In a patent infringement case pending in a California federal court, the defendant moved for summary judgment. The parties jointly requested leave to submit to the court under seal, or with redactions, documents containing trade secrets and other confidential information. The court granted the request only in part. Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., Case No. 12-cv-03844 (N.D. Cal., Mar. 3, 2015) (Tigar, J.).
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Status of the case. This hotly contested patent infringement lawsuit concerned bicycle seats. The defendant moved for summary judgment. By agreement of the parties, the defendant sought to support the motion with certain exhibits filed under seal, or redacted, and the plaintiff did likewise in opposition to the summary judgment motion. Sealing or redacting would have the effect of denying to the public access to all or parts of those documents. Judge Tigar granted leave to seal or redact some of the relevant documents, denied leave as to some, and as to the remainder he directed the parties to tailor more narrowly their sealing or redacting request.
Legal standards applicable to requests to seal or redact. Judge Tigar indicated that there are guiding principles which relate to all such requests in civil cases and additional rules that vary depending on whether the court is considering a non-dispositive or a dispositive motion.
- General principles. The starting point, according to the court, is Fed.R.Civ.P. 26(c)(1)(G). In relevant part, it states that “The court may, for good cause, issue” a protective order “requiring that a trade secret or other confidential . . . commercial information not be revealed, or be revealed only in a specified way.” Next, Judge Tigar pointed to Northern District of California local rule 79-5 which provides that a party seeking to seal or redact must establish that the document contains matter protectable by law and that the request is “narrowly tailored.” An uncontested protective order (or stipulation) regarding confidentiality will not suffice, he said, because of the “strong presumption in favor of [public] access” to court documents. Other courts considering similar motions also have mentioned the burden that sealing and redacting places on judges and other court personnel as another relevant factor.
- Non-dispositive motions. According to Ninth Circuit case law cited by the judge, if the motion to which the request to seal or redact relates is not for summary judgment (or if the motion is for summary judgment but the documents in question “would not be effectively dispositive of” any issues raised in the motion), the party requesting a stay or redaction need make only “a particularized showing under the good cause standard” of Rule 26(c)(1)(G). The Icon-IP case concerned a dispositive motion, and so the court had no occasion to define the phrase “particularized showing.” Other judges have written that the it means proof of specific prejudice or harm that will result if the information is disclosed.
- Dispositive motions. Citing Ninth Circuit and California district court opinions, Judge Tigar stated that a party seeking to seal or redact a document submitted with respect to a dispositive summary judgment motion must overcome a “presumption of public access.” This means articulation of “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.” In other words, courts should operate in the open and not behind a shroud of secrecy.
The court’s rulings.
- Judge Tigar permitted redacting a portion of the deposition of a non-party who had been questioned about “highly sensitive business information regarding” his own company. Sealing the entirety of certain of the non-party’s documents was denied, however, even though they contained confidential information which could be damaging to the non-party’s business interests if it became public. Referring to Local Rule 79-5(b), the judge said that redaction might be permitted if a request was “narrowly tailored to seek sealing of only sealable material.”
- The court denied, for failure to present compelling reasons, the request to seal all or portions of deposition transcripts containing confidential information concerning the defendant’s own research and development, budgets, marketing, sales, revenue, and consulting and licensing agreements. This denial may be without prejudice to a renewed request with more detail regarding the reasons for submitting it.
- Judge Tigar held that compelling reasons were provided for sealing documents where he was satisfied that public access “would result in an invasion of [a] third party’s privacy” and “would put Specialized at a disadvantage in future” licensing negotiations.
- The judge observed that the “compelling reasons” and “good cause” tests also apply to an uncontested request to seal or redact exhibits or deposition transcripts bearing on a Daubert motion to exclude certain expert testimony. If the testimony is “aimed squarely at” a party’s damages methodology, and exclusion “could cause a crippling blow to the sponsoring party’s ability” to support its position with regard to summary judgment, the “compelling reasons” standard should be used. He added that if the testimony would not be dispositive with respect to any “central” issue, “good cause” is the applicable principle.
Takeaways. At one time, courts entered a sealing or redacting order based solely on the parties’ stipulation, but no more. Today, in most courts, even an uncontested request to seal or redact confidential documents to be filed in connection with a non-dispositive pretrial motion requires a particularized showing of specific prejudice or harm. Such a request relating to a dispositive motion requires “compelling reasons” for overriding the public interest in the openness and transparency of court proceedings. Presumably, the “compelling reasons” test also is applicable even to uncontested requests to seal or redact exhibits (a) offered into evidence in a bench trial, or (b) to be submitted in a record on appeal. Contact your Seyfarth Shaw trade secrets attorney for advice regarding the complex rules relating to sealing or redacting confidential information in documents to be filed in court.