From an economic perspective, the ideal dispute resolution system would have as little impact as possible on the businesses involved. It would be cheap, so it is not a big drain on their P&L. It would be quick. It would not require large amounts of management time. And it would not disturb the competitive landscape: neither party would achieve a collateral competitive advantage through litigation.
Where parties to litigation are required to disclose confidential information to each other, that could give them a collateral competitive advantage that they would not have obtained but for the litigation.
So international arbitration, and some national litigation systems, has adopted a system of 'attorneys' eyes only' protection. The lawyers and the tribunal can see the information, but in-house personnel cannot. That prevents companies from using arbitration or litigation as a way of seeing their competitors’ trade secrets, or from using litigation to harm their competitors by making their trade secrets public.
In the world of fair, reasonable and non-discriminatory (FRAND) licensing, there are huge advantages to be gained from knowing the price that others charge to license their patents. The negotiator who has more information than their counterpart has an edge.
If a company is able to access a competitor’s licence agreements through litigation, this can create tactical reasons to litigate FRAND disputes, rather than settle.
UK confidentiality practice
The UK has always departed a little from international norms in this area. It has a reduced level of confidentiality for documents that are likely to be decisive in litigation. The reason is that external lawyers need to take instructions from their clients, and clients need to see the material on which the case will be decided.
The balance between the ability of a client to give instructions and the desire to protect confidentiality was summarised in Mitsubishi v OnePlus [2020] EWCA Civ 1562.
Consequently, the UK allows one or two named employees of a litigant to see a competitor’s trade secrets. Employees receiving the confidential information of the counterparty are required to give promises:
Not to disclose the information they see; and
To use it only for the purposes of the proceedings.
Where that information is confidential licence agreements, the court has also required those who see them not to take part in licensing negotiations for a certain period. The intention behind this requirement is to limit the recipient’s ability to misuse the information.
InterDigital v Oppo
The question of whether a restriction against participating in licensing negotiations is reasonable came before the England and Wales Court of Appeal in InterDigital v Oppo [2023] EWCA Civ 166.
Unanimously, the Court of Appeal found that it was reasonable. Lord Justice Birss held that there was a risk that Oppo would obtain an unfair advantage by seeing InterDigital’s licence agreements. It would gain that advantage not just against the third parties whose licences it saw; it would gain an advantage over the industry as a whole.
There was no real disadvantage to Oppo: it is a large company and has many employees working in the licensing area. Consequently, Mr Justice Mellor’s order was reasonable. Lord Justice Bean and Lord Justice Peter Jackson concurred.
This is unlikely to be the end of the matter, though. Oppo is party to other FRAND actions in the UK and continues to challenge such restrictions.
