Court of Appeal dismisses appeals on confidentiality club in FRAND licence case

November 25, 2020

The Court of Appeal has dismissed both appeals in Oneplus Technology (Shenzhen) Co., Ltd & Ors v Mitsubishi Electric Corporation & Anor [2020] EWCA Civ 1562.

The appeals related to the treatment of commercially confidential materials in the context of litigation about standard essential patents (SEPs). In a type of litigation which is becoming increasingly familiar in the Patents Court, the respondent patent owners sued Oppo and Xiaomi for infringement of their SEPs. 

At an earlier hearing, Mann J established a confidentiality regime for the disclosure. Under this regime the parties could designate documents to one of three levels of confidentiality:

  • Attorney’s Eyes Only (“AEO”): the parties cannot see or give instructions on the documents, which are only made available to external representatives (lawyers and experts) in the AEO Club;
  • Highly Confidential Material (“HCM”): documents may be seen by the HCM Club, which includes the AEO Club and up to two representatives of each party, whose identity must be previously agreed;
  • “Ordinary disclosure materials” governed by the CPR disclosure rules.

Oppo made two applications: (i) the re-designation of 6 AEO documents as HCM and (ii) the inclusion within the HCM Club of the three individuals to whom the respondents objected. Xiaomi made a single application which sought the wholesale re-designation of all AEO documents as HCM. The judge redesignated six AEO documents as HCM ones, refused to accept the nominated individuals into the HCM club, but provided for alternative named individuals to be accepted on the basis of giving specific undertakings not to participate in the negotiations for FRAND licences or litigation. Oppo and Xiamis appealed.

Court of Appeal decision

The Court of Appeal held that the first instance judge’s approach to re-designation of confidential documents had been correct.

Floyd LJ reviewed the case law and drew out the following principles:

  • In managing the disclosure of highly confidential information in intellectual property litigation, the court must balance the interests of the receiving party in having the fullest possible access to relevant documents against the interests of the disclosing party, or third parties, in the preservation of their confidential commercial and technical information.
  • An arrangement under which an officer or employee of the receiving party gains no access at all to documents of importance at trial will be exceptionally rare, if indeed it can happen at all.
  • There is no universal form of order suitable for use in every case, or even at every stage of the same case.
  • The court must be alert to the fact that restricting disclosure to external eyes only at any stage is exceptional.
  • If an external eyes only tier is created for initial disclosure, the court should remember that the onus remains on the disclosing party throughout to justify that designation for the documents so designated.
  • Different types of information may require different degrees of protection, according to their value and potential for misuse. The protection to be afforded to a secret process may be greater than the protection to be afforded to commercial licences where the potential for misuse is less obvious.
  • Difficulties of policing misuse are also relevant.
  • The extent to which a party may be expected to contribute to the case based on a document is relevant.
  • The role which the documents will play in the action is also a material consideration.
  • The structure and organisation of the receiving party is a factor which feeds into the way the confidential information has to be handled.
  • In addition, the court must be alert to the misuse of the opportunity to designate documents as confidential. It remains the case that parties should not designate such material as AEO, even initially, unless they have satisfied themselves that there are solid grounds for establishing that restricting them in that way is necessary to protect their confidential content.