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Confidentiality Clubs: Has The Delhi High Court Gone Too Far?

– Adarsh Ramanujan*

The recent judgement of the Delhi High Court in Interdigital Technology v. Xiaomi Corporation on the structure of ‘Confidentiality Clubs’ to ensure confidentiality of sensitive information/documents in litigation, has far-reaching implications. The Court rejected a prayer that suggested the preclusion of a Party’s in-house representative/employee (other than the advocate or independent expert) from access to the ‘Confidentiality Club’. This was a patent infringement case involving Standard Essential Patents (‘SEPs’) that cover technologies which are essential for devices to be standard-compliant. The enforcement of SEPs is governed by the patentee’s undertaking to grant Fair, Reasonable and Non-Discriminatory (‘FRAND’) licenses to willing implementers of the standard. Among others, the ‘Confidentiality Club’ was being discussed in the context of making available the licenses executed by the patentee with other implements and the point of dispute was whether Xiaomi’s employee (other than the advocate or independent expert) would have access to such documents.

In sum and substance, the judgement is based on the principle that excluding Party’s representatives would fundamentally interfere with natural justice and the advocate-client relationship. The Court felt that it interferes with the Party’s right to defend itself and because the advocate would not be able to confer with, and act upon, the client’s instructions on the documents within the Club. The Court concluded that this would be contrary to the fundamental notions of justice and fair play. No doubt, the order, passed in the facts and circumstances of that case, is based on the arguments raised therein. Nevertheless, the underlying reasoning extends beyond the case and is likely to impact all existing and future cases where ‘Confidentiality Clubs’ have arisen/may arise.

The entire purpose of a ‘Confidentiality Club’ is to preclude the public as well as the opposite Party from gleaning/having access to business sensitive information that is otherwise germane to the adjudication of the dispute.[1] Allowing the Party’s representatives to have direct access to such confidential or business sensitive information, subverts this very object and purpose. On the other hand, if the Party’s representatives have no access to the documents within the Club, and if one assumes that the advocate/expert has gleaned an important fact/point from such confidential documents, how is the advocate/expert able to take instructions on the same from the client, to pursue the same before the Court?

Denying the dilemma is futile; it exists and must be dealt with. The problem, however, is that the Court’s approach completely neglects one side of the story. Imagine, for instance, one is dealing with a trade secret dispute – would it make sense to impose a condition that the respective Party’s representatives must have access to the trade secret within the Club?

Intuitively (and logically), the answer is ‘no’. Equally important to appreciate is the impossibility of the Court to ‘police’ the parties themselves from misusing the information. In the trade secret hypothetical, if the subject matter were a secret process, it would be a herculean task for the Court to monitor the implementation of the confidentiality obligation.[2] These issues affect both the plaintiff and the defendant.

The need to exclude client representatives from such clubs has been appreciated in several other types of disputes and regulatory investigations. A classic example is the Administrative Protective Order (‘APO’) process followed by the United States in anti-dumping and countervailing duty investigations. At the risk of oversimplification, in the APO process, there would be two parallel tracks of the investigation – one where all information is freely exchanged between the advocates and the parties themselves (which are non-confidential), and a separate track for confidential material where the access is limited only to the advocates and independent experts assisting each Party.[3]

The submissions are also in two versions – one confidential (only for the APO members) and the other non-confidential, where APO based material is to be used in arguments, the proceeding or part thereof, is kept in-camera. Typically, in such anti-dumping and countervailing duty investigations, the confidential data relates to the cost of manufacture, suppliers, and other sensitive business information and it would be complete injustice to allow another Party’s representative to have access to such data. Even in such cases, no doubt, the advocate’s ability to confer with the client on the other party’s confidential data is highly limited – but, equally, the cost of one-Party knowing business confidential information of the other Party is extremely high.

Such parallel tracks are also known in Antitrust Investigations. Here is a quote from a recent article that summarises the situation very well:[4]

“…The exclusion of the public in matters concerning confidential information is a standard means available in most Member States.Additionally, the exclusion of the parties themselves should be possible to some degree… Representatives should, however, be imposed with the obligation to keep the confidential information from their client. Only general information or a redacted report should be passed on to the client.This may somewhat burden the lawyer-client relationship, but against the background of the lawyer’s professional rules of conduct and possible criminal and civil sanctions, such measure seems less problematic. A similar position could be given to an expert witness, who creates a generalised report for the parties….Another possibility could be the establishment of so-called clean teams, where disclosure is allowed to the parties themselves, but only to such persons of the undertakings who are not active in the operational business (the Chinese-wall principle)…”

In such instances, it is appreciated that the ability of the client to confer with and give instructions to the advocate is restricted, but it is accepted as a part of the balancing act. It is premised on the fact that the advocate and expert, will keep up to their professional standards and commitments, and will adequately represent the client’s interests in the proceeding.[5] Violation of these obligations results in heavy penalties on all concerned.

I do not wish to comment on the specific facts and circumstances in Interdigital v. Xiaomi case. However, in my reading of the judgement, the nature of the information/document and the nature of the case had a significant impact on the ruling. For instance, the Plaintiff’s (patentee) position was that the other license agreements (covering SEPs) executed with other parties would form part of this Club and they sought to preclude access to the terms of such agreements from Xiaomi. The Court ventured – what if the royalty rates offered to such other companies/persons was much lower than what was being offered to Xiaomi? What the Court did not account for was the fact that the other parties’ interest intertwined in such instances and the other licensees, whose terms and conditions are being laid bare to Xiaomi, are neither heard nor represented.

Further, even in this hypothetical considered by the Court, assuming there are such discriminatory rates, these are objective facts on which the independent expert and the advocates can argue before the Court, and the judge can conclude upon, in an in-camera proceeding. The logic that instruction from the client is necessary on every single piece of contention or argument seems overzealous.[6] Perhaps, the underlying problem is the insufficient trust in the expertise/skill of the advocate, the independent expert, and the judiciary to adjudicate upon and reach a fair conclusion on such matters, in the absence of a client having to guide the way. But if that is so, it is a far more serious problem.

The ‘structure’ of such ‘Confidentiality Clubs’ is often intertwined with the information or document which forms part of or is entitled to form part of the Confidentiality Club. Even within a set of confidential information, it is often the situation that there are degrees of sensitivity attached to such information.[7] It is critical for the Court to first appreciate these factors before determining the structure of such ‘Confidentiality Clubs’. If there is a dispute between the parties on whether something is confidential and/or it is in the ‘highly sensitive category’, it may be more prudent to make this determination first, before deciding upon the structure of such ‘Confidentiality Clubs’. Generically worded observations or finding in a Court ruling that a party’s representatives must never be precluded access to ‘Confidentiality Clubs’ is disproportionate and unbalanced.

*Adarsh Ramanujan is an independent counsel with offices in Delhi and Chennai.

[1] See, Al Rawi v Security Service [2011] UKSC 34, at para 64 (“64. Similarly, where the whole object of the proceedings is to protect a commercial interest, full disclosure may not be possible if it would render the proceedings futile. This problem occurs in intellectual property proceedings. It is commonplace to deal with the issue of disclosure by establishing “confidentiality rings” of persons who may see certain confidential material which is withheld from one or more of the parties to the litigation at least in its initial stages. Such claims by their very nature raise special problems which require exceptional solutions…”) (emphasis supplied in original)

[2] The point is logical because one cannot necessarily know for sure what the other party has done in cases of processes – a change in process may not have a visible change in the product. For instance, what if the Plaintiff, after gaining access to the Defendant’s process, copies the Defendant’s process thereafter. How can one determine if the process has been changed or tweaked, after gaining access to the other party’s process through the confidentiality club? Even assuming the aggrieved party suspects such a breach, one would need a court appointed independent expert/commission who may have to visit the party’s facility and conduct an assessment; plus, the party in question may change the process again pending such inspection and the whole exercise may be futile. Courts in other jurisdictions have recognized this difficulty as well. See, for instance, Goode Concrete v CRH Plc & Ors [2020] IECA 56 (19 February 2020) (“148…In relation to the undertaking offered by Mr.Goode, in my judgment, the trial judge was correct to conclude that this was of little practical use as none of the respondents would have any way of policing whether or not the information would be used for commercial advantage…”); see also, for instance, IPCom GmbH & Co KG v HTC Europe Co. Limited, [2013] EWHC 52, at para 26 (“26…Nevertheless, the commercial value of knowing the terms on which HTC and Nokia and the interested parties have been prepared to licence technology is of undoubted commercial value to IPCom. Mr Flynn for IPCom did not really dispute this. He recognised that if the confidential materials were available to IPCom’s internal management, they would not be able to “unlearn” them. Consequently, in any negotiations with parties to the licensing agreements disclosed, those individuals would have knowledge of potential value which could direct the way in which those negotiations were conducted.”)

[3] See, USITC, AN INTRODUCTION TO ADMINISTRATIVE PROTECTIVE ORDER PRACTICE IN IMPORT INJURY INVESTIGATIONS, available at; see also, USDOC, Administrative Protective Order Handbook, available at

[4] Lena Hornkohl, The Protection of Confidential Information during the Disclosure of Evidence According to the Damages Directive, E.C.L.R. 2020, 41(2), 107-111, at 110-111 (emphasis added).

[5] Ibid.; See, for instance, IPCom GmbH & Co KG v HTC Europe Co. Limited, [2013] EWHC 52, at para 32 (“32. I have come to the conclusion that it would not be right to allow inspection at this stage by Mr Frohwitter or Mr Schoeller [members of the client], but that it is right for Dr Sedlmaier to be allowed inspection. My reasons are: … (v) Dr Sedlmaier, on the other hand is an external lawyer bound by a professional code of conduct. I accept that he is, as the evidence shows, extremely close to IPCom, and has been involved in commercial negotiations. Whilst that fact is relied on by HTC, Nokia and the interested parties to make a case for his exclusion, it shows also that, if he is included, the prejudice to IPCom is significantly mitigated. To the extent that he is involved in future negotiations he will have to shut out from his mind anything learned from the confidential documents.”)

[6] For instance, see, Goode Concrete v CRH, [2017] IEHC 534, at para 87 (“87. …One of the curious features of this case is that Mr. Goode, who appears anxious to gain access to details in relation to the prices and costs and efficiencies of the defendants, has never adequately explained why he, as distinct from his expert, has to gain access to this information, and why (a) the expert cannot simply inform Goode Concrete’s solicitor as to what the expert has found in terms of whether or not the prices at which specific contracts were tendered were below-cost at that time, and (b) why Goode Concrete’s solicitors cannot then (i) get instructions from Goode Concrete on the basis of the expert’s advices and conclusions, and (ii) proffer advice by reference to the expert’s advices and conclusions. (If the expert considered it necessary to include in her report certain information that had not previously thereto been disclosed to Goode Concrete pursuant to such order as this Court may issue, the need for disclosure would presumably be the subject of application at that time).”)

[7] See, for instance, the language employed by the Patents Court in IPCom GmbH & Co KG v HTC Europe Co. Limited, [2013] EWHC 52, at para 31 (“31 (i) The material at issue is confidential. However, its potential for use to the detriment of HTC and Nokia is not at the high end of the scale represented by secret process cases.”); see also, for instance, InterDigital Technology Corporation v Nokia [2008] EWHC 969 at para 18 (“18. The business of InterDigital emerging through the evidence in this case is not that of a head to head competitor of Nokia; Nokia is a potential customer for Interdigital. Secondly, whilst the documents are undoubtedly confidential, it does not seem to me as to the broad class that they are so confidential that they will immediately provide Nokia with information which could be of immediate use to them in their business, except to the very limited extent that has been demonstrated to me in relation to a few documents by Mr. Alexander.”)


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