CAFC Affirms-In Part District Court’s Refusal to Seal Uniloc’s Confidential Information

“The CAFC agreed with the district court that Uniloc should have submitted a narrowly tailored sealing request at the outset, as required by the Local Rules, rather than seeking to seal entire documents based on no more than ‘perfunctory assertions’ and then ‘trying to get away with whatever [it could] on a motion for reconsideration.’”

On July 9, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed in-part and vacated in-part a decision of the U.S. District Court for the Northern District of California in Uniloc 2017 LLC v. Apple, Inc.  In particular, the CAFC concluded that the district court did not abuse its discretion in denying Uniloc’s requests to seal its own confidential information. However, the CAFC concluded that the district court failed to properly assess whether third-party information, including licensees’ names, addresses and royalty rates, should be sealed.

In 2018, Uniloc 2017, LLC (Uniloc) filed four patent infringement actions against Apple Inc. (Apple) and Apple moved to dismiss for lack of subject matter jurisdiction, arguing that Uniloc did not have the right to exclude Apple from using the patents and could not claim an injury in fact. Apple reasoned that Uniloc “lacked” rights in the patents because it defaulted on a loan with Fortress Credit Co. LLC (Fortress), wherein Uniloc had granted Fortress a license with the right to sublicense in the event of default.

Uniloc filed an administrative motion to seal material referenced in Apple’s motion to dismiss. Uniloc had previously designated the material as highly confidential under a protective order entered by the district court. Additional sealing motions were filed with Uniloc’s opposition to Apple’s motion to dismiss and with Apple’s reply. The sealing motions requested that the district court seal “most of the materials in the parties’ underlying briefs, including citations to case law and quotations from published opinions”, as well as “twenty-three exhibits in their entireties”, including “matters of public record, such as a list of Uniloc’s active patent cases.” Uniloc filed three declarations in support of the sealing request, wherein the exhibits were listed, and it was noted that “disclosure of this extremely sensitive information would create a substantial risk of serious harm to the Uniloc entities.”

Subsequently, the Electronic Frontier Foundation (EFF) contacted counsel for Uniloc, noting that Uniloc’s proposed redactions were excessive and that it would move to formally intervene if Uniloc did not refile the documents “consistent with the public’s right of access”. Uniloc declined to revise the sealing requests and EFF filed a motion to intervene with the district court. The district court then denied, in full, Uniloc’s motions to seal because Uniloc did not present “a compelling reason to justify sealing” such an “astonishing” amount of material and because Uniloc’s “generalized assertion of potential competitive harm fail[ed] to outweigh the public’s right to learn of the ownership of the patents-in-suit—which grant said owner the right to publicly exclude others.”

In response, Uniloc filed a motion for leave to seek reconsideration, noting that it would make public “more than ninety percent” of the material it originally sought to seal, but that the district court should seal a table that included third-party licensees’ information including their names, dates of licenses, and amounts paid for the licenses. Along with its motion, Uniloc submitted declarations from several third party licensees, “who stated that disclosure of their confidential and/or proprietary information, including the terms of their licenses with Uniloc, would cause them significant competitive harm.” The district court denied Uniloc’s motion for leave to file for reconsideration and its revised motion to seal, noting that “Uniloc should have submitted a narrowly tailored request for sealing ‘right from the outset rather than over-classifying and then trying to get away with whatever [it could] on a motion to reconsider.’” The district court also asserted that the licensees’ declarations did “not surmount the hurdle of showing a compelling reason to seal.” Uniloc appealed to the CAFC.

Collateral Order Doctrine

The CAFC initially established that its authority to consider the appeal stemmed from the collateral order doctrine, which provides “a narrow exception” to the final judgment rule and permits appellate review of “trial court orders affecting rights that [would] be irretrievably lost in the absence of an immediate appeal.” The CAFC thoroughly explained that the collateral order doctrine applies in this case, noting, in part, that “the orders are ‘effectively unreviewable on appeal from a final judgment because once the parties’ confidential information is made publicly available, it cannot be made secret again.’”

Sealing Orders for Uniloc’s Materials

The CAFC first addressed Uniloc’s sealing orders with respect to Uniloc’s own purportedly confidential or sensitive information. Uniloc argued that the district court abused its discretion in denying is revised request to seal. Explaining that Local Rules set the standards for filing requests to seal and for reconsideration of such requests, the CAFC noted that the Local Rules provide that a leave to file a motion for reconsideration is only granted if the litigant establishes an intervening change in law or facts or a “manifest failure by the Court to consider material facts or dispositive legal arguments.” Noting that Uniloc failed to meet the requirements set forth by the Local Rules, the CAFC reasoned that Uniloc’s motion for leave to file for reconsideration was essentially “an attempt to gain a ‘second shot’ at complying with Local Rule 79-5’s prerequisites for filing documents under seal.” The CAFC agreed with the district court that Uniloc should have submitted a narrowly tailored sealing request at the outset, as required by the Local Rules, rather than seeking to seal entire documents based on no more than “perfunctory assertions” and then “trying to get away with whatever it could] on a motion for reconsideration.

The CAFC rejected Uniloc’s argument that the district court erred in refusing to redact the dollar amounts and financial terms of certain agreements because Apple’s motion “did not directly depend” on such information. The CAFC stated that Uniloc’s argument was “backwards” because there was no requirement for the district court to seal any information; rather, “all filings were presumptively accessible, and it was Uniloc’s duty to provide compelling reasons for shielding particular materials from public view.” The CAFC further noted that Ninth Circuit precedent has made it clear that “judicial records are public documents almost by definition, and the public is entitled to access by default.”

The CAFC also rejected Uniloc’s argument that the district court erred by denying it the opportunity to submit a revised motion to seal because it was the “usual practice” of the district court to give litigants “a second (and third) chance to address the court’s concerns regarding motions to seal.” The CAFC responded that “the fact that other courts, under other circumstances, have permitted litigants to submit revised sealing requests does not mean that the district court was required to do so here.” Noting that the Local Rule “clearly put Uniloc on notice that its motion to seal could be ‘denied in its entirety’ if it did not comply with the Rules, the CAFC explained that the district court did not abuse its discretion by strictly enforcing its local procedural rules or in denying Uniloc’s requests to seal its purportedly confidential information.

Sealing Orders for Third Parties’ Information

The CAFC separately addressed the district court’s decision to deny Uniloc’s motion to seal with respect to third party licensees’ information, including their names, the duration of the licenses, and the royalty rates paid by the licensees. The CAFC noted that many of the licensees submitted declarations requesting that their information be kept confidential because the disclosure of such information would cause them “material competitive injury.” The CAFC explained that the district court’s findings were insufficient to allow an adequate assessment of “whether it properly balanced the public’s right of access against the interests of the third parties in shielding their financial and licensing information from public view” and that there was no indication whether the district court assessed any of the third-party information to determine if it was “protectable as a trade secret or otherwise entitled to protection under the law”. Thus, the CAFC vacated the portions of the district court’s orders related to sealing or redaction of the licensees’ purportedly confidential information and remanded to the district court for “particularized determinations” of whether such information should be made public.



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