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Confidentiality in SEP Litigation – The Court of Appeal Introduces Licensing Bars as a Way Forward
In a recent order (docket no. UPC_CoA_631/205 a.o.) issued in proceedings concerning standard-essential patents (SEP), the Court of Appeal (CoA) of the Unified Patent Court (UPC) introduced a new approach addressing confidentiality in proceedings involving highly sensitive information – namely license agreements with third parties.
The CoA also used the decision to confirm the principles of establishing confidentiality clubs. The decision concerns access to license agreements and, in particular, the possibility of restricting the necessary participation of a natural person from each party.
I. Facts
In June 2024, the patentee filed two SEP infringement actions. In patent litigation concerning SEP, patentees typically refer to license agreements concluded with third parties. The respective license agreements generally include strict confidentiality clauses that prevent the patentee from introducing the license agreement into court proceedings without further measures.
The Claimant, therefore, asked for a confidentiality regime for certain license agreements according to which the Defendant itself was not to gain access to the agreements (“external eyes only” (EEO). The Defendant did not agree to this, with the result that the CoA ultimately had to decide the issue. The dispute, hence, concerned the scope of access to confidential documents, in particular whether at least one natural person of each party should be granted access to the confidential material.
The question was not whether confidentiality measures were appropriate, but to what extent a party’s access to confidential information can be restricted.
II. Principles for establishing a Confidentiality Club
In its order, the Court of Appeal reaffirmed that, as a matter of principle, at least one natural person from each party must be granted access to the confidential information. The UPC, therefore, cannot grant an EEO confidentiality order unless the parties have agreed to it. This principle is expressly set out in R. 262A.6 RoP. Accordingly, the number of persons to whom access is restricted shall be no greater than necessary in order to ensure compliance with the right of the parties to an effective remedy and to a fair trial, however, it shall include, at least, one natural person from each party.
At the same time, the Court acknowledged the particularly sensitive nature of licence agreements in SEP disputes. The information at stake typically comprises information on royalties, terms of the specific agreements and other highly competitive data. Moreover, the information not only concerns the patentee as licensor; disclosure may also cause potential harm to licensees as third parties. The Court therefore accepted that access may be subject to strict conditions in order to safeguard confidentiality.
To this end, the Court opened the possibility of imposing a so-called licensing bar on the natural person who is granted access to the confidential information. According to the Court, the licensing bar may mitigate the potential harm of the third parties by requiring the natural person to refrain from involvement in patent licensing negotiations with the respective contractual partners of the protected licence agreements for a certain period of time. This measure serves to prevent the employee from using the information in these negotiations, whether intentionally or not.
III. Findings of the Court
In its decision, the Court of Appeal applied these legal findings and found that the Local Division Milan correctly established a confidentiality club including a natural person from each party in its confidentiality order. However, with regard to certain license agreements, the Court imposed a licensing bar on those persons for a period of five years from the date of the order.
IV. Confirmation in further decision of the same day
The principles set out in the above-mentioned decision were simultaneously set out in a second decision of the same day (docket no. UPC_CoA_755/2025 a.o.). The Court also found here, that a natural person of each party must, as a rule, be granted access to confidential information in order to safeguard its procedural rights.
At the same time, the Court found that additional protective measures, including the imposition of a licensing bar, may be appropriate where information on particularly sensitive license agreements are concerned. In that case, three persons from the Defendant were included in the confidentiality club and were each made subject to a licensing bar of two years, although the Defendant had argued that those individuals were the only employees currently available to conduct licensing negotiations.
V. Conclusion
The decisions of the CoA specify and expand the protection of licence agreements as highly confidential information in SEP proceedings before the UPC. The Court maintains the fundamental requirement that a natural person of each party must have access to confidential information. At the same time, it explicitly recognises the possibility of imposing a licensing bar as an additional safeguard.
For companies engaged in SEP licensing, these decisions have immediate practical relevance. They must take into account that participation in a confidentiality club may entail restrictions on future licensing activities. Companies should therefore carefully consider which employees they nominate for the confidentiality club. In SEP licensing practice, the relevant knowledge for negotiations typically resides with specific employees responsible for licensing. It is precisely these individuals who are often involved in such legal disputes. However, if they are subject to a licensing bar, they may be prevented from negotiating with certain licensees in the future.
An alternative approach may be to appoint a third person (potentially an external expert) to the confidentiality club. The CoA previously confirmed that this is a possibility.
The Court’s approach therefore requires companies to weigh litigation needs against future commercial strategy. The composition of the confidentiality club is no longer a purely procedural matter but may have lasting business implications.