Apple fights disclosure of BlackBerry patents in Fifth Circuit

(CN) — Apple urged a federal appeals court Wednesday to block its confidential patent-licensing agreements from reaching attorneys for a Chinese smartphone maker, warning of serious competitive harm in overseas lawsuits.

The case, Apple Inc. v. Key Patent Innovations Ltd. et al., centers on a lower court order forcing BlackBerry to hand over licensing contracts for standard-essential patents. Those deals are needed by appellants Key Patent Innovations Ltd. and Malikie Innovations to support their patent disputes against Xiaomi in courts in Germany and India. A magistrate judge in Texas allowed limited disclosure to two vetted Xiaomi in-house attorneys, rejecting Apple’s demand for stricter “outside counsel only” protections. The outcome could set precedent on how U.S. courts balance confidentiality in global patent wars involving powerful tech giants and standard-essential patents used in billions of smartphones.

During oral arguments before a three-judge panel of the Fifth Circuit, Apple argued the ruling wrongly exposed its sensitive pricing information to a direct rival.

“Apple would be gravely harmed if its highly confidential licensing agreements are exported for use in litigation in India and Germany and handed over to in-house personnel of its direct competitor,” attorney Joseph R. Palmore told the court, adding the requested documents include “highly confidential licensing agreements” involving standard-essential patents.

Disclosure would send them to a direct competitor overseas, where Apple would have no visibility into how the information is used inside China and no meaningful way to enforce limits in a protective order. Palmore stressed that the discovery fight itself is the entire case under the federal law known as Section 1782, which lets U.S. courts gather evidence for foreign proceedings.

“This is a free-standing cause of action for discovery,” he said, arguing the magistrate’s order should have received full de novo review by a district judge rather than lighter scrutiny. He also challenged the judge’s reading of the Apple-BlackBerry contract, saying it requires outside-counsel-only limits in litigation.

Apple fears Xiaomi’s lawyers, who also handle pricing negotiations, cannot “separate or compartmentalize” the information.

“It stretches credulity to think that these in-house attorneys are going to be able to separate or compartmentalize in their mind this information,” Palmore concluded.

Malikie’s attorney Steffen N. Johnson pushed back, calling Apple’s fears overblown.

“You’d think the court below had ordered Apple to give away the keys to its technological kingdom, but this is not the formula for Coke or some sensitive algorithm on an AI platform,” Johnson said. “We’re talking about standard-essential patents and licenses on them, which the law routinely requires disclosing under suitable protective orders.”

Johnson argued the contracts explicitly allow disclosure when required by foreign law, and Xiaomi needs in-house access to fairly assess whether Malikie’s licensing offers comply with fair, reasonable and nondiscriminatory, or FRAND, rules. He noted the order already limits access to just two noncompetitive in-house lawyers.

“It is Xiaomi’s position that production of those documents is strictly necessary to assess the FRAND-ness of Malikie’s offer for their portfolio and the Blackberry portfolio,” Johnson said.

The panel included U.S. Circuit Judges Priscilla Richman, Kurt D. Engelhardt and Cory T. Wilson, appointees of George W. Bush (Richman) and Donald Trump (Engelhardt, Wilson).

The judges pressed both sides on whether the magistrate’s ruling counted as “dispositive,” a key legal question that would change how strictly it is reviewed. Wilson noted it “surely sounds interlocutory or ancillary to me,” while Engelhardt asked if it mattered given the narrow issue on appeal.

Palmore said it matters doctrinally, but even if the court decides the merits, Apple wins because the legal interpretation and balancing were wrong. Johnson said it doesn’t matter because under any standard, the lower court got the contract and the balancing right.

The panel took the case under submission without indicating when it would rule.

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