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PROTECTIVE ORDERS IN INTELLECTUAL PROPERTY LITIGATION
Protective orders, or confidentiality orders, are court orders restricting access to confidentialinformation disclosed in the course of litigat ion. Their purpose is to protect sensitiveinformation, such as trade secrets, from the public or from business competitors, while at thesame time allowing opposing parties to access information which is relevant to the matter indispute.
Protective orders are particularly important in the context of intellectual property litigation. Goodwill and commercial success, respectively, are often key issues in trade-mark and patentdisputes, and both issues require significant disclosure of financial records and marketing andsales data. Access to protective orders is therefore crucial in patent and trade-markproceedings. This paper will focus on the availability of protective orders in Canada, withreference to jurisprudence in the United States and the United Kingdom.
Protective Orders: A Balancing of Interests
The decision whether to grant a protective order lies within the discretion of the court. Indetermining whether a protective order is appropriate in a particular case, the court mustbalance competing interests.
On one hand, there is a strong common law presumption of public access to judicial records. One of the very tenets of our legal system is that justice should be administered in an opencourt. As stated by Dickson J. in Nova Scotia (Attorney-General)
Many times it has been urged that the 'privacy' of litigants requires that the public be excluded from Court proceedings. It is now well established, however, that covertness is the exception and openness the rule. Public confidence in the integrity of the Court system and understanding of the administration of justice are thereby fostered.1
This concept is further explored by Wilson J. in Edmonton Journal
v. Alberta (AttorneyGeneral)
, where she commented on the public interest in open trials. She stated that suchpublic interest is rooted in the need to:
maintain an effective evidentiary process;
ensure a judiciary and juries that behave fairly and that are sensitive to the values espoused by society;
promote the sense that courts operate with integrity and dispense justice; and
*Johanna Coutts is an associate at Macera & Jarzyna LLP, where she practises
intellectual property litigation and trade-mark and patent prosecution.
1Nova Scotia (Attorney-General)
(1982), 132 D.L.R. (3d) 385 at 401
provide the community with an opportunity to learn how the justice system operates and how the law being applied daily affects them2
Protective orders may also prevent the disclosure of information important to public safety andwelfare. This is a concern in, for example, cases relating to manufacturer liability for productdefects, but is not typically an issue in patent or trade-mark litigation.
On the other hand, disclosure of sensitive information may harm the parties involved inlitigation. In criminal matters, for example, the privacy and reputation of the victim or theaccused may be at stake. In intellectual property cases, the litigants often have strongcommercial and proprietary interests in maintaining the confidentiality of information. Commercial information often has a substantial financial value, which would be destroyed if itwere to be made available to the public. Disclosure of such information could also put thedisclosing party at a serious competitive disadvantage in the marketplace.
With such important considerations at stake, the decision to grant a protective order requires acareful balancing of interests. In the context of intellectual property litigation, the parties’interest in confidential proceedings is very strong, while the public interest in openness isweaker than in other areas of law. A further consideration is that the parties are so intent onprotecting their trade secrets and valuable commercial information that they may forego legalrecourse rather than disclose confidential information. Given these circumstances, thebalancing of interests in intellectual property matters often results in the protection of sensitiveinformation.
The following review of the law on protective orders in the United States, the United Kingdom,and Canada illustrates how various courts have balanced competing interests in consideringrequests for protective orders.
Protective Orders in the United States
American courts award protective orders in intellectual property cases on a regular basis,sometimes granting strong orders such as those that restrict access to "counsel's eyes only".
Protective orders relating to American federal matters are governed by Rule 26(c) of theFederal Rules of Civil Procedure. Rule 26(c)(7) in particular is applicable to intellectual propertylitigation, as this provision deals with the protection of trade secrets and other confidentialinformation:
26 (c) Upon motion by a party or by the person from whom discovery is sought. and
for good cause shown, the court. may make any order which justice requires toprotect a party or person from annoyance, embarrassment, oppression, or undueburden or expense, including one or more of the following:
v. Alberta (Attorney-General)
(1989), 64 D.L.R. (4th) 577 at 588
(7) that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way
In determining whether to grant a protective order under this provision, the courts have applieda three-step test.3 First, the moving party must demonstrate that the information to beprotected is a trade secret or other confidential information. Second, the moving party mustshow good cause for granting the protective order — that the potential harm caused bydisclosure of the information would outweigh the need of the part y seeking disclosure. Finally,if the moving party has successfully met this test, the burden shifts to the party seekingdiscovery to establish that disclosure of confidential information is both relevant and necessaryto its case.
The courts have considered the following factors in determining whether material qualifies as atrade secret or as confidential information4:
the extent to which the information is known outside the business;
the extent to which it is known by employees and others involved in the business;
measures tak en to guard the information's secrecy;
the value of the information to the business or to its competitors;
the amount of time, money and effort expended in development of theinformation; and
the ease or difficulty of duplicating or properly acquiring the information
Commercial or proprietary information in intellectual property cases often qualifies asconfidential information under this test. In American Standard Inc.
, for example, theFederal Circuit Court of Appeals affirmed that documents relating to clinical analysis conductedfor Food and Drug Administration approval for the manufacture and sale of bone implantsqualified as confidential information.5 The court cited examples of information found toconstitute trade secrets or confidential information in previous cases: quantitative productformulas6; marketing plans7; and information relating to market-entry decisions and productfabrication8.
3See, for example, Heat & Control Inc.
v. Hester Industries Inc.
, 785 F.2d 1017 (Fed.
Cir. 1986); Centurion Industries Inc.
, 665 F.2d 323 (10th Cir. 1981); AmericanStandard Inc.
, 828 F.2d 734 (Fed. Cir. 1987).
4J. Moore, Moore's Federal Practice
3d Ed. (Matthew Bender & Co., 1997) at 26-278.
6Federal Trade Commission
539 F.2d 202 (D.C. Cir. 1976).
v. United Fruit Co.
410 F.2d 553 (5th Cir. 1969).
v. Dynetics Engineering Corp.
54 F.R.D. 524 (N.D. Ill. 1972).
Factors considered in determining whether good cause exists for a protective order include thefollowing9:
whether disclosure will violate any privacy interests;
whether the information is being sought for a legitimate purpose or for animproper purpose;
whether disclosur e of the information will embarrass a party;
whether confidentiality is being sought for information important to public healthand safety;
whether sharing information among litigants will promote fairness and eff iciency;
whether a party benefiting from the order of confidentiality is a public entity orofficial; and
whether the case involves issues important to the public
Typically, few of these considerations are applicable in the context of intellectual propertylitigation, with the result that the risk of violating the disclosing party's interests often outweighsany benefits of making the confidential information available to the public. In AmericanStandard Inc.
. for example, the court noted that disclosure of confidential research anddevelopment, manufacturing methods and costs, and pricing policies to the disclosing party'scompetitors would likely cause irreparable economic harm, and a protective order was thereforejustified.10
Where the dispute is between business competitors, as is often the case in intellectual propertylitigation, disclosure may be restricted to the parties' attorneys, or even to outside counsel. Ifnecessary, a neutral third party may be used to screen the material. American courtsfrequently grant strong protective orders which limit disclosure to outside counsel, thusprecluding employees of the parties, including in-house counsel, from viewing confidentialdocuments.
Protective Orders in the United Kingdom
In the United Kingdom it is "well settled" that in certain circumstances the court may imposerestrictions on the normal right to inspect documents disclosed on discovery. The court willconsider the danger of unrestricted disclosure leading to misuse of information, as well as theneed to ensure that litigants are not prejudiced by restrictions in the reasonable prosecution oftheir claim or their defence.11
In intellectual property litigation, the courts have agreed to restrict disclosure on the basis of thedisclosing party's assertion that the information is confidential. This was the case in SorboRubber Sponge Products Ltd.
, where the plaintiff noted that it would withdraw its
v. Imperial Chemical Industries Plc
 R.P.C. 45 at 48-49 (Pat. Ct.)
claim rather than disclose its secret processes to the public.12 Similarly, in Roussel Uclaf
v.Imperial Chemical Industries Plc
, the defendants established that their secret process meritedprotection because it was costly to develop and because public disclosure would causeconsiderable harm.13
Although courts in the United Kingdom appear quite willing to restrict disclosure of confidentialinformation, they are hesitant to impose strong protective orders which completely exclude theopposing party.
The following passage from Roussel Uclaf
v. Imperial Chemical Industries Plc
was cited withapproval by the Court of Appeal:
Each case has to be decided on its own facts and the broad principle must be that the court has the task of deciding how justice can be achieved taking into account the rights and needs of the parties. The object to be achieved is that the applicant should have as full a degree of disclosure as will be consistent with adequate protection of the secret. In so doing, the court will be careful not to expose a party to any unnecessary risk of its trade secrets leaking to or being used by competitors. What is necessary or unnecessary will depend upon the nature of the secret, the position of the parties and the extent of the disclosure ordered. However, it would be exceptional to prevent a party from access to information which would play a substantial part in the case as such would mean that the party would be unable to hear a substantial part of the case, would be unable to understand the reasons for the advice given to him and, in some cases,the reasons for judgment. Thus what disclosure is necessary entails not only practical matters arising in the conduct of a case but also the general position that a party should know the case he has to meet, should hear matters given in evidence and understand the reasons for the judgment.14
In Roussel Uclaf
, the defendant had prepared a summary of its process for the manufacture ofan insecticide. This summary was confidential, and had been disclosed only to certain of theplaintiff's independent advisors. The plaintiff asked that two of the plaintiff's employees begiven access to the document, since it was difficult for the independent advisors to counsel theplaintiff properly without disclosing confidential information. The court noted that the plaintiff'snominees were French citizens, and that litigation involving the same parties was ongoing inFrance. The court granted disclosure to one of the plaintiff's nominees, but specified that hewould have to withdraw from any involvement in the French litigation.
In an earlier case, Warner-Lambert Co.
v. Glaxo Laboratories
, the defendants had givendiscovery of trade secret information, namely their process f or the manufacture of steroidcompounds. However, disclosure had been limited to plaintiffs' counsel, solicitor, patent agentand an expert selected by the plaintiffs, subject to undertakings that they refrain from divulging
, cited by Court of Appeal  R.P.C. 45 at 54 (C.A.).
the information to the plaintiffs. The plaintiffs then sought unqualified disclosure, oralternatively, disclosure to their chief executive, their U.S. general counsel, their U.S. patentcounsel, and an Italian scientist employed by the plaintiffs in Italy. The Court of Appeal alloweddisclosure only to the chief executive, noting that the plaintiffs "should have an opportunity notonly of being advised by technical experts and legal advisers, but of knowing the facts on whichthat advice was founded, so as to be able to form a personal judgement on how to deal with theaction".15 In refusing disclosure to the other people, the court alluded to the fact that it would bevery difficult to police the terms of the disclosure, since it would be impossible to determinefrom the products whether the defendant's process had been used.
British courts appear to grant protective orders on a routine basis, but are extremely hesitant tomake restrictive orders preventing the non-disclosing party from viewing confidentialinformation.
Protective Orders in Canada
Before 1998, when the new Federal Court Rules came into effect, there was no federal rulespecifically addressing protective orders and the court’s authority to grant them. Orders weregenerally awarded under rule 452, which provided for the production and inspection ofdocuments.
Overall, the Federal Court of Canada has tended to grant requests for protective orders inpatent and trade-mark litigation. In other words, in patent and trade-mark cases, the interest ofthe parties in protecting the confidential nature of material such as research data and financialrecords usually outweighs the public interest in viewing those materials.
In Apotex Inc.
v. Wellcome Foundation Ltd.
, for example, the court stated that:
The general principle of the court and its process being open to public scrutiny, including access for the public to court documents, is fundamental to our system of justice. Striking a balance between that principle and the interests of justice between the parties, including the bona fide commercial and proprietary interests of parties to litigation has led to the practice in this and other courts of providing by protective or confidentiality orders that information obtained in preparation for trial may, in appropriate cases, be maintained in confidence, not accessible to the general public, in the court's processes.16
At issue in the case was the validity of the defendant's patent. The defendant applied for, andwas granted, a confidentiality order to protect the confidentiality of laboratory notebooks,research reports, memos, and other forms of documents containing research results.
v. Glaxo Laboratories Ltd.
 R.P.C. 354 at 359 (C.A.).
v. Wellcome Foundation Ltd.
(1993), 51 C.P.R. (3d) 305 at 309-310
The court held that the moving party's belief that its proprietary, commercial and scientificinterests would be seriously harmed by producing information relating to these interests wassufficient to demonstrate need for a confidentiality order. The court went on allow thedefendant's application, referring to three factors which favoured the grant of a confidentialityorder. First, parallel litigation subject to protective orders was underway in the United Statesand it made sense to provide comparable protection in Canada. Second, the terms of the draftorder were broad enough to allow the producing party to decide whether documents wereconfidential, and to allow the receiving party to object to such claims. Finally, the court notedthat its own practice was to issue protective orders where a party has a belief in good faith thatits commercial or scientific interests associated with trade secrets could be seriously harmed bypublic disclosure.17
At times, the court has balked and refused to grant a protective order as requested, usuallywhen the moving party has asked for more than the typical protective order. For example, inMolson Breweries
v. Labatt Brewing Co.
, the plaintiffs had moved for, and obtained, aprotective order on an ex parte
basis. The order designated certain agreements between theplaintiffs as "secret", as they were confidential, and unrelated to the subject-matter of thelitigation. The secret documents were to be disclosed only to the court, and not to thedefendant. On appeal by the defendant, the Federal Court of Appeal struck out the portion ofthe order relating to "secret documents". The court noted that "the law leans against any fetteron the openness of proceedings", and that "disclosure should be limited as minimally aspossible".18 In this case, the protective order had gone far beyond such minimal limitation inmaking documents inaccessible to the defendants, in being granted on an ex parte
basis, andin covering all "secret documents" which might be required to be produced throughout theproceeding.
Similarly, the court has often refused to grant protective orders restricting access to "trialcounsel's eyes". Such orders would preclude any of the parties' employees from viewingconfidential documents. Highly restrictive orders make it difficult for counsel to communicatewith and receive instructions from their clients, and are therefore granted only where anoverwhelming need arises.
For example, in Zeneca Pharma Inc.
v. Canada (Minister of Health and Welfare)
, therespondent Apotex Inc. sought an order to amend a previously granted protective order. Apotex wished to add a provision to the protective order such that each party would have theright to designate material as confidential information for counsel's eyes only. The courtreviewed the factors set out in Apotex Inc.
v. Wellcome Foundation Ltd.
19, noting the lack ofevidence that some material was of a higher order of confidentiality than other material, and theabsence of "for counsel's eyes only" provisions in parallel U.S. litigation. Finally, the courtstated that:
v. Labatt Brewing Co.
(1992), 43 C.P.R. (3d) 61 at 65 (F.C.A.).
In litigation involving highly technical or scientific information, information made availableto counsel by virtue of a court order will often be of little or no use if counsel cannot consult with her or his client with respect to the information. In such circumstances, the court order would be effectively frustrated. This court should not lightly contribute to such a result.20
The court accordingly dismissed the motion, since the applicant had not demonstrated sufficientcause for the drastic action of limiting disclosure to counsel.
Similarly, in Pfizer Canada Inc.
v. Novopharm Ltd.
, the applicants sought to amend therespondents’ draft confidentiality order, in order to permit disclosure of confidential material tothe parties' employees. The order as drafted permitted disclosure only to counsel and up tothree experts and support staff, provided they were not employees of the parties. The courtcited Zeneca Pharma
21, noting that the onus was on the party requesting a more restrict iveorder to establish the need for such a restriction. Some of the confidential documents were ofcrucial significance to the case, and in order to allow the applicants to prepare an adequatedefence to the respondents' case it was necessary to allow disclosure to at least one expertemployed by the applicants. The court ordered accor dingly.22
The Federal Court of Appeal in Glaxo Group Ltd.
v. Novopharm Ltd.
agreed with this line ofcases, refusing to restrict disclosure under a protective order to "counsel's eyes only" becausethe evidence adduced was insufficient to illustrate how the respondents would be harmed if thedocuments in question reached the eyes of the appellant.23
Occasionally, the Federal Court has voiced a concern with regard to protective orders onconsent, noting that the court has a duty to ensure that it is appropriate to treat the documentsin question as confidential information.
, a patent infringement action, the defendants applied for a protectiveorder with respect to information relating to technical, administrative and financial aspects suchas profit margins, technical details of the production process, correspondence clients, andminutes of meetings with clients and suppliers. The court declined to grant the order withoutreviewing the documents in question, stating that:
Protective orders are an exception to the general rule that a party is required to produce for inspection of other parties all documents which may relate to any matter at issue in the cause. The party seeking such exceptional treatment must make the necessary application. The supporting material must also include the information for which exemption from disclosure is sought in such a way as to
20Zeneca Pharma Inc.
v. Canada (Minister of National Health and Welfare)
22Pfizer Canada Inc.
v. Novopharm Ltd.
(1996), 70 C.P.R. (3d) 176 (F.C.T.D.).
23Glaxo Group Inc.
v. Novopharm Ltd.
(1998), 81 C.P.R. (3d) 185 (F.C.A.).
permit scrutiny of it by the court before any such order is made.24
In Eli Lilly and Co.
v. Novopharm Ltd.
, the court not only refused outright to grant a protectiveorder on consent, but added that protective orders were not appropriate in proceedings underthe Patented Medicine (Notice of Compliance) Regulations
. The applicant had originally soughtan order in accordance with the regulations to prohibit the Minister of National Health andWelfare from issuing a Notice of Compliance to the respondent. In this proceeding, theapplicant brought a motion to compel the respondent to answer questions in cross-examinationof an affidavit sworn in support of the respondent's Notice of Allegation. The court noted thatthe parties had consented to a confidentiality order which they expected the court to "rubberstamp". Justice Muldoon made it clear that the final discretion in granting a confidentiality orderbelonged to the court:
There is an element of public law in these proceedings.An order of this sort goes against the inherent nature and constitutional imperatives of this court. It is an affront which is to be suffered by the court only in instances of dire, demonstrated need, if ever at all. A heavy onus naturally does, and in practice always should, rest on those who seek a confidentiality order, whether by consent or not, for the proceedings are not entirely in the domain of purely private law.Even if the parties do consent, the court should jealously guard against all but the most demonstratively necessitous affront to its very nature. Such secrecy order should never go just for the asking.25
The court concluded that since there was nothing “preciously secret” about the mattersdisclosed during the proceedings, the order on consent should not be granted.
The court’s concerns about granting a protective order without viewing the confidentialdocuments were consistent with other decisions and with new rule 151.26 However, the court’sgeneral comments about the lack of necessity for protective orders in Notice of Complianceproceedings have not been followed in subsequent decisions.
In AB Hassle
v. Canada (Minister of National Health and Welfare)
, the parties were in disputeover whether certain affidavit evidence filed by the generic drug manufacturer RhoxalPharmaInc. was confidential. RhoxalPharma had previously obtained a confidentiality order protectingthe identity of RhoxalPharma's supplier of omeprazole, and the process, components andformulae for the manufacture of RhoxalPharma's omeprazole tablets. The Federal Court ofAppeal found that the information in issue — a list of ingredients of the omeprazole tablets andexpert evidence bearing on the distinctions between RhoxalPharma's tablets and those of ABHassle — was confidential.
The court also noted that protective orders are generally granted in Notice of Complianceproceedings, for several reasons. First, the perceived confidentiality of information is a
(1994), 59 C.P.R. (3d) 302 at 305 (F.C.T.D.).
25Eli Lilly and Co.
v. Novopharm Ltd.
(1994), 56 C.P.R. (3d) 437 at 439-440 (F.C.T.D.).
cornerstone of the regulatory scheme set out in the Patented Medicine (Notice of Compliance)Regulations
and the Food and Drug Regulations
, and in order for the scheme to functionproperly, the confidentiality of information submitted in accordance with these regulations oughtto be maintained to the greatest extent possible.
Second, in striking a balance between the need for public scrutiny of the court process and theprotection of the parties' commercial and proprietary interests, the latter often outweighed theformer in Notice of Compliance proceedings. The court noted that there was "little, if any,public interest in knowing the specific content of drug processes", and that the issue of aprotective order in NOC proceedings was unlikely to imperil the principle of open justice.27 Furthermore, the court referred to the decision in AB Hassle
v. Canada (Minister of NationalHealth and Welfare)
, where the Federal Court of Appeal held that in Notice of Complianceproceedings, "a confidentiality order may be issued on the basis of a subjective but reasonablyheld belief".28
In summary, the Federal Court has been quite liberal in awarding protective orders in patentand trade-mark cases, only objecting when the parties have gone too far by attempting toobtain unnecessarily restrictive orders or by failing to recognize the court’s role in assessing theneed for a confidentiality order.
The Federal Court Rules now provide specific authority to grant protective orders, and rule151(2) requires the court to satisfy itself that given material should be treated as confidential:
151 (1) Motion for order of confidentiality
— On motion, the Court may order that
material to be filed shall be treated as confidential.
(2) Demonstrated need for confidentiality
— Before making an order under
subsection (1), the Court must be satisfied that the material should be treated as
confidential, notwithstanding the public interest in open and accessible court
152 (1) Marking of confidential material
— Where the material is required by law to
be treated confidentially or where the Court orders that material be treated
confidentially, a party who files the material shall separate and clearly mark it as
confidential, identifying the legislative provision or the Court order under which it is
required to be treated as confidential.
(2) Access to confidential material
— Unless otherwise ordered by the Court,
v. Canada (Minister of National Health and Welfare)
(2000), 5 C.P.R. (4th)
v. Canada (Minister of National Health and Welfare)
(1999), 87 C.P.R. (3d)
(a) only a solicitor of record, or a solicitor assisting in the proceeding, who is not a party is entitled to have access to confidential material;
(b) confidential material shall be given to a solicitor of record for a party only if the solicitor gives a written undertaking to the Court that he or she will
(i) not disclose its content except to solicitors assisting in the proceeding or to the Court in the course of argument,
(ii) not permit it to be reproduced in whole or in part, and
(iii) destroy the material and any notes on its content and file a certificateof their destruction or deliver the material and notes as ordered by the Court, when the material and notes are no longer required for the proceeding or the solicitor ceases to be solicitor of record;
(c) only one copy of any confidential material shall be given to the solicitor of record for each party; and
(d) no confidential material or any information derived therefrom shall be disclosed to the public.
What effect have the new rules had on protective orders in the Federal Court? The recent caseof Levi Strauss & Co.
v. Era Clothing Inc.
, a trade-mark infringement action, sheds some lighton the answer to this question. In Levi Strauss
, the defendant Era brought a motion for aconfidentiality order pursuant to rule 151.29 The defendant wished to protect commercialinformation including financial records and sales figures. In a motion before the Prothonotary,the plaintiff objected to the form of the order, stating that since the order applied only todocuments included in the defendant's motion record, the parties would be required to return tothe court each time new documents came to light. The plaintiff also noted that the form of theorder was contrary to the form accepted by the court through established practice. TheProthonotary agreed with the plaintiff, and granted a confidentiality order in the form requestedby the plaintiff.
The defendant appealed to the Federal Court Trial Division, arguing that previous practice ofthe court with respect to the form of confidentiality orders was irrelevant, given the recentchange in court rules. In particular, the effect of rule 151(2) was to require the court to satisfyitself that, with respect to each document subject to the confidentiality order, the claim forconfidentiality outweighed the public interest in open and accessible court proceedings. Thisprecluded blanket orders which covered broad categories of documents.
The court accepted the defendant's argument, but only with respect to "material to be filed". Inthe interests of efficiency and expeditiousness, parties should be able to obtain umbrellaconfidentiality orders covering materials not to be filed. The court acknowledged that this mightrequire parties to seek a second confidentiality order when it came time to file documents, but
29Levi Strauss & Co.
v. Era Clothing Inc.
(1999), 1 C.P.R. (4th) 513 (F.C.T.D.)
stated that a better solution would be to discourage parties from applying for a confidentialityorder until ready to file.30In Chao
v. Costco Canada Inc.
, Prothonotary Morneau refused to grant a motion on consent fora confidentiality order because it was not satisfied that the draft order was "in accordance withthe teachings of this Court in Levi Strauss & Co.
v. Era Clothing Inc.
Also decided since the new rules have come into effect are AB Hassle
v. Canada (Minister ofNational Health and Welfare)
32 and AB Hassle
v. Canada (Minister of National Health andWelfare)
33, discussed above, where the Federal Court of Appeal granted protective orders onthe basis of a reasonably held belief that substantial harm would result from full disclosure.34
The new rules reflect the existing law on protective orders, and have not imposed any drasticchanges. As pointed out in Levi Strauss
, rule 151 does require the court to review allconfidential material that is to be filed. However, in light of previous decisions in which the courtcommented on its role in protecting public interest and in reviewing allegedly confidentialmaterial, this is unlikely to result in a change in court practice. It is interesting to note that thecourts have already interpreted rule 151 in such a manner as to soften its potentially harsheffects; the court has held that rule 151 applies only to material to be filed35, and that it may besufficient for the court to read summaries of the material instead of the complete documents36.
Rule 152(2)(a) provides that by default, access to confidential material shall be granted only tothe solicitor of record. Access may be expanded if the court orders otherwise. It is too early todetermine the impact of this rule. As noted above, the overwhelming trend in Canada has beento grant restrictive protective orders only in exceptional cases. It remains to be seen whetherthis new rule will have any effect on the num ber of restrictive or “counsel’s eyes only” protectiveorders granted.
31(November 1, 2000) Court File No. T-1045-00 (F.C.T.D.) at par. 1. As an aside, a
colleague of mine has recently been refused a protective order covering material not to be filed. The court cited Levis Strauss
, stating that the order must specifically provide that a further orderwould be required if and when the material were filed.
34As an interesting aside, the Federal Court of Appeal in Sierra Club of Canada
Canada (Minister of Finance)
 4 F.C. 426 (F.C.A.) noted at p. 474 that the decision togrant a protective order in AB Hassle
was an indication of the relatively small public interest atstake in the proceedings.
35See Levi Strauss, supra
36See Sierra Club of Canada, supra
note 34 at 478.
Based on this brief overview of American, British and Canadian court practice relating toprotective orders, it appears that basic protection of conf idential information is generallyavailable to intellectual property litigants. However, this is not always the case; the followingexamples illustrate that in some situations protective orders may by unavailable or ineffective.
Protective Orders and the Trade-marks Opposition Board
Although protective orders are available at many Canadian tribunals, such as the CanadianInternational Trade Tribunal and the Competition Tribunal, they are not available forproceedings before the Trade-marks Opposition Board ("TMOB"). This is the case despite thefact that parties appearing before the TMOB must often disclose financial records in order todemonstrate use of a trade-mark or goodwill associated with a trade-mark.
The TMOB's failure to provide protection for confidential information is unusual in comparison topractices in other countries. Protective orders are available in proceedings before the AmericanTrademark Trial and Appeal Board. Upon motion by any party, the Board has the power tomake any order required by justice, as set out in the Federal Rules of Civil Procedure.37 Similarly, the United Kingdom Patent Office makes provision for confidentiality orders in interpartes
proceedings before the Registrar of Trade-marks.38 Upon request, the Registrar willrestrict disclosure to the public, but will only restrict disclosure to opposing parties in exceptionalcircumstances.39
The unavailability of protective orders may have a chilling effect on parties' willingness toproceed before the TMOB. In fact, there is some evidence that parties will withdraw fromlitigation if they cannot obtain protection for confidential information.40 A further danger is thepotential for abuse, in that parties may initiate TMOB proceedings simply to obtain access to acompetitor's information.
The TMOB's failure to allow for the protection of confidential information is a major shortfall. Itis inconsistent with trade-mark tribunal practice in other countries such as the United States andthe United Kingdom, and it may result in serious harm to parties before the TMOB.
37Trademark Trial and Appeal Board Manual of Procedure
, September 1995, Rule
38Trade Marks Rules 2000
, S.I. 2000/136, r. 51.
39See Trade Marks Law Section Practice Notice on "Confidentiality of evidence filed in
40See, for example, Coca-Cola Bottling Co. of Shreveport, Inc.
v. The Coca-Cola
227 U.S.P.Q. 18 (Dist. Ct. Del 1985), where the court ordered the plaintiff Coca-ColaCompany to disclose its secret formula for Coca-Cola. Although the formula would have beensubject to a protective order, the plaintiff sett led the litigation rather than disclose its valuabletrade secret.
Protective Orders and Parallel Litigation
An issue of increasing importance in today's global economy is the treatment of confidentialmaterials from outside the country where litigation is taking place. For example, parallellitigation involving the same parties often takes place in both Canada and the United States. Confidential material produced in the course of Canadian litigation and subject to a Canadianprotective order may not be protected in the corresponding American litigation. A protectiveorder granted by a Canadian court has no extraterritorial effect, and therefore provides noguarantee of protection outside of Canada.
Often Canadian courts will take into consideration the terms of an American protective order.41 In Foseco International Ltd.
v. Bimac Canada
, the Federal Court noted that it would be "highlyundesirable" for the protective order in the Canadian proceedings to differ substantially fromthat issued in parallel American proceedings.42
However, American courts do not always demonstrate the same concern for homogeneity. Insome cases, American courts have refused to grant a protective order under the same terms asa Canadian protective order, or have refused to grant a protective order altog ether. What ismore, these same courts have ordered parties to produce all documents which were producedin the parallel Canadian litigation, even those which had been subject to a protective order.43 As a result, parties who have agreed to disclose sensitive material in Canada because of theprotection promised by a confidentiality order are then faced with a nasty surprise. They mustchoose between defying the American court order and suff ering the severe penalties that would
ensue, and disclosing confidential information to the public.
Where American courts ignore Canadian protective orders in this way, the protection offered bythe Canadian orders becomes meaningless. The American courts effectively undercut thepower of Canadian courts to protect the interests of parties involved in Canadian litigation.
Given that the jurisdiction of Canadian courts is limited to proceedings in Canada, one way thatCanadian courts could sanction this behaviour would be by imposing penalties within thecontext of Canadian litigation. A possible solution could be the inclusion of a clause inCanadian protective orders to the effect that if either party seeks an order before a foreign courtto have all documents produced, regardless of their confidentiality status, that party willautomatically forfeit its case before the Canadian court and be forced to pay costs on asolicitor-client basis. Such a draconian measure might not find favour in Canadian courts, andmight also provoke more drastic reactions in American courts.
Alternatively, Canada and the United States might agree to amend their respective proceduralrules. These amendments would require courts to consider the ter ms of protective orders inparallel litigation, and to grant orders under similar terms unless exceptional circumstances
41See Apotex Inc.
v. Wellcome Foundation Ltd.
42(1980), 51 C.P.R. (2d) 51 at 53 (F.C.T.D.).
43Similarly, American courts have ordered production of documents which would be
protected by privilege in Canada, but are not considered to be privileged in the United States.
existed. This measure would likely be more palatable for the courts, but practically it might bedifficult to accomplish.
Protective orders require a balancing of the litigants' interest in maintaining the confidentiality ofsensitive information against the public interest in transparent, open court proceedings. Inpatent and trade-mark matters, the protection of confidential information is often so important tothe parties that they would withdraw from litigation rather than disclose such information. It isessential for courts to recognize this fact, and to respond by granting protective orders.
Courts in the United States, the United Kingdom, and Canada are generally favourable togranting protective orders under moderate terms in intellectual property cases. As a result, theinterests of patent and trade-mark litigants are, for the most part, well protected. However,notable exceptions to this protection include the Canadian Trade-mark Opposition Board'sfailure to provide for confidentiality orders, and lack of protection from disclosure of confidentialinformation in parallel foreign litigation.
Strong protection for confidential information in intellectual property matters is crucial if partiesare to have fair access to legal recourse. As it stands, protection is reasonably good, but thereis room for improvement.
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