The new set of rules recently adopted in France on the protection of trade secrets can potentially affect many aspects of IP litigation, including in particular the handling of evidence that may contain confidential information.
New judgments are therefore bound to come under scrutiny in order to determine whether there is a change in practice or not: in particular is there any heightened effort by the courts to preserve the parties’ confidential information? In Conversant v. LG, it seemed that maybe there was.
But as far as today’s ruling is concerned, I am not so sure the recent law had any impact on the judge’s assessment of seized evidence.
Here is the context.
Bayer Intellectual Property GmbH owns European patent No. EP 2164496, on a formulation for treating coccidiose and iron deficiency in farm animals, such as piglets.
In November 2017, the French company Ceva Santé Animale let Bayer know that they intended to launch a veterinary product in several European countries, and Bayer replied that the product would infringe their patent. Ceva nevertheless continued to prepare for the launch of the product.
The dispute suddenly crystallized a few months ago. First, Ceva obtained a marketing authorization for their product, Forceris, in April 2019. Then, on May 16, oral proceedings took place in connection with Ceva’s opposition against EP’496 at the EPO, and the opposition division rejected the opposition. On the same day, Bayer sent a cease-and-desist letter to Ceva. Ceva postponed the launch in the Netherlands and agreed to give Bayer a 2-month advance notice prior to such launch. But no similar undertaking was made with respect to France.
Still on May 16 (definitely a busy day for Bayer’s legal team), an ex parte order for infringement seizure was issued. The seizure was carried out 4 days later at Ceva’s headquarters.
Ceva immediately filed a motion in court to request the placement of the seized documents and information under seal.
In fact, the bailiff who performed the seizure had spontaneously placed some of the seized evidence under seal and had redacted some of the seized information – but Ceva deemed that this was not enough.
The interim order further to Ceva’s motion was issued on June 7.
In summary, Ceva argued that Bayer did not need the seizure, as they already had information on the composition of the Forceris product; and that the seized information was highly confidential and could unfairly distort competition if revealed to Bayer.
Unsurprisingly, Bayer disagreed and requested on the contrary that the evidence placed under seal by the bailiff should be released to them.
In her order, the judge first noted that Bayer’s knowledge of technical information on the allegedly infringing product (due to prior exchanges between the parties) was irrelevant.
Indeed, the infringement seizure procedure aims at collecting evidence relating not only to the existence of an infringement, but also to the extent of the infringement.
Second, she noted that the provisions on the protection of trade secrets not only apply to seized exhibits, but also to mentions contained in the bailiff’s report:
[…] The abovementioned provision (article R. 615-2 par. 5) only cites “seized exhibits” but it must also apply to mentions in the infringement seizure report which derive from these exhibits. Otherwise, as stated by Ceva, the protection of trade secrets would be circumvented simply by mentioning the contents of the seized documents in the report.
Pragmatic and fair.
Then, the judge deemed that a redaction of the bailiff’s report was not required in this case; nor was the placement under seal of most of the seized exhibits.
Here is the standard to be applied, as reminded in the order:
The judge of the infringement seizure should only order justified and proportionate measures, taking into account the opposite interests and rights at stake: on the one hand, [the interests and rights] of the seized party to enjoy the protection of its trade secrets and confidential information, if it can prove this qualification; and on the other hand, [the interests and rights] of the proprietor to gain access to any relevant documents which may enable to characterize the infringement, even before any finding by the court as to the existence of the infringement, including confidential information, provided that it appears to be necessary for demonstrating infringement, in order not to deprive the infringement seizure of any efficacy.
I don’t think this standard is substantially different from the one that was traditionally applied before the 2018 trade secret law.
In this case, the judge refused to seal information appearing on one page of the bailiff’s report and in two seized exhibits, relating to commercial plans regarding Forceris.
Ceva stated that Bayer could use the information to adjust the launch of its own competing product, Boycox Iron. But the judge noted that “the countries [where Forceris is to be marketed] are more or less those countries where pigs are raised“. In other terms, the information was obvious and not protected.
I am not sure this reasoning is completely convincing, especially in view of the “more or less” language (“peu ou prou” in the original version).
The judge further noted that the business plan had already been disclosed in the Dutch proceedings, so that the information was not confidential. This, to me, is a much stronger point.
One of the exhibits contained the price of the Forceris product. But the judge also refused to seal it.
The first reason was that Bayer needed the information for the assessment of damages. The second reason was that Ceva has disclosed its recommended price in Italy, so that the judge could not see why the information would be confidential in France (even if the French price was different from the Italian price).
Again, I tend to find this latter reason not fully satisfactory. The fact that a company has decided not to keep some information confidential does not mean that they have given up on confidentiality of all information.
As for the usefulness of the price for the computation of damages, this is of course a central point. In some cases, courts have decided that there should be a ruling on infringement first, before the patentee can access any price-related information. But in other cases, such as this one, they have decided otherwise. This is a delicate case-by-case balance, which, again, has apparently not really been altered by the new trade secrets provisions.
Other exhibits were OKed by the judge as well, as they related to invoices, orders and the like and were therefore relevant for the patentee as they contained information on the distribution network.
Only one exhibit was withheld by the judge, namely some commercial documentation which “it does not appear justified and proportionate to disclose to Bayer in view of the information already collected“.
On the other hand, the judge granted Bayer’s counterclaim for disclosure of the evidence spontaneously placed under seal by the bailiff during the seizure.
The last nail in the coffin was the following sentence:
There is no legitimate reason to prohibit Bayer from using the elements [thus] lawfully obtained in other proceedings in France or abroad.
This is an important reminder of how useful the French infringement seizure can be in a situation of global litigation.
All in all, the judge’s ruling seems to favor efficiency of the proceedings: lengthy expertise proceedings on the exhibits are avoided, and the patentee has now all the necessary information to sue other parties if needed, and file submissions on all aspects of the case including damages. But whether the defendant’s trade secrets were sufficiently preserved in the process may be open for discussion – with the caveat that, as is often the case, the order is relatively brief and does not make it possible to fully appraise the entire context.
CASE REFERENCE: Tribunal de grande instance de Paris, ordonnance de référé, June 7, 2019, Ceva Santé Animale SA v. Bayer Intellectual Property GmbH, RG No. 19/54542.