To Protect Trade-Secret Confidential Information from Unwarranted Disclosure by Obtaining a Confidentiality Preservation Order from the Court

Cracking down on counterfeit goods has always been an essential task for a trademark owner to protect the reputation inherent in his trademark.  Since it is not easy to trace the source of second-hand goods and parallel imported goods are often circulating in the market in large quantities alongside genuine goods, a trademark owner sometimes needs to disclose trade-secret confidential information to help identify that any suspected goods are counterfeits, not second-hand goods or parallel imported goods.  However, once the information is revealed, a high risk of divulgement might arise, which in turn, enables the infringer to improve the quality of counterfeit goods, and makes it more difficult to distinguish between the genuine and counterfeit goods in the future. In this dilemma, which would be the most feasible action that a trademark owner may take? 

A recent Judgment rendered by IP and Commercial Court suggests obtaining from the court a confidentiality preservation order. 

A communications store sold parts and peripheral accessories when repairing mobile phones, which included mobile phone touch screens, headphones, power adapters, connection lines (transmission lines), the internal parts of mobile phones, mobile phone back covers, batteries, etc. Not surprisingly, the store owner then encountered a lawsuit from Apple Inc. the owner of the “iPhone” mark, filed with IP and Commercial Court. 

During the lawsuit proceedings, the defendant argued that the goods it sold were second-hand goods, instead of counterfeit goods. In this regard, Apple submitted a verification report, and in the meantime, requested the court to issue a confidentiality preservation order to the defendant so that the trade secrets disclosed in the verification report could be kept in confidence. If such an order is released, the defendant will only be allowed to read the verification report during trademark infringement proceedings and on that basis file a defense and counterstatement. In other words, the defendant will be prohibited from retaining a copy of the verification report by photocopying, transcription, making photos or via any other means.

The court, upon deliberation, held that the verification report and the contents of the statements Apple Inc. submitted regarding the suspected goods were indeed trade secrets. Since the defendant was engaged in the maintenance of mobile phones and had experience and expertise in the assembly of mobile phone parts, the court opined that he may readily know, by delving into the verification report and the main points of the relevant statements submitted by Apple Inc. to the court, or listening to the opinion of the appraiser, how to elaborately argue in the counterstatement that the suspected goods are not counterfeit goods. Under such circumstance, if the defendant is allowed to photocopy, transcribe, making photos of the relevant information or carry out from the court any litigation materials, such as the verification report or details of the verification process revealed by the verification personnel, it will bring about a high risk of unwarranted disclosure of Apple Inc. 's trade secrets. After weighing on the defendant's right against the risk of disclosure of trade secrets, the court issued a confidentially preservation order to the defendant, prohibiting the defendant from photocopying, transcription, making photos or employing any other means to retain the relevant materials.

The issuance of such confidentiality preservation order is tantamount to a more comprehensive protection accorded to the trademark owner. To be specific, when it is necessary to identify counterfeit goods based on trade-secrets confidential information, a trademark owner can apply to obtain a confidentiality preservation order from the court to prevent unwarranted disclosure of important confidential information during trademark infringement proceedings

The above contents are intended as general discussion of the subject matter only and shall not be deemed as legal advice to any particular case or issue.