The U.S. judicial system operates primarily to the benefit of parties in litigation, but also for the public as a whole. Because citizens fund the judiciary through tax dollars and are the beneficiaries of the First Amendment and common-law tradition of an open legal process, there is a presumption of access to judicial records in court proceedings, albeit a rebuttable one. This is part of the “deal” parties make when they walk through the courthouse door. Filings in patent litigation are not immune from this presumption, but patent litigation filings are often justifiably sealed because they contain trade secrets—information that is “valu[able] because it is not generally known or readily ascertainable, and it is the subject of efforts to maintain secrecy.” Patents, unlike trade secrets, are designed to be open to the public so people can learn from them, just like judicial records. But often, litigation related to patents results in over-sealing that frustrates the purpose of both the patent and legal systems.
One well-known advantage of the patent system is that, in exchange for a period of exclusivity, the recipient of a patent is required to describe their invention to the public “to enable any person skilled in the art to which it pertains . . . to make and use the same.” This is part of the “patent bargain” where, in the words of Justice Stevens’ dissent in Eldred v. Ashcroft, “[c]omplete disclosure as a precondition to the issuance of a patent is part of the quid pro quo that justifies the limited monopoly for the inventor as consideration for full and immediate access by the public when the limited time expires.” But the benefits of this disclosure extend beyond the invention described in the four corners of the patent’s specification. The beneficiaries of the knowledge disclosed in patent filings aren’t just those who sit patiently for 20 years and then create the invention described in the patent.
The Manual of Patent Examining Procedure (MPEP) describes the disclosure requirement in 35 U.S.C. 112(a) as “enhanc[ing] the development and disclosure of new ideas and [expanding] scientific knowledge” because the “information contained in the patent becomes a part of the information available to the public for further research and development[.]” This rationale is empirically verified. The late 20th-century expansion of the Patent and Trademark Depository Library System increased patenting activity in areas where libraries containing patent information were opened. Following the passage of the American Inventors Protection Act of 1999, all patent applications were published after 18 months. Subsequently, there was an increase in innovation among patent applicants’ competitors, as measured by competitors’ citation of issued patents, R&D and capital expenditures, alongside a relative decrease in the same for patentees. So, while those filing for patents decreased R&D activities when competitors’ access to their applications expanded, those same competitors increased their R&D efforts instead of just copying the initial applicants.
The disclosure component of the patent bargain is well established in theory, though it is imperfect in practice. Jeanne C. Fromer explained that because patent disclosure occurs relatively early in the innovation process, shortly after the patent is filed, patent disclosure requirements fail to capture much of the value that comes between filing and commercialization. This is especially true in the post-America Invents Act first-to-file system that allows constructive reduction to practice, which “occurs when a patent application on the claimed invention is filed.” During the interim between the filing of an application or the issuance of a patent and implementation at scale is the “development process,” during which, Fromer writes, “so much new information is typically generated [and the new] information about refinements, development, commercialization, and markets is bound up with the invention.”
However, there is one opportunity for more details of an invention to be revealed to the public: litigation in federal court. The judiciary operates based on a “presumption of openness” to the public, and the First Amendment’s “guarantees of speech and press, standing alone, prohibit the government from summarily closing courtroom doors which had long been open to the public[.]” In patent litigation, the presumption of openness benefits the public. As Bernard Chao and Derigan Silver write:
Allowing the public to access judicial records clarifies these boundaries and sheds light on validity issues. When patent holders sue in court, they must explain which aspects of the infringing product their patent claim covers. This involves disclosing infringement contentions and how they interpret the claims. Similarly, defendants try to identify weaknesses in the patent in suit. This includes identifying prior art that might affect the validity of a patent, disclosing invalidity contentions and explaining their own interpretation of the claims. Claim interpretation, also known as claim construction, is so important that courts often deal with it separately, in a so-called Markman hearing. Infringement and validity issues are also usually addressed when the parties file summary judgment motions.
But this presumption of openness can be overcome “only by an overriding interest based on findings that closure [of the record] is essential to preserve higher values[.]” One such higher value is the protection of trade secrets. Federal Rule of Civil Procedure 26(c)(1)(G) allows courts “for good cause” to limit the disclosure of trade secrets. Determination of whether or not to allow a filing containing a trade secret to be filed under seal requires a balance between the “interests of the trade secret owner, the court as an institution, and the public.” Within this dynamic is an added need to balance trade secret and patent protections, both of which an inventor may avail themselves. Even though these are separate legal regimes, they are difficult to separate in practice. As Nicholson Price writes, “sometimes the protected aspects [of an invention] are inseparable, and any realistic competition in the market requires use of both patented and secret aspects of a single invention.” For trade secrecy to work, allowance must be made for sealed filings, lest every legal dispute involving trade secret misappropriation destroy the value of the subject of the litigation.
However, this balancing creates a serious problem for patent litigation. Due to the overlapping nature of patent and trade secret protection, trade secret chocolate often gets into patent peanut butter. When this happens, an opportunity emerges for parties to file under seal documents that should be open to the public. As Chao and Silver contend in their analysis of sealed filings in patent litigation generally and those related to Monsanto v. Dupont specifically, “there are indications that it is far easier to seal court records than what the law suggests.” This does not mean that even bona fide trade secrets automatically lead to an order to file under seal. Cause must be shown to file under seal, and even when cause is shown, the public’s interest sometimes prevails over trade secrecy.
Of course, it is difficult to quantify the prevalence of over-sealing. As Chao and Silver note, “it is not clear how pervasive the problem is.” There are plenty of valid reasons to move to file under seal, and because the material itself is sealed a comprehensive audit of the materials is virtually impossible. But the incentives weigh in favor of over-sealing. Parties to litigation (or at least their attorneys) have access to sealed filings, so they are not directly harmed by filing under seal. Indeed, intervention is a more common route for sealed filings to come to light. Cases establishing the right to court records rely on intervention by outlets like The Chicago Tribune, The Associated Press, Press-Enterprise or associations of newspapers, as was the case in Richmond Newspapers v. Virginia. In patent litigation, public interest organizations like the Electronic Frontier Foundation (EEF) and the Public Interest Patent Law Institute (PIPLI) intervene to challenge improperly sealed filings. (This author worked for PIPLI, and his experience there inspired this post).
There are no easy answers to this problem. The most obvious would be for district courts to more closely scrutinize motions to file under seal, but the issue of an understaffed and under-resourced judiciary has been so acute it necessitates legislation expanding the judiciary. Groups like EFF, PIPLI, and Public Citizen serve an essential role through interventions that separate the bona fide trade secret sheep from the over-sealed goats, but they too can only do so much.
Systemic changes are far beyond the scope of this post, but one suggestion would be to consider access to the Federal Courts as part of the bargain associated with patent protection. As discussed above, disclosure is part of the patent bargain. But this agreement should not stop once a patent has been issued. Article III courts or their counterparts like the Patent Trial and Appeal Board or International Trade Commission (each of which have similar rules related to sealed filings) are not the only way for parties to resolve their disputes. The Patent Act includes specific provisions related to arbitration, and such arrangements are not subject to the same presumption of public access.
Of course, arbitration is only possible if both parties agree. A patent owner with a strong claim for patent infringement may prefer arbitration as a vehicle to pursue their claim but nonetheless have it denied. But just as seeking a patent itself is not required, neither is pursuing a claim for patent infringement. Availing oneself of the protections associated with having a patent requires compliance with U.S. patent law just as much as seeking a patent in the first place. A party seeking to file under seal must overcome a Constitutional and common law presumption, and it must show cause beyond mere “ukase,” as Judge Frank Easterbrook wrote in Baxter v. Abbott. A party that brings its claim to district court rather than an arbitration proceeding “may have a claim if it can show injury. But it does not have any right to keep third parties from learning what this litigation is about.”
Daniel Takash is an Associate Editor on the Michigan Technology Law Review.