Oneplus Technology (Shenzhen) Co Ltd and others v Mitsubishi Electric Corporation and another [2020] EWCA Civ 1562 (19 November 2020)

In this judgment of the Court of Appeal (Floyd LJ giving the main judgment, and Males LJ giving a short second judgment in agreement) upheld the decision of the first instance judge, Sir Alastair Norris, in the Patents Court and dismissed both appeals. The appeals related to how commercially confidential materials would be treated in the litigation between the parties. The Court of Appeal held that the first instance judge’s approach to re-designation of confidential documents had been correct.

Background:

Mitsubishi Electric Corporation (“Mitsubishi”) and Sisvel International SA (“Sisvel”) (together the “Claimants”) sued a number of companies for patent infringement of their standard essential patents (“SEPs”), including entities in the OnePlus/Oppo and Xiaomi groups of companies (the “Defendants”).  As part of this litigation, a technical FRAND trial is set to take place in March 2021.

A confidentiality regime for disclosure was previously established at the case management conference (“CMC”), which provided for three levels of confidentiality for documents:

• Attorney’s Eyes Only (“AOE”): documents only made available to external representatives (lawyers and experts) in the AEO Club;
• Highly Confidential Material (“HCM“): documents only made available to the HCM Club, which includes the AEO Club and up to two representatives of each party (whose identity must be previously agreed);
• “Ordinary disclosure materials”: as governed by the CPR disclosure rules.

At the same CMC, Mann J ordered (i) the Defendants to provide an amended FRAND statement of case particularising any positive case they intended to make, (ii) if the Defendants intended to advance a positive case based on comparable agreements, then they would need to identify and particularise any case they intended to rely upon; and (iii) the Claimants disclose any licenses relating to any patent in their “MCP Pool” of Patents.

Mann J observed that this order for disclosure from the Claimants cast the net widely, as any license which overlapped with any of the patents in the MCP Pool (even if only by one patent) would have to be disclosed.  However, the disclosure was deemed necessary in order to enable the Defendants to formulate a positive case on FRAND.

Following the CMC, the Claimants disclosed a further 150 documents, designating 36 of them as AEO. Xiaomi challenged the AEO designation of all 36 documents and Oppo challenged the AEO designation of 6 of the documents. Oppo also requested permission for three of its in-house licensing negotiators to be admitted to the HCM Club.

First instance decision:

Sir Alastair Norris (“the judge”), in his first instance decision, dismissed Xiaomi’s challenge to the designation of the AEO documents for not being a targeted document-by-document request  The judge also dismissed Oppo’s application for its three in-house specialists to be admitted to the HCM club, considering the balance between affording disclosure and preserving confidentiality and noting points such as that confidential information could not be unlearned and once known and an individual could not in “practical reality” avoid using this information.

However, the judge found that Oppo’s re-designation request for six of the AEO documents were considered and targeted requests, supported by evidence. Due to the risk to third parties, the judge ordered that Oppo’s HCM club members be required to give undertakings directly to the counterparties of these six “re-designated” agreements not to participate in licensing negotiations with the counterparties or their subsidiaries or affiliates.

Court of Appeal decision:

Both Oppo and Xiaomi appealed the first instance decision. Notably, this case was expedited on appeal and the hearing took place less than a month after the first instance decision.

In the Court of Appeal judgment, Floyd LJ reviewed the case law that had addressed the issue of disclosure of confidential information, starting from Warner-Lambert Co v Glaxo Laboratories Ltd [1975].  Floyd LJ distilled the numerous authorities referenced and set out the following legal principles and list of points of importance:

• In managing the disclosure of highly confidential information in intellectual property litigation, the court must balance the interests of the receiving party in having the fullest possible access to relevant documents against the interests of the disclosing party, or third parties, in the preservation of their confidential commercial and technical information.
• An arrangement under which an officer or employee of the receiving party gains no access at all to documents of importance at trial will be exceptionally rare, if indeed it can happen at all.
• There is no universal form of order suitable for use in every case, or even at every stage of the same case.
• The court must be alert to the fact that restricting disclosure to external eyes only at any stage is exceptional.
• If an external eyes-only tier is created for initial disclosure, the court should remember that the onus remains on the disclosing party throughout to justify that designation for the documents so designated.
• Different types of information may require different degrees of protection, according to their value and potential for misuse. The protection to be afforded to a secret process may be greater than the protection to be afforded to commercial licences where the potential for misuse is less obvious.
• Difficulties of policing misuse are also relevant.
• The extent to which a party may be expected to contribute to the case based on a document is relevant.
• The role which the documents will play in the action is also a material consideration.
• The structure and organisation of the receiving party is a factor which feeds into the way the confidential information has to be handled.

Additionally, Floyd LJ noted that the court needs to be alert to potential misuse of the ability to designate documents as confidential. Parties still should not designate any material as AEO unless they have satisfied themselves that there are solid grounds for such restrictions to protect their confidential content.

Decision on the appeals:

Xiaomi’s appeal to challenge all documents designated as AEO was again dismissed. The court held that the appropriate test was to examine the claim to confidentiality over the documents in question in light of the severity of the confidentiality restrictions being contended for and Xiaomi had not explained what documents it actually needed to see.

For Oppo’s appeal regarding its three in-house license negotiators being admitted into the HCM Club, it became apparent that Oppo had discussed the matter with the Claimants prior to the hearing. Oppo had changed its position, noting that it was willing to restrict access of the three negotiators to only the six “de-designated” AEO documents and one other of the HCM documents. The Claimants had responded and agreed to this beforehand on certain proposed terms.

The court therefore found that this appeal fell away but noted that if it needed to be reconsidered the parties could return to court, e.g. if the Claimants’ proposed terms were not acceptable and did not resolve the issues.

Males LJ agreed with Floyd LJ, but also pointed out that a number of the confidentiality issues arose due to the Defendants being required to plead in detail any positive case on FRAND terms that they proposed to run at trial before any issues of liability had been decided. To enable the Defendants to do this, more extensive disclosure was required of the Claimants’ licenses and patents assignments than would likely ultimately prove to be relevant.  Males LJ noted that the unusual course the proceedings had taken in this case was responsible for many of these subsequent problems surrounding confidentiality but that, for the reasons given by Floyd LJ, the regime which was established at first instance was fair and appropriate.  Males LJ agreed however that the regime may have to be adjusted as the litigation proceeds to trial, when the issues will likely become more focused. Lewis LJ agreed with both judgments.

Conclusion

The Court of Appeal upheld the findings of the first instance judge and both appeals were dismissed.

The full judgment can be accessed here.

Headnote: Nancy Heath and Amy Crouch, Simmons & Simmons LLP