Arkipelago Architecture Inc v Enghouse Systems Limited, 2018 FCA 192

In this leading case on Counsel and Expert’s Eyes Only (“CEEO”) Orders, the Federal Court of Appeal (“FCA”) confirms that such Orders should only be granted in unusual circumstances. [11] The FCA dismissed Arkipelago Architecture Inc’s (“Arkipelago”) appeal of Justice Roussel of the Federal Court’s (“FC”) decision upholding FC’s Prothonotary Aylen’s decision to grant a CEEO protective order. [1]

Background

Arkipelago filed a motion against Enghouse Systems Limited, Enghouse Networks Limited, Stephen J. Sadler and Douglas Bryson (collectively “Enghouse”) within a copyright infringement action of a computer program. Arkipelago was looking to obtain confidential information from Enghouse, including computer source code, client information and agreements and financial information. In response to the motion, Enghouse requested a CEEO order. [3]

Upon review of the arguments and evidence, the Prothonotary concluded that the information requested was highly sensitive and that a CEEO order was warranted since the prospect of Arkipelago’s use of the information would present a real and substantial risk for Enghouse. Moreover, the Prothonotary was not convinced that Arkipelago needed the information to effectively instruct its counsel, since Arkipelago could retain experts who would have access to the confidential information. In appeal, Justice Roussel of the FC affirmed the Prothonotary’s decision. [3-6]

CEEO Orders granted in unusual circumstances

The FCA stated that the case law on CEEO Orders is clear – they should only be granted in “unusual circumstances”. The FCA found that both the prothonotary and the FC articulated the correct legal standard applicable to the issuance of a CEEO order.  [11-12]

The FCA addressed Arkipelago’s argument that the FC ignored its evidence on the need for access to the confidential information to properly instruct counsel. The FCA agreed with the FC’s observation that Arkipelago failed to explain why the information was necessary to properly instruct counsel. The FCA also agreed with the FC’s conclusion that the risk of providing the information to Arkipelago was real and substantial. [15-16] The FCA dismissed Arkipelago’s argument that the order interferes with its solicitor-client relationship, noting that “[t]aken to its logical conclusion, the appellant’s position would mean no CEEO orders would ever be granted.” [17] The FCA also dismissed Arkipelago’s argument that granting the CEEO Order presupposes that Enghouse’s computer program is non-infringing – a matter that had not yet been determined. The FCA found this argument had no merit, as it “operates with equal force in the opposite direction – that is, to accept their submission would require this Court to presuppose that the respondents’ program is infringing.” [18-19]

Commentary

The “Open Court” principle requires that court proceedings and documents be open and available to the public and media. There are, however, instances where exceptions will be made to this principle. For instance, confidentiality orders will preclude the distribution of confidential and sensitive information from the public. CEEO Orders are an exception within the exception of confidentiality orders.

This new leading case on CEEO Orders offers guidance to individuals (and of course their counsel) who seek to protect highly sensitive information that is very common in intellectual property cases. The FCA stated that the case law surrounding CEEO Orders is clear – they may be granted in “unusual circumstances”. The FCA acknowledged that there is no comprehensive definition of “unusual circumstances”, but offers some insight:

However, there is no comprehensive definition of what constitutes “unusual circumstances” and each case must be decided on its own merits. In the context of harm to a commercial business interest, a CEEO order is warranted where the disclosure of the confidential information at issue presents a “serious threat” that is “real, substantial, and grounded in the evidence” [11]

IP rights holders should therefore consult their IP lawyers to determine whether their information should be protected and take the necessary steps to protect it. Contact a PCK IP professional today for more information!