Confidentiality Designations in Federal Circuit Appeals

By Jason Rantanen

In re violation of Rule 28(D) (Fed. Cir. 2011) (precedential order) Download 11-m976 order
Panel: Dyk (author), Prost, and Moore

Patent litigations, by their nature, often invove commercially sensitive information.  Unsurprisingly, parties are frequently reluctant to reveal the innermost workings of their manufacturing processes or valuable financial data.  To preserve the confidentiality of this information, parties enter into agreed-upon protective orders that help ensure that their proprietary information is not disclosed outside the confines of the litigation.

The difficulty arises when it comes time for judicial resolution of the dispute.  Although parties can readily agree to keep materials they exchange among themselves confidential, once that information must be presented in court or placed into a judicial opinion, it is much more difficult to prevent public access.  In part this is due to practical realities (for example, although it is a possible approach, clearing a courtroom during a trial or hearing is a cumbersome process), but it is also due to the public's right of access to court proceedings, as recognized in Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597-99 (1978).

The difficulty of maintaining the confidentiality of particular information becomes even greater when the lawsuit is on appeal.  Federal Circuit Rule 28(d) does permit the use of confidentiality markings in briefs, but in general the Federal Circuit has demonstrated a dislike for the overuse of confidentiality designations, especially when it would interfere with the preparation and dissemination of its opinions.

The Federal Circuit's view on confidentiality designations is particular apparent in a recent precedential order imposing a monetary sanction on Sun Pharmaceutical Industries, Ltd. and Caraco Pharmaceutical Laboratires, Ltd. (collectively "Sun") for the extensive use of improper confidentiality markings.  Sun  was apparently so concerned about revealing the contents of a confidential license agreement and proposed consent judgment that it marked vast swaths of its brief as confidential, including essentially all of its legal argument. 

Following oral argument, the CAFC issued an order instructing Sun to show cause why it should not be sanctioned for the violation of Rule 28(d).  In response, Sun attempted to justify its use of extensive confidentiality designations, an approach that did not sway the court.  Even leaving aside the question of whether the the agreements were properly designated, Sun's designations nevertheless fell far on the side of error.

Particular concerning to the court was Sun's designation of its legal arguments.  This type of material is generally afforded little, if any, protection:

The marking as confidential of legal argument concerning the propriety of a decision by the court is generally inappropriate given the strong presumption of public access to court proceedings and records. Rule 26(c)(1)(G) is limited to commercial information that has competitive significance. The marking of legal argument as confidential under Rule 26(c)(1)(G) cannot be justified unless the argument discloses facts or figures of genuine competitive or commercial significance. That is certainly not the case here, and there is no claim that it is.

Further, much of the material marked as confidential does not even disclose the nature of the triggering event. For example, legal argument regarding the preclusive effect of consent judgments was marked as confidential in the briefs submitted by Sun. See Addendum at i–ii. One of the most blatant examples of improper confidentiality markings involves case citations and parentheticals describing the cited cases which are used to support the proposition that “parol evidence should have been examined to resolve the ambiguity and determine the intent of the parties.” See id. at iii–iv.

Slip Op. at 14.  Due to the severity of the improper confidentiality designations, the CAFC imposed a sanction of $1,000 on counsel for Sun.  Although perhaps a relatively small monetary sanction, the CAFC rarely imposes such a penalty, suggesting that the conduct in this case was particularly troubling to the court.  For those interested in examples of improper confidentiality markings in Sun's brief, the court included an addendum containing relevant quotations.

17 thoughts on “Confidentiality Designations in Federal Circuit Appeals

  1. 17

    I doubt this sanctioned lawyer looks at this as free advertising. He was designating case citations and quotes as confidential. That looks more like sloppiness than being overzealous.

    Perhaps some trial lawyers like to be sanctioned in front of a jury for dramatic effect, but I don’t think there are many IP lawyers who consider sanctions a good thing.

  2. 16

    He may have got off easier if he’d have just said “Judge now that you point it out I believe we made a mistake plz to be having mercy”.

  3. 15

    Andrew, if both sides abused the confidentiality provision, that is a reason to come down on both like a ton of bricks, not levy a wrist slap on one side. And a wrist slap is just what this is. $1000 doesn’t even cover the lawyer’s time spent at oral argument (once we consider the small army of associates that would also be in the courtroom).

    As for public shaming, what shaming? In the client’s eyes, this is a lawyer who zealously protects the client’s interests above all other duties. Really, the $1000 might as well be considered cheap advertising.

  4. 14

    I think $1,000 is an appropriate sanction here. This isn’t like a fraud on the court or contempt. Both sides abused the confidentiality designation provision. That’s contrary to the rules and to the goal of public access. Still, it’s not something that warrants a major sanction.

  5. 11

    t’s a bit ironic when people post under pseudonyms and then claim that public shaming in a court opinion isn’t a meaningful sanction

    Not at all Stan. If you want to conflate actual practice of law and posting on a blog, then you have more fundamental issues to deal with than determining what is or is not an effective sanction.

    Pseudonyms on a blog just allow a more biting commentary – I can pretty much guarantee that NO ONE acts in court like they do here.

  6. 10

    The embarrassment is being called out by name. It’s a bit ironic when people post under pseudonyms and then claim that public shaming in a court opinion isn’t a meaningful sanction.

  7. 8

    The shame is… what?

    Not getting away with it?

    Sunshine actually breaks through the clouds on this one – gotsta put teeth in sanctions or they be worse than no sanctions at all.

    Sorta like gotsta put teeth in the power to exclude…

  8. 7

    As we discussed recently (last week?), stern lectures are not a “real sanction” and have little or no deterrent effect, particularly on other attorneys and/or their clients.

  9. 6

    The real sanction is having your name and excerpts of your offending brief on display for shaming to everyone who follows the Federal Circuit.

  10. 5

    These attorneys were asking for it, but they got about the worst possible panel if they were hoping to avoid punishment.

  11. 3

    I wonder why it took Dyk J. so long…

    I especially love the idea of designating legal arguments as confidential.

  12. 1

    Due to the severity of the improper confidentiality designations, the CAFC imposed a sanction of $1,000 on counsel for Sun.


    … for someone earning $10K/yr.

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