Protection of Trade Secrets in Patent Litigation Before the Unified Patent Court

Introduction

After decades of failed attempts and many obstacles to overcome along the way, Europe is now closer than it has ever been in creating a patent with unitary effect and setting up a Unified Patent Court (UPC). With the UPC, the patent litigation landscape will change significantly in Europe. The new court is established by the Agreement on a Unified Patent Court of 19 February 2013 (UPCA). Due to the unitary effect of unitary patents and the competence of the UPC, infringement and invalidation proceedings can encompass the whole territory of the Member States of the UPCA instead of individual states, as is currently the case with EP patents.

Germany has recently deposited its UPCA ratification instrument, and it has been reported that the UPC will open its doors on 1 June 2023. With summer approaching fast, it is time to get ready. In this article, I discuss a few aspects on confidentiality in UPC proceedings. These questions can be equally important for a plaintiff as well as a defendant in UPC proceedings, who may both wish to ensure that their trade secrets are safeguarded. While ensuring the protection of trade secrets information, the UPC will also have to consider other interests, such as the right to an effective remedy and the right to a fair trial.

The Publicity of Hearings

The UPCA includes a few provisions on trade secrets in patent matters heard before the UPC. Pursuant to Art. 45 of the UPCA, as a point of departure the UPC proceedings are public.  Under said provision, the proceedings shall be open to the public unless the court decides to render them confidential, to the extent necessary, in the interest of one of the parties or other affected persons, or in the general interest of justice or public order. Rule 115 of the Rules of Procedure of the Unified Patent Court of 8 July 2022 (RoP) essentially states the same as Art. 45 of the UPCA, with the addition that the “proceedings” includes the oral hearing as well as the hearing of witnesses.

The above-mentioned provisions allow for the court to hold the trial behind closed doors for example when trade secrets are being discussed or disclosed to the extent this is necessary in the interest of one of the parties (the trade secret holder). The trade secret can belong to one of the parties in the litigation or even third parties. The wording of the provision does not even require there to be disclosure of a trade secret; it is sufficient that it would be in the interest of one of the parties to hold confidential proceedings. Based on the wording of Art. 45, the provision appears to grant the court the power to at least exclude the public from the proceedings. But the provision is silent on whether the parties and/or their representatives can also be excluded if this would be warranted for example to protect the trade secrets of one of the parties. This boils down to what is meant by “confidential” proceedings in Art. 45 of the UPCA. But perhaps more importantly, it should be noted that excluding one of the parties and/or his counsel from the proceedings or part of the proceedings would be problematic from a fair trial point of view because Art. 47 of the Charter of Fundamental Rights of the European Union ((2000/C 364/01) (CFREU) guarantees everyone a right to an effective remedy and a fair trial, which includes the right to a public hearing. The UPC is bound by the CFREU as a consequence of Art. 20 of the UPCA, which stipulates that the court shall apply EU law in its entirety and shall respect its primacy.

Rule 262A of the RoP – which was included only in the final version of the RoP (of 8 July 2022) – also includes rules on the confidentiality of a hearing as far as it concerns the use of evidence in the proceedings. Under said provision, the UPC can in some situations order that certain information contained in the collection and use of evidence in proceedings is restricted or prohibited or that access to such information or evidence is restricted to specific persons. This provision will be discussed in more detail later in this article.

What should also be pointed out that is the UPC can decide to dispense with arranging an oral hearing altogether, pursuant to Art. 52 (Para. 3) of the UPCA. This requires that both parties agree on the matter. Furthermore, under Rule 179 of the RoP, a witness may refuse to answer questions if answering them would violate a professional privilege or other duty of confidentiality imposed by the national law that is applicable to the witness.

The Publicity of Trial Documents

Decisions and orders of the UPC shall be published pursuant to Rule 262 (1) (a) of the RoP. Written pleadings are also public and so is the evidence. The public has access to the court files unless a party has requested that certain information be kept confidential and have provided specific reasons for such confidentiality pursuant to Rule 262 (Para. 2) of the RoP. If a party requests that parts of written pleadings or written evidence be kept confidential, when making that request of confidentiality, the party must also provide copies of said documents with the relevant parts redacted.

Rule 262 (Paras. 3-7) of the RoP also includes a quite interesting provision which gives a member of the public an opportunity to submit an application to the court and claim that information excluded from public access should be made available to the applicant.

Rule 262A concerns restriction of access to pleadings between the parties in the proceedings. Under said rule, a party may submit an application to the court for an order that certain information contained in its pleadings may be restricted or prohibited or that access to such information be restricted to specific persons. One ground for requesting such restriction is the protection of trade secrets (Rule 262A (Para. 2) of the RoP).  The application is to be made at the same time as lodging a document containing the information or evidence and a copy of the unredacted relevant document and, if applicable, a copy of the redacted document, should be provided (Rule 262A (Para. 3) of the RoP). The court is also to invite comments from the parties prior to making any order (Rule 262A (Para. 4) of the RoP).

When considering whether to restrict access, the court should consider whether the grounds relied upon by the applicant for the order significantly outweigh the interest of the other party to have full access to the information in question (Rule 262A (Para. 5) of the RoP). And, as the UPC has to safeguard fundamental rights, the right to a fair trial also has to be respected. Consequently, under Rule 262A (Para. 6), it has been stipulated that the number of persons referred to in Rule 262A (Para. 1) shall be no greater than necessary in order to ensure compliance with the right of the parties to the legal proceedings to an effective remedy and to a fair trial, and shall include, at least, one natural person from each party and the respective lawyers or other representatives of those parties to the legal proceedings. This provision resembles Art. 9 ((Para. 2, Subpara. 2 (a)) of the Trade Secrets Directive (2016/943) (TSD) in that it allows for the restriction of persons who are allowed to review the pleadings. Rule 262A (6) clarifies that the one of the parties cannot be completely excluded from reviewing pleadings, and neither can their legal representatives.

Collection and Use of Evidence

Art. 58 of the UPCA, entitled “Protection of confidential information” allows the court to issue orders restricting the use of evidence and/or to restrict access to specifically named persons. Under said provision the following is stipulated:

“To protect the trade secrets, personal data or other confidential information of a party to the proceedings or of a third party, or to prevent an abuse of evidence, the Court may order that the collection and use of evidence in proceedings before it be restricted or prohibited or that access to such evidence be restricted to specific persons.” (Emphasis by the author)

Purely based on the wording of Art. 58 of the UPCA, the UPC is left with a lot of room in which to maneuver. Other than the requirement that the information should qualify as a trade secret, the provision prima facie appears to give the court wide discretion as to when the collection or use of evidence can be restricted. But Rule 262A of the RoP gives the UPC some more guidance. What was discussed above in this article regarding Rule 262A also applies to evidence. This inter alia means that a party can apply for an order that the collection and use of evidence in proceedings may be restricted or prohibited or that access to such information or evidence be restricted to specific persons (Rule 262A (Para. 1)). Before handing down such an order, the court has to consider whether the grounds relied upon by the applicant for the order significantly outweigh the interest of the other party to have full access to the information and evidence in question (Rule 262A (Para. 5) of the RoP). Also, the rights to a fair trial and an effective remedy have to be adequately taken into account, and there should be at least one natural person from each party and the respective lawyers or other representatives of the parties to the legal proceedings (Rule 262A (Para. 6) of the RoP).

Under Art. 59 of the UPCA, the court may order the opposing party or a third party to present evidence, “subject to the protection of confidential information”. The wording of Art. 59 closely corresponds to the wording used in the Enforcement Directive and does not give any more detailed guidance as to how the protection should be given in practice. Some further guidance can be found in the RoP. In Rule 190 (Para. 1) of the RoP, which concerns an order to produce evidence, it has been stipulated that for the protection of confidential information the court may order that the evidence be disclosed to certain named persons only and be subject to appropriate terms of non-disclosure. Rule 262A, which was discussed above, is also relevant when it comes to production of evidence. Both rules have clear similarities to Art. 9 (Para. 2, Subpara. 2 (a)) of the TSD, which concerns restriction of access to documents concerning containing trade secrets or alleged trade secrets submitted by the parties or third parties to a limited number of persons. It may be noted that in Rule 190 (Para. 1), the UPC has been given a wide discretion (“may”) and there will be no automatic obligation of non-disclosure under the UPCA or the RoP, i.e., such an obligation would have to be based on a separate court order.

Preservation of Evidence and Inspection

Art. 60 of the UPCA concerns the preservation of evidence and inspection of premises.  Under Art. 60 (Para 1), the court can order provisional measures to preserve evidence under certain circumstances, subject to the protection of confidential information. Under Rule 196 of the RoP, it is stated that when handing down an order to preserve evidence, the court may order that in the interest of protecting confidential information, the relevant evidence is disclosed only to certain named persons and subject to appropriate terms of non-disclosure. Further guidance is given in Rule 262A of the RoP, which could mutatis mutandis be applicable also in the preservation of evidence as it concerns the collection of evidence. This rule was discussed in the previous chapters.

Furthermore, under Art. 60 (Para 3) of the UPCA, the court can order an inspection of premises. For some reason, no reference to the protection of confidential information has been included in this section of the provision. However, based on Rule 199 of the RoP, it is clear that confidential information should also be protected in inspection proceedings. Rule 199 reads as follows:

“The Court may, on a reasoned request by a party, order an inspection of products, devices, methods, premises or local situations in situ. To protect confidential information, the Court may order that any of the above be disclosed only to certain named persons and subject to appropriate terms of non-disclosure in accordance with Article 58 of the Agreement.”

If evidence is collected in the inspection, Rule 262A can also give further guidance on how to protect trade secrets in the proceedings. Another important point is that under Art. 60 (Para. 4) of the UPCA, the applicant is not allowed to be present during the inspection of premises but may be represented by an independent professional practitioner. This provision could function as a certain kind of practical safeguard for the counterparty’s trade secrets when an inspection is conducted. The procedure pursuant to Art. 60 (Para 4) of the UPCA clearly resembles the Düsseldorf procedure, which has been developed by German Courts in patent litigation. For an inspection under the Düsseldorf procedure, everyone present during the inspection would be bound by confidentiality. The UPC can also hand down an order of non-disclosure pursuant to and to Rule 199 of the RoP and such an order may well be warranted because Art. 60 (Para 4) of the UPCA can only act as an adequate safeguard against further disclosure of a trade secret on the condition that the party’s counsel does not disclose any trade secrets. Again, the procedure pursuant to Art. 60 (Para 4) of the UPCA must be in line with the rights to a fair trial and the effective remedy requirements of the CFREU.

Conclusions

Trade secret protection has been taken into account in both the UPCA and the RoP, which is very positive. The rules give UPC some guidelines and tools for dealing with situations (which can be quite difficult) where different interests have to be balanced and a solution found. Especially when taking into account the final amendments made to the RoP last July, one can conclude that there has certainly been an effort to consider the different interests involved and give the UPC guidelines for protecting trade secrets, while also taking other interests (such as the right to a fair trial) into account.

Nevertheless, as there are still no rulings from the UPC, it remains to be seen how the rules are applied in practice. Careful consideration will be required when making sure that trade secrets are protected, while at the same time taking into account the right to an effective remedy and a fair trial in casu.