Federal Circuit: Secret Patent Trials are OK

By Dennis Crouch

By their nature, patents have the power to control the ways that we can use our property. Gun laws can prohibit gun owners from shooting in certain areas. In the same way, a patent covering a particular gun will prohibit an individual (without license) from building or using a gun with that design. This is true even if the individual owns all the raw materials necessary to build the gun. Following this train reasoning, Courts have historically recognized that the public has a right to access patent information. Traditionally, US courts have operated in a manner that is open and public. However, in recent years more and more judges have allowed the courts to become a largely secret adjudication forum. [Note here that this issue will be a topic of one of our panels at the October 4 Conference here at Mizzou]. This parallels the rise in the ongoing secret adjudication both for grand juries and national security issues.

In Apple Inc. v. Samsung Electronics Co. (Fed. Cir. 2013), the Federal Circuit largely rejects any general public interest in patent and litigation information and instead holds that the public interest must be definite and particularized in order to have merit. The court writes:

We recognize the importance of protecting the public’s interest in judicial proceedings and of facilitating its understanding of those proceedings. That interest, however, does not extend to mere curiosity about the parties’ confidential information where that information is not central to a decision on the merits. While protecting the public’s interest in access to the courts, we must remain mindful of the parties’ right to access those same courts upon terms which will not unduly harm their competitive interest. For the reasons set forth above, we hold that the district court abused its discretion in refusing to seal the particular documents that Apple and Samsung challenge in these appeals.

Ordinarily, this type of appeal does not reach a court of appeals because most district court judges are extremely willing to allow parties to keep file documents, briefs, and testimony under seal in a way that is generally kept secret from the public. As with most disputes, the judge does not intervene when all parties agree to keep information secret. Here, Judge Koh refused to keep documents under seal even though both parties (Apple and Samsung) had stipulated that they could be so filed.

Writing for the court, Judge Prost highlights what the “extraordinary” notion that a patent trial should be open to the public.

Consistent with the extraordinary level of interest in the case, the press was given extraordinary access to the judicial proceedings. Unlike many patent trials, which often contain mountains of sealed exhibits and occasionally have closed courtroom proceedings, the district court explained to the parties before the trial that “the whole trial is going to be open.” Consequently, the district court agreed to seal only a small number of trial exhibits. And shortly after the close of business each day, the parties, by order of the court, provided the press with electronic copies of every exhibit used at trial that day. Similarly, most exhibits attached to pre-trial and post-trial motions were ordered unsealed.

In its decision, the Federal Circuit purported to follow Ninth Circuit law requiring that “That is, the party [wanting to seal records] must articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Here, the inclusion of trade secret information is often sufficient to warrant sealing of records.

In rejecting the district court’s decision, the Federal Circuit held that Judge Koh had applied a too stringent standard. In particular, Judge Koh asked for “compelling reasons” for sealing the documents while the law only requires “good cause.”

18 thoughts on “Federal Circuit: Secret Patent Trials are OK

  1. the law just actuates itself as a protective device
    into which function and action exist by measure of order
    the court just makes sure the roadsigns are all aptly directional
    for the processes which are all lodged between the brains range of frequencies
    scalar weights transitions & etceteras. Objects are a collection of [its] constituents
    and initially words are just contructees as signs with the tines.

    Without secrets what would be the use of rhetoric?

    link to youtube.com

  2. Paul, you should note that the decision points out that material to be sealed need not rise to the level of a trade secret (even as the material here arguably does rise to that level). See footnote 3, page 18.

  3. Overall the article as presented tends to unecesarily hew to a 570 nm journalistic tone.

    The title is far too sensationalistic and incorrect. There is simply no way to reach the idea that an entire patent trial is going to be ‘secret,’ and the last two paragraphs (the use of the word ‘purported’ and the failure to qualify that the court was discussing non-dispositive motions when talking about a different standard as well as acknowledging that even under a heightened standard the proper balancing was in error below. All of this creates a ‘chum’ effect only too eagerly seized by Malcolm (since patents are the ‘worst thing EVER,’ any court proceeding involving someone trying to enforce their patent rights should automatically lose any ability to seal information).

    Further evidence of chum effect is Malcolm’s great irony comment, which sounds in the FAILED (the court uses the word irrelevant) argument by (known anti-patent) EFF.

    Malcolm’s post (once again) indicate that he has not even bothered to read the case before making his ‘glorious edicts of what would be fair when those 3v1l patents are involved.

  4. Malcolm, most people return from vacation relaxed, energized, even cheerful.

    You have been nothing but vile spite and negativity.

    You really need to get into a line of work you can believe in.

  5. The parties assert that their detailed product-specific information concerning such things as costs, sales, profits, and profit margins qualifies as trade secrets.

    Again, if either party is voluntarily presenting information for any reason during the course of the litigation (e.g., to “prove” the alleged “value” of the invention), I don’t see why its status as a “trade secret” should be maintained. Litigation is a public act. You want to use the court system to “reclaim” $1 billion dollars from your competitor? Then you should be prepared to donate some of those precious “trade secrets” to the public who has a right to know how that result was obtained. Just because the voluntarily proferred information was not “relied on at the jury trial” does not mean that it was relied on during the course of the litigation.

    The great irony, of course, is that these computer-implementer companies thrive off information collected by any means necessary, which typically means collected from unknowing members of the public.

  6. I think the district court was wrong. From the case:

    “Apple and Samsung argue that the district court
    abused its discretion in refusing to seal their confidential
    financial information. The parties assert that their
    detailed product-specific information concerning such
    things as costs, sales, profits, and profit margins qualifies
    as trade secrets.”

    “The First Amendment Coalition responds that Apple
    and Samsung have failed to establish that these documents
    contain trade secrets because, for the reasons
    stated by the district court, the parties have not shown
    that they will suffer competitive harm from public disclosure.

    “On the other side of the scale, the Coalition asserts
    that the public has a strong interest in the financial
    information in question..

    “Considering the parties’ strong interest in keeping
    their detailed financial information sealed and the public’s
    relatively minimal interest in this particular information,
    we conclude that the district court abused its
    discretion in ordering the information unsealed.”

    Next, Apple wanted to exclude portions of market reports not used at trial,

    “These market research reports contain information
    that Apple’s competitors could not obtain anywhere else.
    It may be true, as the district court indicated, that Apple’s
    competitors could perform their own surveys of Apple
    customers and replicate much of the data. However, they
    would never know the exact questions Apple chooses to
    ask or the conclusions that Apple has drawn from the
    responses. Perhaps more importantly, there is a critical
    distinction between Apple’s competitors being able to
    “infer the most significant results by simply observing
    Apple’s product releases and marketing campaigns” and
    being able to predict Apple’s future product releases and
    marketing strategies. Id. Apple obtains a competitive
    advantage by being the first company to introduce products
    with new features. Giving Apple’s competitors a
    head-start could provide them with an enormous benefit—
    to Apple’s detriment. Thus, Apple has a strong
    interest in keeping its market research reports confidential.”

  7. And what about the scores and scores of patent applications which have been languishing for years before the Board

  8. As suggested by others above, there should be a distinction drawn between protecting genuine commerical and technical trade secrets vis a vis overly-sweeping protective orders used to conceal documents disclosing potentially invalidating prior art from the public [and even destroying them after a settlement]. Documents could otherwise lead to less expensive licenses, third party competition, and lower customer prices. Rather than just advantaging the patent owner in all later patenet suits, and advantaging that suit defendent [having exclusive knowledge of that prior art] over its competitors.
    To say that a open trial eliminates any such issues is to ignore the fact that only a very small percentage of patent suits, even after very useful discovery, ever go through trial. Also, often non-infringement [not invalidity] is the only issue being tried even in those few.

  9. Secret Warrants.

    Secret Blanket Warrants.

    Secret Laws.

    Secret Trials.

    Secret Prisons?

    How about Secret Patents, too?

  10. link to washingtonpost.com

    The celebrated writer William Vollmann has revealed that the FBI once thought he might be the Unabomber, the anthrax mailer and a terrorist training with the Afghan mujahideen….

    [S]omeone … turned him in to the authorities as a possible Unabomber suspect because of the content of his fiction. His file claims that “anti-growth and anti-progress themes persist throughout [his] work”

    I’m surprised he wasn’t accused of being a Patent Examiner.

  11. Dennis: most district court judges are extremely willing to allow parties to keep file documents, briefs, and testimony under seal in a way that is generally kept secret from the public

    In the context of invalidity contentions, at least, this is a serious problem.

  12. How would you modify the statement, IBP? It seems reasonably accurate.

    This statement from the decision is one of the stranger ones: While protecting the public’s interest in access to the courts, we must remain mindful of the parties’ right to access those same courts upon terms which will not unduly harm their competitive interest.

    As Dennis suggests, the issue here is not so much about the public’s interest in “access to the courts” (although that’s a legitimate issue in any public legal proceeding). It’s about the public’s interest in their own right to make things and do things, i.e., the right that is directly impacted whenever a patent (valid or invalid) is granted.

    It should never be the case that the reasons for finding a patent valid or invalid are hidden merely because revealing those reasons would “unduly harm” someone’s “competitive interest.” That’s absurd.

    I reasonable rule to follow in these cases should be that if a patentee wants to rely on a “trade secret” to justify retaining its patent, it must give up the “trade secret.” To hold otherwise would be akin to allowing Congress (or any other legislative body) to pass restrictive laws for “secret” reasons, which might as well be “no reason” at all as far as the public is concerned.

    Obviously, I’m not suggesting that all products of the discovery games that litigants tend to play with each other should be made public immediately upon production. But the relevant material in documents in response to reasonable invalidity contentions and infringement contentions? Of course those should all be public (although in the case of an ultimate finding of non-infringement, I think an argument could be made that none of the infringer’s otherwise “secret” documents need to be made public).

  13. “In Apple Inc. v. Samsung Electronics Co. (Fed. Cir. 2013), the Federal Circuit largely rejects any general public interest in patent and litigation information and instead holds that the public interest must be definite and particularized in order to have merit.”

    Care to modify this statement?

  14. “Gun laws can prohibit gun owners from shooting in certain areas.”

    LIKEWISE

    Privacy laws can prohibit government agencies from snooping in certain areas.

    OOPS. WRONG SECRET TRIBUNAL.

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