The Delhi High Court, on Tuesday, allowed telecom major Ericsson's plea for constitution of a "confidential club" in its ongoing legal tussle with Chinese handset maker Xiaomi. A confidential club essentially consists of only certain persons, usually the lawyers and some key witnesses, who are permitted to view the documents in question.
Justice Yogesh Khanna saw no impediment in creation of such club and explained, "The reason probably is in today’s world of globalization, where competition is at its peak, the organizations may not be inclined to disclose trade secrets/confidential agreements or its details, it had entered with different parties lest may cause serious prejudice to such parties because of competition involved. A trade secrets may make or break a company hence need to be protected. Once such disclosure is made or is misused by a competitor no order of the Court can save the company from loss or could retrieve it to its original position."
Ericsson had sought creation of the club in a pending suit seeking permanent injunction against Xiaomi for allegedly infringing its patents. It had submitted that in order to discharge its onus, it would be producing various patent licensing agreements which contain business sensitive information.
It had, further, submitted that such clubs have been constituted in the past and that in disputes involving fair, reasonable and non-discriminatory (FRAND) issues, creation of the club would be legitimate in order to ensure the sanctity and confidentiality of commercially sensitive information filed by the parties.
While the Defendants were not against the creation of such club, they prayed for being a party to the club or have access to the information. The Court noted, "For the learned counsel for the defendant there is no jurisdiction in the world as known to him wherein the parties are kept out of such confidential clubs and since as the lawyers, though act on instructions of their clients, if are not in a position to discuss the contents of the documents would not be in a position to seek instructions qua the similarly placed organizations with whom the plaintiff has entered into license agreements."
Justice Khanna agreed with Ericsson, observing that a confidential club can be created by limiting access to the documents through an eight-point procedure. The procedure also took care of the Defendant's apprehensions, by directing Ericsson to file agreements pertaining to only similarly placed parties and permitting parties to get copies of such agreements, without redacting rates and products.