Third party license information may be an exception to access to public records

In a second appeal regarding the sealing of third-party license information, the United States Court of Appeals for the Federal Circuit reversed and dismissed a district court’s order denying a motion to seal because the court in district did not follow previous instruction from the Federal Circuit to make particular decisions. regarding information. Uniloc USA, Inc. v Apple Inc.Case No. 21-1568 (Fed. Cir. Feb. 9, 2022) (LourieCunningham, JJ.) (Mayer, J., dissenting).

In a previous decision, the Federal Circuit affirmed the denial of a sealing motion regarding the Uniloc information, but reversed and dismissed the denial of the sealing motion regarding certain third-party license information. The Court instructed the District Court to “make specific determinations as to whether, and if so to what extent, the elements of each of these [third] the parties should be made public.

On remand, the district court again denied the motion to seal third-party license information. The district court made findings regarding the relative weight of the public interest in accessing court records, including patent license information. He also concluded that the particular licensing information at issue was relevant to a dispute over Uniloc’s standing. With respect to one particular third party, Uniloc’s financier, Fortress Credit Co. LLC, the district court denied the sealing motion because Fortress failed to comply with Local Rule 79-5(e)(1) of the Northern District of California, which requires that a supporting statement be filed. Uniloc appealed a second time.

The Federal Circuit found that the district court failed to follow its instructions to make specific decisions about whether the third-party license information sought to be sealed should be made public. Accordingly, the Court returned to the District Court to conduct the investigation it had previously ordered.

The Federal Circuit also noted its disagreement with certain statements the district court made in its order denying the sealing motion. The district court said that “[t]The public has an interest in controlling the valuation of patent rights. . . secrecy, especially given, so often plays to the advantage of the patent holder by forcing inflated royalties. The Federal Circuit said the district court erred “in law in making a blanket ruling that the public has a broad right of access to patent information.” Although the district court stated that the public has every interest in knowing the full terms and conditions involved in exercising their patent rights and in seeing the extent to which the patentee’s exercise of the grant government affects commerce, the Federal Circuit wrote that “[a]Absent an issue raised by the parties regarding the rights and terms of the licenses, there is no public interest or right to information regarding the licensing consideration. And while the amount Uniloc received in royalties is relevant to the standing dispute, the Court wrote that “this fact can be proven without opening all the licenses to which the court has granted access.” Finally, with respect to Fortress, the Court wrote that “any procedural failure by Uniloc and Fortress cannot justify the disclosure of third party information” and that “[t]The district court should have considered whether the interests of the third parties involved outweighed the public’s interest in seeing the details of the individual licenses that are not necessary to resolve this case.

Judge Mayer dissented, saying he would have upheld the district court’s denial of the sealing motion. According to him, the findings of the district court regarding the weight of the public interest and the interests of third parties were sufficient to meet the instructions of the earlier remand. Judge Mayer further stated that the Federal Circuit need not find that the public has an interest in accessing licensing information generally because:

  • The licensing information at issue had been submitted as part of a legal proceeding.

  • The general right of public access to court records applied to licensing information.

  • It was up to Uniloc or the third parties to establish compelling reasons why the information needed to be sealed.

Judge Mayer pointed out that the district court is in the best position to assess what constitutes compelling reasons to seal. He also noted that when Uniloc sought the opinion of the 109 licensees whose information was implicated, only 31 requested that all or part of this information be sealed and only 13 filed statements in support of this request. , and these statements “on the whole are vague and conclusive and do not provide concrete evidence that the release of licensing information would cause licensees material competitive harm in future licensing negotiations or that the information on the licenses in question are otherwise considered a trade secret.

Practical note: The Federal Circuit continues to protect third parties from the disclosure of potentially sealable information. However, it is unclear from the Court’s order whether the Court intends to provide an exception for third party licensing information from the general rule that a request to seal information submitted to a court must be supported by compelling reasons, or if the Court understands the Ninth Circuit’s “compelling reasons” standard applies only to information strictly necessary to prove the issues in dispute. It is also unclear to what extent the Court will stand by its statement that neither a litigant’s nor a third party’s failure to comply with local rules regarding sealing can be grounds for refusing a request to seal the third party’s information. . The Court’s willingness to review the district courts’ application of its own local rules demonstrates the Court’s strong interest in protecting third parties.