On November 27, 2012, ALJ E. James Gildea issued Order No. 73 in Certain Portable Electronic Devices and Related Software (Inv. No. 337-TA-797).  In the Order, ALJ Gildea denied without prejudice Complainant Apple Inc. (“Apple”) and Respondents HTC Corp., HTC America, Inc., and Exedea, Inc.’s (collectively, “HTC”) joint motion to terminate the investigation based on a settlement agreement.

According to the Order, Apple and HTC had filed both a public version and a confidential version of their motion to terminate.  The public version of the motion included a redacted version of the settlement agreement.  The confidential version of the motion included a confidential version of the settlement agreement.  However, even the confidential version included certain redactions relating to the specific consideration for the private parties’ cross licenses, which Apple and HTC argued were highly sensitive.  In particular, Apple and HTC argued that disclosure of these redacted licensing terms was unnecessary and that neither Apple nor HTC had generally disclosed the terms within their own organizations.  They further argued that additional disclosure of these terms had the potential to impact the private parties’ interests and the settlement of the instant investigation as well as other investigations, that the terms are not relevant to any remaining issues in the investigation, and that termination of the investigation based on the settlement agreement is in the public interest and poses no threat to the public health and welfare, competitive conditions in the U.S. economy, the production of competitive articles in the U.S., or U.S. consumers.

The Commission Investigative Staff (“OUII”) opposed the motion, arguing that the public version of the settlement agreement was excessively redacted and that it was improper for the confidential version of the settlement agreement to contain any redactions at all.  Regarding the public version, OUII asserted that approximately 75% of the agreement had been redacted and that this was excessive because the redactions were not limited to the types of confidential business information described in Commission Rule 201.6.  Regarding the confidential version, OUII asserted that Commission Rule 210.21 does not provide for the confidential version itself to have any confidential information redacted.  OUII argued that the private parties had not justified a deviation from the Commission Rules, that the Commission and the ALJ needed to review the entire unredacted agreement to determine if the terms were relevant to any of the public interest factors, and that allowing redactions even in the confidential version would set an undesirable precedent.

After considering the arguments, ALJ Gildea determined to deny the joint motion to terminate without prejudice.  With respect to the public version of the agreement, the ALJ agreed with OUII that the redactions were excessive and went beyond the types of confidential business information enumerated in Commission Rule 201.6.  With respect to the confidential version, ALJ Gildea found that the Commission Rules do not contemplate the submission of a confidential version of an agreement that itself contains redactions.  The ALJ also rejected the private parties’ argument that the specific licensing terms were irrelevant to the public interest analysis of the agreement.  Accordingly, the ALJ denied the joint motion to terminate without prejudice.

After denying the motion, ALJ Gildea further stated that should the parties wish to file a renewed motion to terminate, they must do so by November 30, 2012 and follow the following guidelines.  With respect to the public version of the agreement, the parties must file a public version with redactions that strictly comport with the definition of confidential business information in the Commission Rules.  Moreover, if the parties continue to seek redactions of large swaths of the public version, they must provide justification for such redactions with supporting evidence.  With respect to the confidential version of the agreement, the parties must either (a) file an unredacted version of the agreement according to the normal filing procedures for confidential submissions, or (b) provide a well-supported proposal for filing an unredacted version under alternate procedures that would provide further protections for the confidential information, comply with Commission practice and the Commission Rules, and allow the ALJ and the Commission to consider all the provisions of the settlement.  ALJ Gildea noted that he would be unlikely to grant a request under option (b) absent a showing of compelling circumstances.  He additionally noted that, should the private parties choose option (b), they should include evidence showing who has had access to the unredacted agreement, whether the unredacted agreement has been transmitted electronically, and what protections have been put into place to protect the confidentially of any transmission of the unredacted agreement.  The ALJ specifically noted that such evidence “should include the extent and circumstances of disclosure of the Agreement to counsel for Samsung,” citing a Wall Street Journal article dated November 23, 2012 entitled Apple to Provide HTC-Pact Details.