighed in favor of permitting the designation, given the minimal risk of disclosure and the substantial burden that exclusion would impose on Supernus's ability to manage its litigation.

Cross-Disclosure Among Defendants

The second dispute centered on whether Supernus should be able to share one defendant group’s confidential information with another without first obtaining the producing defendant group’s consent.

Defendants proposed DCO provisions requiring Supernus to redact the confidential information or seek the producing defendant’s consent before disclosure. Defendants argued this was necessary because otherwise defendants would have no ability to control the dissemination of their own information, and the defendant groups are direct competitors.

Supernus proposed that it should be able to share such material without first obtaining the producing defendant's consent. Supernus argued that because the consolidated actions involve overlapping issues, cross-disclosure would promote judicial efficiency and avoid unnecessary burdens on the Court and parties.

The Court ruled in favor of the defendants, holding that the DCO must require the producing defendant's consent before cross-disclosure of that defendant's confidential information to other defendant groups. The Court emphasized that the defendant groups are direct competitors, and the confidential materials at issue — including information relating to ANDA products, product formulation, development processes, and FDA review status — present a meaningful risk of competitive harm if shared among them without consent.

Allowing unrestricted sharing, the Court reasoned, would “effectively eliminate the producing Defendant Group's ability to control dissemination of its own confidential information and could expose sensitive competitive data to direct market competitors.”

The Court found that Supernus's efficiency arguments did “not outweigh these confidentiality concerns,” noting that the “burden of redacting documents or seeking consent does not significantly impede litigation and is consistent with the purpose of a confidentiality order[.]” The Court further observed that Supernus had not demonstrated that one defendant group's confidential information was necessary for another defendant group to litigate its claims or defenses.

While the Court acknowledged that certain confidential information might be relevant across defendant groups, it concluded that such sharing is better handled on an individual, case-by-case basis rather than through wholesale distribution.

The parties were ordered to submit a revised Discovery Confidentiality Order consistent with the Court's rulings within 14 days.

Paul W. Kalish and Jonathan J. Madara are members of the IP Litigation team in Fox Rothschild’s Princeton, NJ office and write about patent litigation decisions in the District of New Jersey. Contact Paul at pkalish@foxrothschild.com or 609.895.6751 and Jonathan at jmadara@foxrothschild.com or 609.844.7428.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.