Court of Appeal clarifies disclosure of confidential information in UK litigation – OnePlus v Mitsubishi and others

Background

Mitsubishi Electric Corporation and Sisvel International SA are both members of a 3G and 4G patent pool administered by Sisvel. Mitsubishi and Sisvel sued for patent infringement a number of companies, including companies in the OnePlus/Oppo and Xiaomi groups of companies.

The patents concerned are alleged to be essential to the cellular standards. Therefore, in the event that a patent is determined to be valid and infringed and provided that the defendants indicate their willingness to enter into a licence on FRAND terms, the defendants will be subject to a FRAND injunction preventing infringement of the patent unless they enter into a licence on the terms determined by the Court to be FRAND.

At the case management hearing in July, the defendants were ordered to amend their FRAND statements of case to particularise any positive case they intend to run in reliance on the claimants’ FRAND obligations including to identify any comparable agreements they intend to rely upon. In order for the defendants to be able to plead fully to comparables Mitsubishi and Sisvel were ordered to disclose any licences which involve any patent in the pool and to disclose any assignments of patents in the pool, although the case management judge had expressed scepticism as to the likely relevance of at least the latter category. Sisvel had already disclosed 23 licences to the patent pool in issue.

The first instance court also approved the parties’ proposed confidentiality regime, which provided for a Highly Confidential category to which only named, pre-approved employees of the parties would be admitted, and an external only club (which was called Attorneys Eye’s Only (AEO), in the US fashion).

Following the case management hearing Mitsubishi and Sisvel disclosed a further 150 documents; 36 of which were designated AEO. Xiaomi challenged the AEO designation of all documents claiming they should be re-designated to Highly Confidential. Oppo challenged the AEO designation of just 6 of the documents and also sought permission for 3 of its internal licence negotiators to be admitted to the Highly Confidential club, following the Claimants’ rejection of their admission.

Findings of the first instance judge

The first instance judge, Sir Alastair Norris, found that Oppo’s request to de-designate the 6 documents, involving four different counterparties, was a considered and targeted one which was supported by evidence that these were the licences, which Oppo’s external representatives considered necessary in order to plead their case. However, because of the risk to third parties, who had made their concern known in letters to the court and, in the case of two related companies, by intervening in the matter, the judge ordered that Oppo’s Highly Confidential club members would need to give undertakings directly to the counterparties of the de-designated agreements not to participate in licensing negotiations with the counterparties or their subsidiaries or affiliates.

Sir Alastair dismissed Xiaomi’s blanket de-designation request, stating that the Claimants had set out the basis for the AEO designation and that any de-designation application should have been made on a more targeted document-by-document basis.

Finally, Sir Alastair dismissed Oppo’s application for three of its in-house licensing negotiators to be admitted to the Highly Confidential club, having considered the fact that:

i) Confidential information once known cannot be unlearned;

ii) An individual possessed of confidential knowledge will not in practical reality be able to avoid its use;

iii) Disclosure to key people who may be involved in commercial negotiations risks causing unnecessary harm; and

iv) In striking the balance between affording disclosure and inspection and preserving confidentiality it is material to know the size and structure of the receiving party.

Court of Appeal’s determination

Both Oppo and Xiaomi appealed the first instance decision, and in order to avoid any undue delay in them pleading their FRAND case, which could have impacted the timetable through to trial in October 2021, the Court of Appeal ordered…