The UK High Court maintained “external eye only” protection for a class of documents essential to the plaintiffs’ loss of earnings claim in a damages investigation. External Eye Privacy Clubs exclude all employees or officers of clients and limit access to EEO information to outside lawyers and experts. In rendering his judgment, Justice Mellor acknowledged that this was an exceptional action in light of recent rulings on confidentiality in patent cases.

Background

Both parties to this action are chemical companies and, in particular, are fierce competitors in the supply of raw materials used in catalytic converters. Rhodia, the plaintiffs, brought this action with a patent infringement action against Neo, the defendants. The patent in question concerned a substance used in the manufacture of catalytic converters. This patent was declared valid and infringed by certain Neo products in a judgment rendered in 2018.

Following the finding of patent infringement, the action evolved into a damages investigation in which Rhodia filed a claim for loss of profit. As part of this investigation, Rhodia was ordered to communicate a Sales Report and documents concerning the margin that Rhodia would be entitled to recover if they, instead of Neo, had supplied the patented substance to a particular customer. The documents disclosed are very sensitive commercially, containing sales volumes, revenues and margins for each of Rhodia’s customers broken down by year, product and invoice.

Request access

Mellor J’s judgment concerned a request made by Neo to authorize its Deputy Chief Executive Officer to access the confidential documents disclosed by Rhodia. This access request was contested by Rhodia and a third party, one of Rhodia’s customers, referred to as “Party B” in the judgment. Mellor J heard this question on October 8, along with a smaller question regarding access to other material relating to another third party, Party A.

The legal principles to be applied, namely those set out in paragraphs [19-41] and [39-40] of the judgment of the Court of Appeal in Oneplus vs. Mitsubishi Electric [2020] EWCA Civ 1562. A key point of the Oneplus is that it should be exceptionally rare for access to important documents to be denied to an employee or agent of the party concerned. However, the parties have applied these principles very differently to the facts concerning these confidential documents.

Party positions

Neo had identified their COO, Mr. Morris, as the only suitable candidate to access confidential documents. He was an experienced lawyer, responsible for leading the multi-jurisdictional litigation between Rhodia and Neo, and he did not deal directly with Neo’s clients on pricing. Neo argued that Mr. Morris needed access to confidential documents so that he could help prepare expert evidence, review settlement agreements, and generally give instructions.

Neo was also ready for Mr. Morris to make a strengthened commitment confirming that he would not play any role in discussions or decisions relating to the pricing of affected products, the allocation of manufacturing capacity, or lead times. in which these products must be supplied.

Rhodia and Party B opposed this commitment and Neo’s comments on Mr. Morris’ need to access confidential information. A crucial issue they raised, which the judge then relied on, was that Neo and Rhodia were rivals in this industry and that sharing this highly sensitive business information by competitors in the same market could result in rise to a competition law. worry.

In dealing with Neo’s case, Rhodia made a counter-proposal regarding Mr. Morris’s access. Although Rhodia was unwilling to grant Mr. Morris access to their confidential documents, they did agree that Mr. Morris could be “informed of the impact” that the documents might have on commercial margins and profitability. Rhodia thesis on these margins. Rhodia suggested that this information would be sufficient for Mr. Morris to assess the claimed margins and make a possible settlement offer.

exceptional result

Rhodia’s counter-proposal solution was favored by the judge and he rejected Neo’s request for Mr. Morris to have access to the confidential documents on the conditions they proposed. This maintenance of EEO protection on confidential documents was justified by Mellor J because he considered that this circumstance was an exceptional situation. Mellor J said that:

[T]The documents in dispute inevitably contain key information which, once seen, will be very difficult, if not impossible, to forget.

Mellor J noted that even a man of Mr. Morris’ reputation and character would have a hard time forgetting the business information in the documents, no matter how diligently he tries to meet his commitments:

The solution I take at this point is primarily to protect the information, but also to relieve Mr. Morris of having to struggle to disregard that information in circumstances where it can be very relevant.

This continued EEO protection, however, is an interim measure that Mellor J urged parties to revisit at the next PTR hearing, where he hoped that the information Mr. Morris might need to access could be significantly reduced.

Contrast with the IP bridge

On the same date, another Mellor J judgment in the IP Bridge v Huawei case was issued. This judgment stems from a case management hearing between these parties, during which an issue regarding access to confidential IP Bridge license agreements by Huawei employees was raised.

Unlike the Rhodia ruling, Mellor J’s conclusion in this IP Bridge ruling was that two Huawei employees should have access to a specific license agreement. However, there are significant differences between the facts in these two cases which explain why different orders were made.

First, in IPB, the access of Huawei’s customers was debated in connection with two licensing agreements, on which significant weight was likely to be given. On the other hand, in Rhodia v Neo, the access concerned a large number of documents (more than 2000 pages) and it was not clear at this stage of the action which of these documents really should be seen by the COO of Neo .

Second, unlike Neo, Huawei was able to identify at least two salaried legal advisers who may have given instructions on the litigation but who are not involved in the licensing discussions. The judge was prepared to authorize access on the basis that these people agree not to get involved for five years in license discussions with the counterparty to the license in question.

Take points at home

Three important points of these cases were:

1. Identify at the customer’s premises the person who is least likely to have difficulty meeting their commitments not to work in the commercial area concerned.

2. Clearly define the scope of the requested material to be viewed by the client.

3. Mellor J suggested that providing concrete reasons for the difficulties faced by clients not having access to confidential information may be helpful in justifying access for clients.

Anan Kasei & Rhodia Operations vs. Neo Chemicals & Oxides & Ors [2021] EWHC 2825 (Tap)

Godo Kaisha IP Bridge 1 vs. Huawei Technologies Co. Ltd & Ors [2021] EWHC 2826 (Tap)