Are there established mechanisms to protect confidential information required to be disclosed/exchanged in the course of patent litigation (e.g. confidentiality clubs)?
Parties routinely agree “confidentiality club” arrangements, either in an agreement between the parties, or by formal court orders. Often the confidentiality club includes only external lawyers, patent attorneys and independent experts, but sometimes in-house lawyers may be included.
The Federal Court of Australia may make interim confidentiality orders over specific documents while proceedings are ongoing, and continuing confidentiality orders after trial, the latter requiring the confidentiality claim to be justified more rigorously.
Until recently, Austrian provisions did not provide for specific mechanisms in order to ensure the protection of confidential information during civil proceedings.
Only with regard to orders to provide evidence based on Secs 303-307, 369 CPC the law foresaw the right of the ordered party to refuse this order if the sought after evidence contained trade secrets. Furthermore, witnesses may refuse to testify if they otherwise have to reveal trade secrets (Sec 321 para 1 CPC).
However, there was no statuary possibility to ensure confidentiality vis-à-vis the other party regarding the information contained in evidence once the evidence was introduced to proceedings.
This was especially a problem regarding PIs requesting the seizure of evidence, since potentially large quantities of confidential information could be seized. However, since the Enforcement Directive required the protection of confidential information, the Austrian Supreme Court ruled that such information should be protected via ‘procedural measures’, but without specifying what these measures should be (Austrian Supreme Court from 30.08.2017, 1 Ob 75/17m).
However, at the beginning of 2019, the EU Directive on Know-How and Trade Secrets ((EU) 2016/943) was implemented and comprehensive procedural measures to protect trade secrets during civil proceedings were introduced in Sec 26h Austrian Unfair Competition Act. Based on this provision it is now, for example, possible that the trade secret is only fully disclosed to a court-appointed expert who then reports to the court and that a trade secret does not become part of the file which is accessible to the other party (in camera review).
However, there is no case law yet if this provision applies to all civil proceedings or only in proceedings where the infringement of trade secret is the subject matter. Nonetheless, due to the requirements of the Enforcement Directive to protect confidential information and the lack of other law on which this could be achieved, at least an analogous application with regard to PIs requesting the seizure of evidence is warranted.
Yes. The case can be considered under seal by the judge. Only parties and their attorneys will be able to access the dockets of the case.
Parties in Federal Court patent litigation have historically obtained Protective Orders from the Court on consent which place heightened restrictions on the parties with respect to the treatment of confidential information exchanged during the course of the litigation. These Orders have supplemented the general implied undertaking at common law which prohibits a party from using documents produced by the other parties for any purpose other than the proceeding within which they were produced. This practice, however, is currently in flux, and patent litigators are waiting for further clarification from the Federal Court of Appeal.
Additionally, a party can also seek a “Confidentiality Order” from the Court that would provide for the treatment of information as confidential before the Court such that it is not publically available.
According to Article 103 of Interpretations of Civil Procedural Law, evidence, which involves State secrets, commercial secrets, personal privacy or evidence to be kept confidential pursuant to the provisions of the law, shall not be cross-examined openly. In practice, parties of the case generally would claim that the evidence relates to trade secret and thus request the court not to hold a public hearing or public cross-examination.
Even if it was already an established practice, the Decree of 11 December 2018 in application of the Law of 30 July 2018 implementing the EU trade secrets Directive endorsed the mechanism to protect confidential information in the course of patent litigations.
For example, it is possible to request:
- the placement of pieces of evidence under escrow to ensure the protection of trade secrets, upon the decision of the judge;
- to restrain the communication of some pieces of evidence that contain trade secrets information to a strict number of persons (equivalent to the well-known clean team system);
- to restrict the number of persons accessing to the courtroom (Article L.153-1 of the French Commercial Code);
- to issue, upon request of a party, a redacted version of the judgment containing only the operative part and bearing the enforcement order.
Generally speaking, it is not possible to exclude a party from any information given during court proceedings in Germany. However, apart from the oral hearing itself, patent infringement proceedings in Germany are not public and it is very hard for third parties to inspect the files of such proceedings unless they are able to present a clear legal interest, which is rarely granted. Therefore, third parties are generally excluded from obtaining the files of patent infringement proceedings. However, the files of patent nullity proceedings can generally be inspected.
In any case, parties may request that specific confidential information shall be exempted from a file inspection.
By virtue of the Enforcement Directive 2004/48 which has been incorporated into the Greek patent law, the competent national court has the right to order the defendant to present evidence which is under his control, subject to the protection of confidential information.
There are following mechanisms through which confidential information required to be disclosed/exchanged in the course of litigation proceedings including patent litigation, as enumerated below:
- Confidentiality Club: While Courts in India, have allowed setting up of a 'confidentiality club' in the past, of particular significance is the recent order dated 24th October 2017 in Telefonaktiebolaget Lm ... vs Xiaomi Technology & Ors. The Court while referring to Section 103 of the Patents Act, 1970 which states that “..103 (3) If in such proceedings as aforesaid any question arises whether an invention has been recorded, tested or tried as is mentioned in section 100, and the disclosure of any document regarding the invention, or of any evidence of the test or trial thereof, would, in the opinion of the Central Government, be prejudicial to the public interest, the disclosure may be made confidentially to the advocate of the other party or to an independent expert mutually agreed upon”, has stated that the said section contemplates a situation where the disclosure of any document regarding the invention may be made confidentially only to an advocate or to an independent expert mutually agreed upon. The Court further laid down a procedure which may be adopted for establishing a confidential club, which broadly allowed access to confidential documents to not more than five lawyers (who are not and have not been in-house lawyers of one of the parties) and no more than three external expert witnesses. The documents would otherwise be filed in sealed cover and deposited with the Registrar General;
Thereafter, the same was introduced in Chapter VII rule XVII of the Delhi High Court Rules, 2018. Annexure F of the Delhi High Court Rules, 2018 lays down the detailed procedure for establishment of confidentiality clubs.
- In camera proceedings: Where an applicant desires that he be heard in Camera for the purpose of passing an ex-parte interim order, he shall file an application stating reasons thereof and the same is provided under Chapter X rule II of the Delhi High Court Rules, 2018.
- Sealed cover- One may even file an application before Court to have the confidential documents filed under sealed cover.
Confidentiality clubs may be agreed by the parties or ordered by the Court where the disclosure of certain information might give a competitor an unfair commercial advantage and are becoming a more common feature of the Irish litigation process. These impose restrictions on the discovery process by stipulating who on the opposing side can have access to the documents which are being disclosed, how documents may be copied, where they may be viewed and how the information they contain may be disseminated. In such cases, the court will typically direct that only the parties’ lawyers, and not the parties themselves, and their experts may inspect the documents. The lawyers and experts will also be required to undertake not to reveal the contents of the documents to their clients or other third parties.
As noted above, post-grant revocation proceedings are conducted before the Patent Office. When the revocation proceedings are conducted during pending court infringement proceedings, the Court will decide whether the revocation proceedings will proceed and whether to stay the court proceedings pending a decision by the Patent Office.
Traditionally, the tendency of the courts was usually in favour of staying the Patent Office proceedings and decide on both validity and infringement, unless the revocation proceedings were already at an advanced stage. However, some recent court decisions indicate a growing tendency toward surrendering validity issues to the Patents Registrar, based among others on the premise that the Patents Registrar is a specialized tribunal.
Briefs and documents filed by the parties, witness testimony, minutes and hearing protocols cannot be accessed by third parties. According to our rules of civil procedure, all third parties have access to is the judgment/decision and its content, once the latter is published.
While the above already ensures a certain degree of protection of confidential information exchanged or referred to by the parties during the proceedings, cases where the need to shield confidential information exists as opposed to the other parties of the proceedings, or cases that the judge cannot decide but by making reference to such confidential information in the text of the judgment call for additional protection.
The institution of “confidentiality clubs” and the adoption of measures suitable to conceal or redact the text of the judgment/decision in the parts referring to the confidential information are common practices in our courts.
These practices are now the subject of statutory provisions, adopted as part of the implementation of EU Directive 2016/943 (Trade Secrets Directive).
Along with a general provision requiring judges to take all appropriate measures and steps for the protection of confidential information, those statutory provisions specifically contemplate the judge’s power to restrict access to all documents on file to certain persons only, and order that the decisions/judgments be redacted in those parts that the judge will specifically identify as containing or referring to confidential information of the parties.
Unlike in other jurisdictions, the above measures are not adopted by virtue of a formal agreement entered into between the parties, but imposed by the judge by means of an order/decree.
According to a literal interpretation of the above mentioned statutory provisions, the above measures should available only in proceedings concerning the breach or violation or infringement of confidential information/trade secrets. Nevertheless, there seems to be no reason why the same measures should not apply to patent infringement proceedings by analogy, in the extent to which reference to trade secrets is relevant to establish patent infringement.
In general, a petition for restriction of inspection, etc. is often employed. When the court makes a determination for such restriction, third parties are not permitted to have access to the part of the case record regarding which the determination for such restriction has been made. In this regard, a restriction on inspection, etc. does not impose a confidentiality obligation on the parties and therefore cannot prevent any of the parties from disclosing the case record to third parties. There is also the system of confidentiality protective orders which can be made against parties; however, it is quite rare, in the practice in Japan, for a confidentiality protective order to be issued.
Under the Norwegian Civil Procedural Act the Court may order that information that is disclosed/exchanged in the course of a patent litigation shall be treated as confidential. This will imply that a duty to treat the information as confidential is imposed on the Parties and their representatives and the Court may also order that only a limited and predetermined circle of people representing a Party shall have access to the information.
There are no mechanisms which would fully guarantee the protection of the confidential information disclosed/exchanged in the course of patent litigation. The regulation of that aspect is very limited and covers confidentiality of court files towards third parties and a possibility of closing a hearing for the public.
On the other hand, all information and evidence which may be taken into account by the court must be made available to all parties, their representatives, attorneys and experts and there are no legal measures to prevent such information or evidence from being disclosed to the opponent. In case of process patents and the reversed burden of proof described above, the law vaguely says that when taking the opposite evidence, the defendant's legitimate interest in the protection of his production and trade secrets should be taken into account. There are, however, no procedural mechanisms that would allow preventing such evidence from being disclosed to the plaintiff.
The IPC has recently transposed Directive (EU) 2016/943 and the confidentiality measures provided therein are now expressly provided for in the IPC (since 1 January 2019). There is still no relevant case law on the matter.
Part 2 Article 11 of the Arbitration Procedural Code states that the Court may satisfy a request for consideration of the court case in a closed hearings, if a requesting party shows, that some evidence may comprise trade secret or other confidential information. If the court declares hearings procedure as a closed procedure, the parties bear the obligation not to disclose and not to use without proper authorization the confidential information discussed in the closed hearings. The decision or other court ruling on such cases is not published, if it contains confidential information. Such mechanism operates effectively in Russia in patent disputes.
The parties to the proceedings are subject to an implied undertaking not to use the documents disclosed during the discovery process and the information obtained thereon for a purpose other than pursuing the action in respect of which discovery is obtained. This is known as the Riddick principle.
Parties may agree on other forms of confidentiality undertakings beyond the Riddick principle:
(a) The parties may consider subjecting the disclosure of documents to a Non-Disclosure Agreement (“NDA”). The NDA may be executed prior to the exchange of the lists of documents pursuant to general discovery; and/or
(b) The parties may consider forming a confidentiality club to protect the confidential information about the patent in suit and/or the allegedly infringing product. Members typically comprise the parties’ representatives, lawyers, appointed expert witnesses, and whoever the parties deem necessary to include. The members will sign the necessary confidentiality undertakings before the disclosure of the abovementioned confidential documents. Where these confidential documents are used in Court, they are typically collated into a confidential bundle that is only available to the members of the confidentiality club. The Court session will also be conducted in camera. The terms of the confidentiality undertakings generally include personal indemnity clauses in the event of a breach of the said undertakings.
When a party is requested to submit evidence by the opposing party but the requested party has justification to refuse the request and the information to support such justification is confidential, the court will review the information without disclosing it to the requesting party to determine whether or not the submission of such information should be ordered. Further, if the evidence submitted (voluntarily or upon the court’s order) is confidential, the court may, upon the disclosing party’s request, designate the scope of disclosure and/or individuals allowed to access such evidence.
As a main rule, everything submitted to the court becomes public and can be obtained by third parties. Trade secrets submitted to the court may be kept confidential there but will be disclosed to the other party and its counsel. There is a liability in damages for the use or disclosure of trade secrets obtained in court proceedings and the court has the power to order restrictions relating to the documents but cannot prevent the other party from learning the contents of them.
The parties can request that their manufacturing and trade secrets be safeguarded. In particular, evidence which would disclose such secrets may be made available to the counterparty only to an extent compatible with safeguarding the secrets. For instance, it is possible that confidential information is only disclosed to the party representatives who, however, may not disclose such information to the parties.
Under Taiwan IP law practice, a protective order is available for those materials that contain trade secrets of a party of a patent litigation or of a third party. The IP Court will issue a protective order only if the moving party has established that certain materials are required to be disclosed in the patent infringement proceeding but contain trade secrets of the moving party or a third party. The IP Court will usually grant a protective order upon attorneys for the party who will have access to those confidential materials. Upon being subject to a protective order, one is prohibited from disclosing the protected materials to anyone who are not subject to the same order. Violations will result in criminal liabilities.
A party may submit a petition requesting the court to impose a mechanism to protect confidentiality of information or to seal certain evidence or records.
Normally, all documents submitted to the court file are open to the counterparty, and parties are entitled to obtain copies of the documents. If a party has a request of confidentiality, the judge takes this request into consideration initially. In case such request is accepted, the relevant document is kept in the court’s safe, and may only be examined by the counterparty with the judge’s permission at the court’s premises limited to the scope of due process, i.e. for ensuring the right to defence.
The general rule under CPR 31.22(1) is that a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it has been disclosed unless:
- that document has been read to or by the court, or referred to, at a hearing that has been held in public;
- the court gives permission; or
- the party who disclosed the document and the person to whom the document belongs agree.
However, the court may make an order restricting or prohibiting the use of a document that has been disclosed, even where the document has been read to or by the court, or referred to, at a hearing that has been held in public (i.e. an order under CPR 31.22(2)). Any party or any person to whom the document belongs may seek such an order.
In addition to CPR 31.22(2) orders, there are a number of additional measures that the parties can use (as appropriate to the proceedings) to protect confidential information:
- Confidentiality clubs – commonly used, confidentiality clubs are formed by way of written agreement between the parties to the litigation setting out who can have access to confidential documents disclosed in the proceedings, and under what terms. The provisions of the confidentiality club agreement typically contain requirements and restrictions relating to access, storage, labelling, copying, reproduction and destruction of the relevant confidential information, alongside requirements as to court orders that must be sought in respect of the confidential information (such as under CPR 31.22(2) and CPR 5.4C(4)). Where confidentiality is a major concern, for example in relation to very sensitive technical information, access to confidential information may be restricted to the opponent’s legal team.
- Pro tem confidentiality order – another mechanism for protecting the confidentiality of information disclosed among parties to the litigation is the use of a pro tem confidentiality order - an order agreed in many cases by the parties and sealed by the court.
- Sealing the court file – the general rule is that third parties that are not parties to the litigation may obtain copies of the statements of case filed at court under CPR 5.4C, but not the accompanying attachments or documents served with it. Third parties can nevertheless apply to the court for permission to obtain these additional documents and any other document filed by a party or communication between the court and a party or another person. However, any party or person identified in a statement of case may apply to the court for an order that non-parties may not obtain a copy of a statement of case, that only certain persons (or classes of persons) may obtain a copy thereof, or that persons or classes of persons may only obtain a copy of a statement of case if it is edited in accordance with the directions of the court. Whilst parties to court proceedings sometimes attach a confidential schedule to a statement of case, it is often considered safer to apply to the court to restrict access as described above.
- Hearings in private (‘in camera’) – whilst the general rule is that hearings should be held in public, CPR 39.2 allows part or all of a hearing to be held in private for reasons of confidentiality if and to the extent that the court considers that it must be held in private in order to secure the proper administration of justice and that publicity would damage the confidential information.
- Injunctions – a party may apply for an injunction preventing the use of confidential information at any time, provided there is no other remedy that could adequately compensate for the harm that would be suffered but for the injunction. Further detail on the requirements for obtaining an injunction is set out below.
Confidential documents are typically produced pursuant to a “protective order” entered by the court. The protective order regulates who may access such documents and under what conditions. Most courts have a standard protective order, but these orders can be modified through negotiation between the parties and to address the particular needs of a case. Typically, the party seeking to protect their material must ensure that it is appropriately marked, and the party receiving the material must ensure access is limited as described in the protective order. Different levels of protection are usually available for different levels of confidential material. In addition, aligned parties (e.g., multiple co-defendants) may enter common interest agreements, which can provide protections for confidential and/or privileged information shared with each other.
There is no effective mechanism to protect confidential information during court proceedings. However, the concerned parties can call on the court to keep the disclosed information strictly confidential from the public. The parties can call for a secret trial (not open to the public).