The Software IP Report

Federal Circuit Reverses Decision to Unseal Documents in Apple-Samsung Litigation

By Charles Bieneman
08/24/2013

Categories: Patent Civil Procedure, Software Patents, The Software IP Report

The Federal Circuit has reversed District Judge Koh’s order that certain confidential documents of both Apple and Samsung be unsealed in those parties’ high-profile patent litigation. Apple, Inc. v. Samsung Electronics Co., Ltd., Nos. 1012-1600, 1606, 2013-1146 (Fed. Cir. Aug. 23, 2013). Because filing papers under seal is such a routine part of patent (and other) litigation, this decision would undoubtedly attract attention even if it had not come in such a notorious case.

Because this was an incredibly high profile case, the district court “agreed to seal only a small number of trial exhibits.” After ordering certain documents unsealed, the court ordered the parties to immediately appeal, which they did, although only with respect “to a small subset of exhibits.” As the Federal Circuit, in the opinion by Judge Prost, noted, this case was unusual in that the litigants did not oppose each other’s appeals, although several journalist organizations did.

In general, each of the parties sought to protect confidential business and technical information. Documents that the district court ordered unsealed included “the parties’ product specific profits, profit margins, unit sales, revenues, and costs, as well as Apple’s own proprietary market research reports and customer surveys and the non-price terms of licensing agreements.”

As an initial matter, the court decided that it had jurisdiction even though the current appeals were not from a final decision of the trial court. Under the “collateral order doctrine” in the Ninth Circuit, appeal is permitted as to “rights that will be irretrievably lost in the absence of an immediate appeal.” Here, the district court’s order “conclusively determined” that the parties’ documents would be made public, the question of whether to seal the documents was “an important issue completely separate from the merits of the action,” and would have been “unreviewable on appeal from a final judgment.”

Because the question here was not one of substantive patent law, Ninth Circuit law applied. In the Ninth Circuit, review of orders regarding ceiling or unsealing court records was conducted de novo under a “clearly erroneous” standard of review.

The court began by acknowledging the historical recognition of the public’s right to inspect and copy court documents. Thus, although the public’s right was not absolute, there was a strong presumption that public access should be permitted. Infringement of trade secrets was one thing that could overcome this strong presumption. Also, the Ninth Circuit recognized an exception when records sought to be sealed had been attached to a non-dispositive motion. In that case, a showing of good cause would be sufficient to preserve documents’ secrecy.

The district court recognized the Ninth Circuit’s rule concerning non-dispositive motions, but then, Judge Prost stated, erroneously applied a “compelling reasons” standard for overcoming the presumption against sealing documents. Nonetheless, even under this incorrect standard, the Federal Circuit found reasons to reverse.

Most of the documents at issue “were filed as exhibits in support of or in opposition to Samsung’s Daubert motions to exclude the opinions of certain of Apple’s experts, in large measure by the nonproducing party,” or other non-dispositive motions. However, there were two Apple documents and four Samsung documents submitted by Apple in its opposition to Samsung’s summary judgment motion.

Apple and Samsung had each submitted declarations to the district court concerning steps they took to keep their documents confidential. These declarations also identified harms that would be suffered if documents were made public, such as exposure of confidential information to competitors and suppliers. Although the district court and various amici disagreed, the Federal Circuit found that the parties had an interest in keeping their information secret because they would suffer competitive harm if it were disclosed.

The parties’ interests did have to be balanced against the public interest. Although the public interest is important, the public does not have a “legally cognizable interest in every document filed.”

With respect to the financial information at issue, that information was not considered by the jury, and the public therefore had no reason to be interested in it. With respect to market research reports produced by Apple, its employee’s declaration described the measures it took to preserve those reports’ confidentiality, as well as the competitive disadvantage Apple would suffer if material redacted from those reports was disclosed. Further, when weighing harm to Apple against the public interest, the court was swayed by the fact that Apple had not redacted any information from the reports that was actually considered by the jury.