The Federal Circuit Court of Appeals has determined that a district court erred in refusing to seal or allow the redaction of confidential exhibits attached to pre-trial and post-trial motions in patent-infringement litigation between smart phone competitors. Apple Inc. v. Samsung Elecs. Co., Ltd., Nos. 2012-1600, -1606, 2013-1146 (Fed. Cir., decided August 23, 2013). The only participants in the appeal supporting the district court’s denial of the plaintiff’s and defendant’s motions to seal were media interests allowed to participate as amici.
According to the Federal Circuit, the California district court erred in requiring the companies to have “compelling reasons” to seal “documents attached to non-dispositive motions regarding the admissibility of evidence at trial.” The trial court had apparently found that “the admissibility of evidence is such a closely contested issue in this trial, which has become crucial to the public’s understanding of the proceedings.’” While the Federal Circuit noted that the Ninth Circuit does not appear to have any precedent applying the compelling reasons standard to nondispositive motions addressing admissibility questions, it applied the standard “for the sake of simplicity” and concluded that even under this more stringent standard the district court erred by refusing to seal the documents at issue.
Apple and Samsung had filed declarations in support of their motions to the effect that they would be disadvantaged if competitors and suppliers gained access to financial information that was not ultimately used at trial. They argued that the public has only a minimal interest in the documents because the companies agreed not to present this detailed information at trial. The Federal Circuit agreed that product-specific financial information must be kept secret or suppliers would be given an advantage in contract negotiations.
The media groups countered the companies’ minimal public interest assertion by arguing that “major media outlets were closely following ‘the case’s strategic impact on the companies, including the financial risks for shareholders.’” The court disagreed and said, “promoting the public’s understanding of the judicial process and of significant public events”—as a counterbalance to the litigants’ confidentiality concerns—would not be advanced by releasing this information, which had significance, if at all, to shareholders’ interests in determining financial risks and consumers’ interests in manufacturing and pricing decisions. In this regard, the court said that these types of interests “simply are not relevant to the balancing test.” The court reached the same conclusions as to Apple market research reports submitted with post-trial motions.