The Federal Court is trying to clarify the scope and typical terms of confidentiality and protective orders for use in the court. Keeping confidential information can be a key consideration in intellectual property proceedings where the adverse party is often a direct competitor and the subject matter of the dispute touches on trade secrets and business plans.
Since my previous column on this subject (see Protecting Your Confidential Intellectual Property Information in Court, May 2017), a split between various Prothonotaries and Judges led to significant uncertainty as to the preferred options for keeping information confidential in court proceedings.
In the Federal Court, a distinction has been drawn between ‘protective orders’ and ‘confidentiality orders’, although this distinction is relatively recent and often orders would combine aspects of both types:
- Protective Orders – apply to the exchange of information between parties to litigation, such as discovery documents, discovery transcripts and answers to undertakings. A Protective Order does not permit material to be filed under seal with the Court. Rather than a Protective Order, parties can enter into a Protective Agreement which includes many of the same terms as an Order.
- Confidentiality Order – apply to the filing and handling of confidential information within the Court such as filing materials under seal and holding hearings in camera. These are issued under Rule 151 of the Federal Courts Rules.
Earlier this year, the Federal Court published ‘model orders’ for both Protective and Confidentiality Orders (see Federal Court website). The model protective order includes some of the typical language of these types of orders for handing information between parties, including:
- two levels of confidentiality designations, “Confidential Information” and “Solicitor’s Eyes Only Information” for outside counsel information;
- marking requirements with an “other means” exception if the standard marking is not practical;
- inadvertent disclosure and inadvertent designation procedures;
- permission to maintain an archive after the proceeding is over;
- disputes over designations to be taken to the court;
The confidentiality order for filing material with the Court contemplates the Court considering evidence before issuing the order and says that confidential information will be segregated non-confidential information, or if not segregated that a public/redacted version as be filed. The model order also says that the Court can require a party to show cause why the documents should be confidential and not unsealed and placed on the public record.
Some of the decisions over the last couple of years on the issuances of protective and confidentiality orders provide the context for these model orders.
- Live Face on Web, LLC v. Soldan Fence and Metals (2009) Ltd., 2017 FC 858 – The Prothonotary denied a request on consent to issue a Protective Order primarily on the basis that ‘rubber stamping’ agreements between parties is inconvenient to the court and is not necessary in view of the implied undertaking rule: “I conclude that, absent highly unusual circumstances, it is not necessary for the Court to incorporate in an order the specific or additional protective measures agreed by the parties for them to be effective, and that the Court ought no longer to routinely issue protective orders on consent of the parties.”
- Seedlings Life Science Ventures LLC v. Pfizer Canada Inc., 2018 FC 443, reversed 2018 FC 956 – The Prothonotary denied a motion on consent for issuance of a protective order on a similar basis as in Live Face on Web. On appeal, the Court issued the protective order by finding that the same Sierra Club test of the Supreme Court of Canada applied to both confidentiality orders and protective orders: “The rationale behind the Sierra Club test, whether one is considering a confidentiality order, a protective order, or a hybrid order, is the same: that is, the protection of sensitive information – whether from the general public or other business adversaries – from abuse or use in activities collateral to the litigation. In this sense, the Prothonotary’s attempt to read Sierra Club as exclusive to confidentiality orders is effectively an exercise in splitting hairs.”
- Arkipelago Architecture Inc. v. Enghouse Systems Limited, 2018 FC 37 – In this appeal, the Court granted a protective order that excluded client representatives. “This Court has held that where the parties themselves are competitors, preventing disclosure to the opposing party is a perfectly legitimate purpose of a protective order, particularly where the evidence shows that the disclosure to the opposing party ‘could injure the interests of the other party’, that ‘a party’s commercial interests could be harmed without such an order’, or that the disclosure of the confidential information ‘would create potential harm if divulged’.” (internal references omitted)
- Canadian National Railway Company v. BNSF Railway Company, 2019 FC 281 – The Court dismissed a motion on consent for a protective order by comparing the proposed protective order with the implied undertaking rule and a contractual agreement, and concluding that, “the reasonable alternative measure of a protective agreement will protect the parties’ confidential information as well as the requested protective order”.
- dTechs EPM Ltd. v. British Columbia Hydro & Power Authority, 2019 FC 539 – The Court noted, the “great uncertainty regarding the proper test to be applied in determining whether a protective order should be granted”. The Court concluded that a different test should be applied for protective orders than for confidentiality orders and found that a protective order was appropriate. In conclusion the Court also said that, “Finally, I wish to add that given the fairly low test that a party has to satisfy to obtain a protective order, parties should be encouraged to apply informally to the Court, particularly in case managed proceedings, when such relief is sought on consent of the parties or is unopposed.”
- Paid Search Engine Tools, LLC v. Google Canada Corporation, 2019 FC 559 – The Court granted a contested motion for a protective order, disagreeing that Sierra Club applied to protective orders and set out a test for such orders, “In my view, the Court’s jurisdiction to issue protective orders rests in Rules 3 and 4 and the decisions which followed it. Sierra Club gives guidance on the test for protective orders, but establishes a test in paragraph 53 meant solely for confidentiality orders. The test for protective orders can be summarized as follows: that the information at issue has been treated at the relevant times as confidential; that the information is confidential in nature; and that there is a reasonable probability that disclosure of the information could cause harm to proprietary, commercial and scientific interests.”
The issue of protective and confidentiality orders have also been discussed at several bench/bar events including the Federal Court Town Hall at the CBA’s IP Day and at the Patent Colloquium. Hopefully with the publication of these model orders, some of the uncertainty regarding the appropriateness of ‘protective orders’ has now been resolved.