Court Refuses To Seal Information on Patent Owner’s Valuation and Licensing Activities Because the Public Had a Compelling Interest in the Information

Abstract

A California judge refused to seal documents in a dispute on expert testimony that related to a patent owner’s patent valuation and licensing activities because the public’s compelling interest in the information outweighed any impact on the patent owner’s future licensing negotiations.

Background

On the eve of a patent-infringement trial, the trial court excluded testimony from a damages expert and permitted public access to information on the patent valuation and licensing activities involved in the case.

On appeal, the Federal Circuit asked the trial court to reconsider its findings and balance the interests of the patent owner and its negotiation partners against the public’s interest in having access to information on the patent valuation and licensing activities involved in the case. But the trial court again permitted public access to information on the patent valuation and licensing activities involved in the case.

The Finjan Decision

Documents and other information submitted to a court in a litigation are generally available to the public, but the parties may ask the court to consider sealing certain confidential information so that it is not publicly available. The court has discretion in deciding whether to seal documents, and dealing with sealed documents creates administrative challenges in conducting the litigation. So, documents are not routinely sealed.

While a court order making the documents available to the public would not completely dispose of the case, the court found no compelling reason to seal the documents that outweighed the public interest in disclosure of the documents. The court used the standard of “compelling cause” to seal rather than “good cause,” because the issue was more than tangentially related to the merits of a case. However, while such orders to seal documents or exclude expert testimony may not technically dispose of the case, they can effectively shape the result of the case by preventing a party from providing expert testimony supporting their cases on critical issues like the amount of damages awarded.

The court found that disclosing information on patent valuation and licensing negotiations would not compromise the leverage of a patent owner in future negotiations or dissuade potential licensees who might be wary of confidentiality concerns. No potential licensees asserted any confidentiality interest despite having the opportunity to do so.  The public was entitled to know about patent-assertion activities because patents involve public rights granted by the government and the public has a strong interest in seeing how such patent grants impact commerce, as they affect patent marking by licensees, validity of patented inventions, and setting reasonable royalties.

Strategy and Conclusion

Litigation can cause confidential documents to become available to the public. Judges have discretion in determining whether to seal such documents from disclosure, but often do not seal confidential documents because the public is interested in the information and sealing the documents causes administrative burdens to the court during the trial.

Further Information

The Finjan decision can be found here.