The UK High Court has released a final form public version of the Unwired Planet v Huawei judgment ( EWHC 2988 (Pat)) after ruling on the confidentiality of commercial licensing information that had been redacted in the original public judgment ( EWHC 711 (Pat)).
The main judgment in Unwired Planet was handed down on 5 April 2017. Before the judgment was published, Birss J had received complex submissions on confidentiality. Rather than delaying the release of the judgment and giving the parties more time to deal with confidentiality, he produced a redacted public version of the full judgment that took a generous view of the confidentiality claims made by the parties. Following a hearing on 29 June 2017, the court has now issued a judgment ( EWHC 3083 (Pat)), ruling on these confidentiality claims and published a final redacted main judgment.
In deciding the confidentiality claims, Birss J has summarised the principles applicable to the question of whether commercial licensing information (in particular royalty rates) should be treated as confidential in the context of a UK High Court action. The Unwired Planet case related to Standards Essential Patents (SEPs) and fair, reasonable and non-discriminatory (FRAND) licensing, but these principles have wider applicability to actions involving the disclosure of purportedly confidential material. The starting point is that all parts of a judgment should normally be publicly available. However, there are occasions on which judgments may be redacted, but only when there are powerful reasons supported by cogent detailed evidence. Factors which will be relevant include:
i) The nature of the information itself: For example cases in which some redaction may more readily be accepted could include technical trade secrets and private information about family life.
ii) The effect of the publication of the information: This is a critical factor. If publication is truly against the public interest then the information should be redacted. If publication would destroy the subject matter of the proceedings – such as a technical trade secret – then redaction may be justified. The effect on competition and competitiveness could be a factor but will need to examined critically.
iii) The nature of the proceedings: This is because the balance of factors will change in different cases – Birss J gives the example of the need to encourage leniency applications in competition law.
iv) The relationship between the information in issue and the judgment (as well as the proceedings as a whole): It may be that some sensitive information can be redacted without seriously undermining the public’s understanding of the judge's reasoning.
v) The relationship between the person seeking to restrain publication of the information and the proceedings themselves (including the judgment): For example, a patentee seeking damages for patent infringement on a lost profit basis knows that they will have to disclose their profit margin in the proceedings and that those proceedings are public. A third party whose only relationship with the case is that they are a party to a contract disclosed by one of the parties to the litigation is in a different position.
In the present case, the main confidentiality claims related to the details of SEP licences agreed by Ericsson that had been used by the court to determine the value of an SEP portfolio that had been purchased from Ericsson by Unwired Planet. Birss J considered the impact of revealing information about these existing licences from the perspective of the licensor (i.e. Ericsson) and the licensee (various third parties). He held that:
i) From the licensor's perspective the information would be of help to future putative licensees seeking a licence from the same licensor and would weaken the licensor’s negotiating strength.
ii) The licensee will typically perceive that it has a contractual duty to maintain confidentiality under the confidentiality clause in the licence. Further, its negotiating position as a licensee itself may be harmed if putative licensors know that it was prepared to accept a given term.
Although redactions had been sought to over 10% of the paragraphs in the judgment, Birss J was ultimately satisfied that the evidence demonstrated that the publication of the commercial licensing information in issue (subject to a few limited exceptions) would materially weaken the competitive position of the relevant party in each case, particularly the relevant licensor. His key reasons for coming to that decision were:
i) The public can still understand how the judge reached the conclusions in the main decision without seeing those details.
ii) Although the public cannot decide for themselves whether they would agree that the specific figures arrived at are justified by the data, to provide that information would substantially weaken the position of various companies mentioned in the judgment, particularly as licensors but also as licensees. He concluded that that interference with the competitive position of the telecommunications market is unwarranted.
The limited exceptions included revealing some aspects of a historic licence (signed in April 2009), but not the specific figures.
A new public judgment (with updated redactions) was published at the same time as this judgment. Further, the parties had asked the court to annex to this judgment a copy of the licence terms which the parties had agreed between themselves as a set of terms which would accord with the main judgment save for the fact that its scope is as a UK only licence. Birss J accepted this request and attached a copy, but noted that he was not endorsing it as FRAND (as he had already found in the main judgment that a UK only licence would not be FRAND) nor as in accord with the main judgment.
Interestingly this judgment comes just a day after the European Commission issued its much awaited guidance on the EU approach to SEPs, in which it advocates more transparency in the field of SEP licensing. This sentiment seems to be shared by Birss J who notes in the judgment:
"it might be said that the lack of public information about FRAND licence terms is a cause of difficulty in this sphere and perhaps more transparency about royalty rates would be a good thing, but this is not the occasion to get into that".