In June 2024, I covered some nuances regarding confidentiality and disclosures in the SB and DB orders passed in InterDigital Technology Corporation vs. Guangdong OPPO Mobile Telecommunications Corp. Ltd (here and here). Part I of this set of posts analyzed the SB’s 31st May 2024 decision on the disclosure of agreements between the parties and different third parties. There, the SB upheld InterDigital’s request for the disclosure of license agreements between Oppo and Qualcomm, a third-party SEP holder, on the grounds of their relevance in determining the FRAND rates.

Continuing on the matter, on 19 September 2024, a Single Bench (SB) of the DHC, consisting of Justice Mini Pushkarna, delivered a judgment in this case (pdf), settling another nuance regarding the disclosure of agreements in a confidentiality club related to FRAND and SEPs. The issue before the SB was whether it was appropriate for the plaintiffs to limit access to confidential information to two in-house employees of Oppo who are part of the confidentiality club by allowing them to view summaries of the plaintiffs’ patent licensing agreements (PLAs), while providing full access to counsel and external experts. The SB held that the plaintiffs must show the seven PLAs and the full agreement with Qualcomm to the in-house employees, who will then remain bound by the restrictions established in the 5 April 2024 order of this Court. This post will analyze the considerations the SB took into account when making this decision and the significant implications of this ruling.

A Timeline of the Matter

The case is based on the plaintiffs’ contention that they have complied with their FRAND obligations concerning the defendants’ use of the plaintiffs’ 3G, 4G, and 5G Standard Essential Patents (SEPs) and that the defendants are ‘unwilling licensees.’ The tussle for revealing documentation between InterDigital and Oppo has been going on for some time now. The timeline of orders and judgements relevant for this issue is as follows:

Contentions by the Parties

Plaintiffs contended that this approach aligned with prior agreements made in parallel UK proceedings, where it was established that in-house employees would only access summaries, with full agreements available exclusively to legal counsel. They further argued that Oppo could not now request broader access to the full PLAs, as this would undermine the agreed-upon confidentiality model and give Oppo an unfair advantage in obtaining sensitive information. Secondly, it contended that Oppo’s reliance on the December 2020 decision in InterDigital Technology Corporation vs. Xiaomi was misplaced, as it was merely an interlocutory order that was vacated when the suit was settled; the prior ruling did not establish that the summaries of the licensing agreements were inadequate.

The defendants maintained that Oppo had consistently sought access to full PLAs to determine a FRAND rate. They highlighted that a Confidentiality Club was established, allowing in-house employees access to relevant documents, and accused the plaintiffs of contradicting themselves and delaying the proceedings without cause.

Granting In-house Employees Access to PLAs 

SB seems to have allowed access to the documents based on two rationales:

1. The Court placed no such restrictions before, and the parties had agreed.

The Court established this intention from two major sources. Firstly, the Court noted sufficient intent from the Court and parties to disclose these documents to the in-house employees, as reflected in past court orders and judgments dated 5 April 2024, 9 July 2024, 31 May 2024, and 5 September 2024. Secondly, the Court also noted this intent in email exchanges between Samsung and Oppo.

2. To determine whether Oppo is an unwilling licensee

To determine whether Oppo is an unwilling licensee, the Court found it important to disclose the PLAs. The defendants argue that access to the plaintiffs’ third-party license agreements is crucial for assessing the value of the suit patents and determining the aggregate royalty rate for Standard Essential Patents. They contend that without this access, they cannot be considered unwilling licensees, as there is no objective material to evaluate the plaintiffs’ FRAND claims. The Court noted that to assess the plaintiffs’ FRAND claims and determine if the defendants are “unwilling licensees,” the plaintiffs’ third-party license agreements are essential. The Court must evaluate the infringement of specified patents and confirm the royalty rates offered to other license holders. Thus, the in-house representatives of the defendants in the Confidentiality Club should have access to these agreements as part of the proceedings.

Some Thoughts on the Decision

Needless to say, the concerns raised in the previous post on the 31st May 2024 order continue to be issues to ponder. The ongoing tension between transparency and confidentiality in SEPs, with confidentiality clubs aiming to protect sensitive business information, often undermines the very transparency needed to evaluate licensing terms and ensure non-discriminatory practices (as also argued here). Apart from this, SB’s decision in the extant case has rather accurately applied prior precedents to determine the intent of the court and the parties in assessing whether in-house employees should have access. However, the very fact of allowing in-house employees to access information within a confidentiality club is a rather perturbing issue. 

Adding to the already contentious conceptual basis, the law is also rather unclear when it comes to the provision describing Confidentiality Clubs. Chapter VII Rule 17 of the Delhi High Court (Original Side) Rules, 2018 defines ‘confidentiality clubs’ in a highly loosely worded fashion. However, it is generally understood that membership in such a club is limited to only counsels representing the parties and external expert witnesses. This approach aligns with similar practices in England, where these groups are referred to as “external eyes-only clubs.” This has also been the usual practice of Indian Courts, as seen, for instance, in Telefonaktiebolaget LM Ericsson (publ) v. Lava International Ltd., where a Confidentiality Club was created on Ericsson’s application, consisting of three lawyers (apart from in-house ones) and two external experts to examine PLAs. In light of this, how far does the inclusion of in-house employees in the club serve the purpose of confidentiality, which is essentially to restrict internal members of the opposing entity from knowing certain information?

Including in-house experts in the confidentiality document assessments is not an unprecedented scenario. One instance is of the DHC allowed Genentech’s in-house employee to inspect Reliance’s documents placed on record under a confidentiality club in the Trastuzumab Suit. One distinction between the two cases is that, in the latter, the in-house employee was not already part of the confidentiality club. Adarsh Ramanujan, in an astute analysis of this order (here), comments that when a party designates information as confidential or a trade secret, it’s counterproductive to allow in-house employees from the opposing side to access it. He further notes that this order was established before the amendments to the Delhi High Court Rules, 2018, and should not set a precedent for including internal experts in confidentiality clubs. Yes, here we are with a likely precedent to now allow this practice in future cases. In his piece, Ramanujan also calls for greater clarity in Rule 17, questioning whether it should explicitly allow only external experts or if internal experts can also be included.

In the international domain, I did find a 2022 case related to two related patent infringement actions between Siemens Gamesa Renewable Energy (SGRE) and General Electric (GE), where J Meade (UK Court), while establishing a confidentiality club for Product or Process Description (“PPD”), allowed one SGRE employee (from its IP department) to be a part. However, even here, the judge allowed only one employee to participate and not the two originally requested by SGRE, as it was deemed more prudent to begin with just one member to manage access, allowing for adjustments later if needed, rather than facing the potential challenges of having two individuals involved from the outset. Clearly, letting in-house employees into the club isn’t the best approach possible. The DHC’s decision is likely to cause discrepancies due to its precedential value, and it is difficult to say how well the two-year restrictions can hold without undermining the very purpose of creating confidentiality clubs.

[Edit: This post has been rectified to indicate ‘Qualcomm’ instead of ‘Ericsson and Orange SA’ in the second para of the post. Thanks to the anonymous commenter for bringing this to our attention.]