U.S. Court of Appeals for the Federal Circuit Chief Judge Sharon Prost. (Photo: Diego M. Radzinschi/ALM)

The U.S. Court of Appeals for the Federal Circuit signaled Wednesday it might be open to affirming U.S. District Judge William Alsup's ground-breaking order on confidentiality in a patent infringement case—but likely with major caveats.

Alsup, of the Northern District of California, had refused Uniloc 2017 LLC's request to seal multiple pages of financial information that involved licensing agreements with more than 100 third parties. Alsup argued that the request was "astonishing" in its overbreadth, as it included such nonconfidential matter as quotations from public case law. As for the licenses, Alsup reasoned that because Uniloc's patent rights flow from a government-conferred power to exclude, "the public in turn has a strong interest in knowing the full extent of the terms and conditions involved in Uniloc's exercise of its patent rights," Alsup wrote.

Uniloc counsel Aaron Jacobs argued Wednesday in Uniloc 2017 v. Apple that it was unprecedented for a judge not to give a patentee a second chance to more narrowly tailor its sealing requests. "Uniloc's licensing terms and loan information are the equivalent to Apple's source code to Apple," the Prince Lobel Tye partner said. "It is the life blood of a company that relies on licensing its intellectual property, and to let this fall to the public would be incredibly damaging."

Federal Circuit Chief Judge Sharon Prost and Judge Richard Taranto mentioned repeatedly that a district judge has a lot of leeway to enforce local rules.

"The district court has a lot of discretion in these matters," Prost said. Is it an abuse of that discretion for a judge to decide "on his or her own that they want to be a little more stringent and scrupulous about how they review these documents?"

But Prost and Taranto also signaled from the get-go that they had concerns about making public the identity of Uniloc's 109 licensees. "Why do we penalize, or apply an extraordinarily stringent rule, to the interests of third parties who don't bear any responsibility" for Uniloc's alleged excesses? Prost asked Alex Moss, a staff attorney at intervenor Electronic Frontier Foundation.

Moss conceded that a good case could be made to redact just the names of the licensees. But she said Uniloc has never proposed that compromise. Taranto sounded concerned that even with names redacted, third parties might be able to figure out the licensees' identity by mapping the timing and/or value of the licenses to litigation settlements.

"I don't believe" third parties could make those connections, Moss said, because she wasn't sure if any of those licenses were the result of litigation filed on public dockets.

Moss and EFF are representing the public interest in the case. They didn't get much help from Apple, Uniloc's opponent in the underlying litigation.

Goldman Ismail Tomaselli Brennan & Baum partner Doug Winnard argued for Apple that there is a precedent in the Northern District of California for denying a second chance on confidentiality: U.S. District Judge Vince Chhabria sanctioned Boston Scientific's attorneys $500 each for overbroad sealing requests in 2018.

But he added that Apple would not oppose sealing the names of the licensees. In fact, Apple also would not oppose sealing the dates and dollar figures associated with the licenses.

Prost seemed surprised. "You're saying that you would not oppose taking the table … that consists of all the information about the licenses?" she asked.

For some of the cases, Winnard said, "I think there's a distinct possibility that you could match them, certainly in amount and time, to some of the cases that were settled."

Prost asked Jacobs if that would be enough to satisfy Uniloc. He indicated that Uniloc is looking for more, though he was circumspect. "There are other third parties that are concerned about other matters, for example the loan agreements and other financial information that have third-party information in them," he said.