Microsoft Corporation v. Hon Hai Precision Industry Co., Ltd.
- Lucy Koh
- 5:19-cv-01279
- U.S. District Court · Northern District of California
- 5
In Microsoft v. Hon Hai, Judge Koh granted Microsoft’s renewed motion to seal specified patent-license terms as trade secrets.
Microsoft and Hon Hai, whose specified patent-license terms were sealed from public access in the court record.
What happened
Microsoft Corporation v. Hon Hai Precision Industry Co., Ltd. concerns a contract lawsuit and related counterclaims. Microsoft asked the court to seal selected portions of a 2012 draft patent license agreement attached to its filing.
The court applied the demanding “compelling reasons” standard because the agreement was closely connected to the case’s underlying claims. It found that pricing terms, royalty rates, payment terms, and related financial information could qualify as trade secrets.
Judge Lucy H. Koh granted the requested sealing of the specified portions, including numerical entries, dollar figures, percentages, time periods, and other identified language in the agreement. The ruling did not decide the parties’ contract claims or counterclaims.
The detailed version
- Microsoft Corporation v. Hon Hai Precision Industry Co., Ltd. · No. 5:19-cv-01279
- Lucy Koh
- Mar. 10, 2020
Background
Microsoft Corporation and Microsoft Licensing GP sued Hon Hai Precision Industry Co., Ltd. for breach of contract. Hon Hai asserted counterclaims for breach of the implied covenant of good faith and fair dealing, fraudulent inducement, and negligent misrepresentation.
Microsoft previously sought to seal a May 14, 2012 draft of a Confidential Patent License Agreement in its entirety. The court had denied that request. Microsoft then filed a renewed motion seeking to seal only specified portions of the draft, which was attached as Exhibit A to Microsoft’s motion to dismiss and/or strike Hon Hai’s counterclaims and affirmative defenses.
Legal standard
The court explained that judicial records generally carry a strong presumption of public access. Because the patent-license draft was more than tangentially related to the underlying claims, Microsoft had to show “compelling reasons” supported by specific facts to overcome that presumption. The court also required compliance with the Northern District of California’s local sealing procedures, including a narrowly tailored request identifying only material that was legally protectable.
The court stated that compelling reasons may exist when court records could reveal trade secrets. It relied on authorities recognizing pricing terms, royalty rates, guaranteed minimum payments, and information linking identified customers to particular financial terms as potentially sealable trade-secret information.
Ruling
The court granted the parties’ motions to seal. Specifically, it granted sealing for the following portions of Exhibit A:
- All numerical entries in the table at the bottom of page
- - The last sentence of the definition of “eReader” on page
- - All language after the word “means” in the definition of “Transfer Price” on page
- - Numerical dollar figures referenced in Section 3.3 on page
- - Specified language in the first and last sentences of Section 4.2.2 on page
- - Specified language in the first sentence of Section 4.2.4 on page
- - Numerical references to days and percentages in Section 4.2.5 on page
- - The first sentence after the section title in Section 4.4 on page
- - Specified language concerning a rate in the first sentence of Section 4.5 on page
- - Numerical references to days and percentages in Section 5.2 on page
- - All numerical entries in the table at the bottom of page 18, which contained the same information as the table on page 2.
The order addressed access to specified court-filed information; it did not resolve the merits of Microsoft’s contract claims or Hon Hai’s counterclaims.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.