Court May Force Apple to Publicize Sealed Financial Information

By Christopher Witrak  OCT 18, 2012 2:50 PM

Media organizations join the court fight.


MINYANVILLE ORIGINAL High-profile courtroom battles between major companies always attract attention from investors and the media because of the information that may be revealed to the public. Consequently, Apple's (NASDAQ:AAPL) and Samsung's (PINK:SSNLF) legal battles have been closely monitored.

ArsTechnica reported yesterday that US District Judge Lucy Koh denied part of Apple’s request to seal data and documents used in its case against Samsung that include "product-specific unit sales, revenue, profit, profit margin, and cost data." The company usually does not provide a breakdown of profits by product in financial reports, and Apple has argued this product-specific information would "provide its competitors with an advantage." (View Koh's order here.)

Koh is the same judge who presided over the Apple vs. Samsung trial in August of this year. Apple won the case on August 24 with the court handing Samsung an order to pay Apple $1.05 billion in damages for infringing on Apple's patents. However, Apple wants to increase the damage amount by $535 million, and the sealed information is critical to Apple's case. Koh argued in her order that the sealed information is important to Apple's case and should be made known to the public due to its importance. She also saw no "compelling reasons" in Apple's claim that unsealing the product-specific information would aid its rivals.

Courts may require companies to release information crucial to the court case because of its interest to the public. Koh explains in her order:

As this Court has explained in its previous sealing orders in this case, courts have recognized a “general right to inspect and copy public records and documents, including judicial records and documents.” ... Unless a particular court record is one ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.... In order to overcome this strong presumption, a party seeking to seal a judicial record must articulate justifications for sealing that outweigh the public policies favoring disclosure....

As evidenced by the plethora of media and general public scrutiny of the preliminary injunction proceedings and the trial, the public has a significant interest in these court filings, and therefore the strong presumption of public access applies... [Apple] cannot both use its financial data to seek multi-billion dollar damages and insist on keep it secret.

Koh’s order is not final, though. The documents won’t be unsealed until her order is reviewed by the US Court of Appeals for the Federal Circuit, which is the higher court that handles all patent cases. The Federal Circuit is already reviewing a similar order  issued on August 9 by Koh to unseal a different set of documents. The Federal Circuit stayed this prior order. If the Federal Circuit upholds Koh’s August 9 order then it will lift the stay on the current order by Koh, since “they are subject to exactly the same analysis.” Similarly, the Federal Court approving the current order will lift the stay on the August 9 order.

Apple has deemed other documents and court evidence worthy of hiding. It claims as confidential proposed redactions to the Damages Motion, proposed redactions to the Musika Declaration, several exhibits of the Musika Declaration, the proposed redactions to the Robinson Declaration, and Exhibit 30 to the Robinson Declaration.

One exception was made for data from the IDC. Koh allowed Apple to seal this information because "the public's interest in this information about the smartphone market generally is not especially great." Furthermore, the unsealing of the data could hurt the IDC's "ability to sell its reports to other customers."

Media Interest in the Case

The media has expressed its interest in the case by becoming involved. Reuters hired its own attorney to intervene in the case and filed its own motions requesting the unsealing of certain documents.
The First Amendment Coalition, or FAC, filed its own friend-of-the court brief, supporting Koh's decision. Its brief stated that Apple’s data doesn’t hold true trade secrets. (View the brief here.)

The Reporters Committee for Freedom of the Press also filed a friend-of-the-court brief arguing to unseal the documents. Seven news organizations joined the brief, namely the American Society of Editors, Bloomberg, Dow Jones & Co., Gannett Co. (NYSE:GCI), The New York Times (NYSE:NYT), Society of Professional Journalists, and the Washington Post (NYSE:WPO). (View the brief here.)

There has been no information on when the Federal Circuit plans to release its decision. 

Twitter: @ChrisWitrak
No positions in stocks mentioned.