UK: Confidential Pharmaceutical Data: Restricting Disclosure in Court Proceedings

Last Updated: 8 January 2004

Article by Richard Best, Ashurst*

Pharmaceutical companies produce a wealth of valuable and commercially sensitive information, much of which needs to be kept beyond competitors' reach. Nevertheless, a measure of disclosure is commonplace given the data and fairness requirements of regulators, codes on access to government information or freedom of information legislation, and the disclosure process in civil proceedings if a company finds itself in court. The author has addressed all but the last of these elsewhere.(1) The purpose of this article is to provide an overview of the circumstances in which the disclosure in court proceedings of commercially sensitive data can be restricted, primarily from an English perspective but also by reference to Commonwealth authorities.(2) In particular, it addresses:

  • the relevance of confidentiality to disclosure obligations;
  • pre-action disclosure and confidentiality orders;
  • circumscribed disclosure of confidential documents and trade secrets in civil proceedings;
  • the circumstances in which a proceeding or part of it may be heard in private; and
  • post-trial confidentiality orders over documents disclosed during civil proceedings.

Confidentiality alone no protection against disclosure

In England, as in other common law jurisdictions, parties to proceedings are obliged to disclose certain documents in their control. Can confidentiality be raised as a bar to disclosure? The short answer is no. As Lord Wilberforce once put it, "there is no principle in English law by which documents are protected from discovery by reason of confidentiality alone".(3) However, that is not to say that confidentiality is irrelevant. It may "properly play a potent part in the way in which a tribunal or court exercises its discretion in the matter of discovery".(4) Bare assertions from one's opponent that confidentiality is irrelevant to disclosure may, therefore, need to be resisted.

Pre-action disclosure and confidentiality orders

Whilst disclosure is normally made after the commencement of proceedings, under section 33 of England's Supreme Court Act 1981 and rule 31.16 of the Civil Procedure Rules ("CPR"), pre-action disclosure may be ordered, upon application, where (a) the applicant and respondent are likely to be parties to proceedings, (b) the documents sought would have to be disclosed had proceedings been commenced, and (c) pre-action disclosure is desirable to dispose of the anticipated proceedings fairly or without proceedings or to save costs. Even if one of the prerequisites in (c) is satisfied, the Court retains a discretion as to whether to make an order.(5) An application for pre-action disclosure must be supported by evidence, i.e., a witness statement explaining why the documents are required, how it is that they fall within rule 31.16, that there are no other means of obtaining the information, and the like. This is an important exercise because the courts are wary not to allow fishing expeditions.

Unlike the position that prevailed before the CPR came into force in 1999, pre-action disclosure is not limited to personal injury cases, although the courts have stated that "pre-action disclosure should not be ordered as a matter of course, at any rate where the parties at the pre-action stage have been acting reasonably".(6)

Voluntary pre-action disclosure

A party wishing to obtain pre-action disclosure is expected to notify the other party of its desire for documents before making an application to the courts. Where appropriate, a reasonable response to such a request through the provision of documents (even if not acceding to it entirely) can avoid an application (or at least reduce the likelihood of one succeeding) and provide an opportunity for negotiating confidentiality agreements under which the range of persons within and advising the opposing party entitled to inspect commercially sensitive documents is to be restricted. (One may also note that an unreasonable refusal to comply with a request might be considered contrary to the general terms of the Protocols Practice Direction and any specific pre-action protocols which apply to the dispute, which in turn could lead to adverse costs consequences in court.) Although much will depend on the type of proceedings and parties involved, it may be possible to obtain confidentiality undertakings from all solicitors, counsel, experts and claimants (assuming the request came from claimant(s)) before their receipt of documents.

Confidentiality in the wake of court-ordered pre-action disclosure

Similarly, if the parties cannot agree on voluntary pre-action disclosure and if the court makes an order for pre-action disclosure, the party from whom disclosure is sought may wish to seek corollary orders from the court that disclosure and inspection of commercially sensitive documents are subject to redaction (blanking out) and/or limited to specified individuals within the organisation or limited to legal advisors only, coupled with confidentiality undertakings. (To decide such issues the court may have to read the documents in question.(7))

The Australian case of SmithKline Beecham Plc and others v Alphapharm Pty Ltd (8) illustrates how this can work in practice – a (potential) patent infringement case where the parties disputed how confidential documents ought to be protected. The court ordered that, subject to an appropriate form of undertaking, disclosure of the information contained in the discovered documents or the results of any test performed on the sample should be made only to the applicants' solicitors, to their counsel, to any patent attorney the applicants had retained, to any independent expert retained to perform tests or to advise on the possibility of patent infringement, and to one director of one applicant who could decide whether to commence infringement proceedings.

Restricted disclosure of commercial and technical secrets in civil proceedings

The same issues of confidentiality can arise during the course of proceedings which have been commenced at the stage of normal disclosure(9) or, in judicial review proceedings for example, when witness statements are served because they may, for example, contain confidential exhibits. In English proceedings, normal disclosure consists of disclosure of those documents on which the party giving disclosure relies, those which adversely affect or support the disclosing party's case or another party's case, and those required to be disclosed pursuant to any practice direction. Parties are required to make a reasonable search for such documents and must certify to the court, by way of a disclosure statement, that they have done so.

Voluntary confidentiality regimes

As in the case of pre-action disclosure, a party may, for example, wish to limit disclosure to its opponent's advisors or to a limited number of its opponent's employees and/or to redact portions of the documents to be disclosed. Also as in the case of pre-action disclosure, it may be possible to agree upon an appropriate confidentiality regime without having to seek assistance from the courts. In some cases, such regimes may need to be more sophisticated than those implemented as a part of pre-action disclosure, because the scope of disclosure once proceedings have commenced is likely to be broader. For example, some of the documents required to be disclosed might contain information which is so commercially sensitive that it is desirable to distinguish between various categories of documents and seek agreement on the treatment of each category, some of which may be subject to redaction and limited inspection. Such a regime might look something like this:

  • documents without commercially sensitive data are to be disclosed without restriction as to who (amongst the claimant and its various advisors) may inspect the documents;
  • documents containing commercially sensitive yet relevant data are to be disclosed in two versions, namely, with and without redaction of the commercially sensitive material, with the redacted version being disclosed without restriction as to inspection, but with the non-redacted version being subject to solicitor/counsel (or similar) inspection only and confidentiality undertakings;
  • the non-redacted versions, no matter how relevant, are not to be disclosed to the client (or members of it, if a corporate) without due notice and in any event subject to restricted access and acceptance of confidentiality undertakings;
  • documents containing commercially sensitive but irrelevant data can be redacted and disclosed in redacted form alone (perhaps with explanation as to why the redacted material is confidential and irrelevant and perhaps also with the option for one solicitor of the law firm to inspect the documents and apply for disclosure if not satisfied with the explanation, although one might argue that, strictly speaking, such explanation and option are unnecessary.(10))

Courts' approach to protection of commercial or technical secrets

Whether or not the parties are able to agree to such a regime, and whilst there is no universal formula that can be rigidly applied in these sorts of cases, certain guiding principles have been enunciated by the courts relevant both to the formulation of a voluntary regime or, if not possible, the court's exercise of discretion on an application for restricted disclosure when commercial or technical secrets are at stake, as follows:(11)

  • If disclosure is made by one party to its opponent's advisers before trial, it must normally follow that the opponent itself should be entitled to know the facts disclosed.
  • But this principle is subject to modification if trade secrets are to be protected from disclosure to (possible) competitors.
  • The object to be achieved is that the applicant should have as full a degree of disclosure as will be consistent with adequate protection of the secret. The court will be careful not to expose a party to any unnecessary risk of its trade secrets leaking to or being used by competitors. What is necessary or unnecessary will depend upon the nature of the secret, the position of the parties and the extent of the disclosure ordered.
  • It would be exceptional to prevent a party from access to information which would play a substantial part in the case as that would mean that the party would be unable to hear a substantial part of the case, would be unable to understand the reasons for the advice given to it and, in some cases, the reasons for the judgment. Accordingly, what disclosure is necessary entails not only practical matters arising in the conduct of a case, but also the general proposition that a party should know the case it has to meet, should hear matters given in evidence and understand the reasons for the judgment.

The English case of R v Secretary of State for Health, ex parte Association of Pharmaceutical Importers (12) provides an interesting case study of restricted disclosure of pharmaceutical pricing and advertising data.

Public or private hearing?

Court proceedings are normally heard in public and indeed the right to a public hearing in the determination of civil rights and obligations is a facet of article 6 of the European Convention on Human Rights, now incorporated into English law by the Human Rights Act 1998.

However, that right is not absolute. Rule 39.2 of the CPR states that whilst the general rule is that a hearing is to be in public, a hearing, or any part of it, may be in private if, among other grounds, "it involves confidential information … and publicity would damage that confidentiality" or "the court considers this to be necessary, in the interests of justice". Paragraphs 1.4 and 1.4A of the Practice Direction to Part 39 of the CPR state that the "decision as to whether to hold a hearing in public or in private must be made by the judge conducting the hearing having regard to any representations which may have been made to him" and that the "judge should also have regard to article 6(1) of the European Convention on Human Rights" (right to a fair and public hearing). The court's exercise of discretion under rule 39.2 is not governed by the wishes of the parties; rather, the discretion to hold a hearing or part of it in private may only be exercised on one or more of the specified grounds.(13) The courts consider the general rule of publicity to be a strong one(14) and are generally reluctant to hold hearings in private.

Post-trial confidentiality orders over disclosed documents referred to in court

Public hearings

The need for confidentiality may well remain once proceedings are at an end. However, documents a party considers confidential may have been referred to or read out in open court, thereby activating the principle in rule 31.22(1)(a) of the CPR that a party to whom documents have been disclosed may use those documents for other purposes if those documents have been read to or by the court, or otherwise referred to, at a public hearing. To counter this position, a party wishing confidentiality to be retained would need to make an application to the Court for a restriction or prohibition on further use. Under rule 31.22(2) the court may make an order restricting or prohibiting the use of a document which has been disclosed, even where the document has been read to or by the court, or referred to, at a public hearing. An important question is when and how the courts exercise this power.

In Lilly Icos Limited v Pfizer Ltd (15) the English Court of Appeal restated the legal principles and on the particular facts ordered that confidentiality over advertising data referred to in court but only in passing was to remain in force. The Court made the following comments on the scope of the provision releasing the normal rule of confidentiality, which arises when a document "has been read to or by the court, or referred to, at a hearing which has been held in public" (CPR 31.22(1)(a)):

  • The intent of the provision would be substantially frustrated if it were literally restricted to what had physically happened in open court. It is necessary to take as falling under CPR 31.22(1)(a) any document pre-read by the judge, or referred to in, for example, witness statements taken to stand as evidence, even if the document or the witness statement was not actually read out in court.
  • As regards documents pre-read by the judge, it does not have to be established that the judge has actually read the documents: once the category is established, it is for a party alleging that they have not in fact been read to establish that fact, something that has to be achieved without enquiry of the judge.
  • It follows that not everything that is disclosed or copied in court bundles falls under this rule regarding pre-reading by the judge: it is restricted to documents to which the judge has been specifically alerted, whether by reference in a skeleton argument or by mention in the "reading guide" with which judges are now often provided.
  • Because this approach is based upon the assumed orality of a trial, documents, however much pre-read by the judge, remain confidential if no trial takes place, but the application is, for instance, dismissed by consent, albeit by a decision announced in open court.
  • The central theme of the rules is the importance of the principle that justice is to be done in public, and within that principle the importance of those attending a public court understanding the case. They cannot do that if the contents of documents used in that process are concealed from them: hence the release of confidence once the document has been read or used in court.
  • When making its decision under CPR 31.22(2) at the end of the proceedings, the court will note but not be constrained by confidentiality agreements between the parties under which (for example), during the proceedings, documents designated as confidential shall be seen only by a strictly limited number of people on each side (e.g., professional advisers) who are bound by undertakings of confidence in relation to them.

The Court of Appeal also set out a number of principles that had guided it on the facts before it – which parties seeking an order under rule 31.22(2) may wish to bear in mind:

  • The court should start from the principle that very good reasons are required for departing from the normal rule of publicity.
  • When considering an application in respect of a particular document, the court should take into account the role that the document has played or will play in the trial, and thus its relevance to the process of scrutiny which a public trial affords.
  • In dealing with issues of confidentiality between the parties, the court must have in mind any "chilling" effect of an order upon the interests of third parties.
  • Simple assertions of confidentiality and of the damage that will be done by publication, even if supported by both parties, should not prevail. The court will require specific reasons why a party would be damaged by the publication of a document. Those reasons will in appropriate cases be weighed in the light of the considerations referred to in the second bullet point above.
  • It is highly desirable, both in the general public interest and for simple convenience, to avoid the holding of trials in private, or partially in private. In the present case, the manner in which the documents were handled, together with the confidentiality agreement during trial, enabled the whole of the trial to be held in public, even though the judge regarded it as justified to retain confidentiality in respect of a significant number of those documents after the trial was over. The court should bear in mind that if too demanding a standard is imposed under CPR 31.22(2) in respect of documents that have been referred to inferentially or in short at the trial, it may be necessary, in order to protect genuine interests of the parties, for more trials or parts of trials to be held in private, or for instance for parts of witness statements or skeletons to be in closed form.
  • Patent cases are subject to the same general rules as any other cases, but were considered to present some particular problems and to be subject to some particular considerations. Patent litigation is of peculiar public importance which means that the public must be properly informed; but it means at the same time that the issues must be properly explored, in the sense that parties should not feel constrained to hold back from relevant or potentially relevant issues because of (legitimate) fears of the effect of publicity.

Private hearings

Even where proceedings are heard in private, a party may apply for confidentiality orders to be released or minimised after the hearing given, for example, the appearance of relevant facts in the public domain. The Australian case of Aktiebolaget Hässle v Alphapharm Pty Ltd (16) provides an illustration of a court limiting the scope of, but not removing, a confidentiality order in connection with a private hearing given a narrowing in scope of the information which previously needed to be kept confidential.

Conclusion

Although confidentiality alone is not a ground for refusing disclosure of relevant documents, various means exist for restricting access to commercially sensitive documents or parts of them. Whilst commercial parties are sometimes at odds as to the scope of protection, it is often possible to strike agreement on confidentiality regimes involving restrictions on inspection, redaction of highly sensitive data and/or undertakings as to confidentiality – in cases of pre-action disclosure, normal disclosure once proceedings have commenced and post-proceedings use and disclosure. If the parties cannot agree, confidentiality orders, including orders as to redaction, may be sought from the courts. Although the courts are, as a rule, reluctant to hold hearings in private, they have shown a willingness to protect commercial and technical secrets from competitors' prying eyes by the granting of confidentiality orders, albeit pursuant to a balancing exercise which emphasises the importance of parties being able to understand and meet the cases raised against them. Parties may encounter difficulties in protecting confidential documents which have been read to or by the court in a public hearing, even if not read out aloud. In that event the party wishing to preserve confidentiality needs to seek a court order prohibiting further use or disclosure. Whilst such orders have been granted, the threshold is not low. Similar issues might arise upon conclusion of private hearings if circumstances suggest that the confidentiality which warranted a private hearing in the first place has lost or is losing its potency.

References

*Richard Best is a solicitor at international law firm Ashurst, Frankfurt; Solicitor (England and Wales), Barrister and Solicitor (New Zealand), Registered Foreign Lawyer (Frankfurt, Germany). This article is not intended to be a comprehensive survey of the subject-matter; readers should take legal advice before applying the information contained in the article to specific issues or transactions. Copyright reserved.

(1) R D Best "Protecting the Confidentiality of Pharmaceutical Data" (2003) Regulatory Affairs Journal (Pharma) 261 (part 1) and 343 (part 2). See also R D Best "The Select Committee's Report on NICE - Confidentiality Concerns", 15 August 2002, available online at: www.pharmiweb.com/features/feature.asp?ROW_ID=256

(2) A longer version of this article, which discusses each of the cases in more detail, has been submitted for publication to www.pharmiweb.com; once published it should appear in the "Resources>Features" section of the website.

(3) Science Research Council v Nassé [1980] AC 1028, 1065 (HL).

(4) Science Research Council, above n 3, 1074 (per Lord Edmund-Davies); see also Lord Wilberforce at 1065-1066.

(5) On this point and generally, see Black v Sumitomo Corporation (2002) 1 WLR 1562; (2002) 1 Lloyd's Rep 693; Moresfield Ltd and others v Banners [2003] EWHC 1602.

(6) Moresfield, above n 5, para 32.

(7) See generally Science Research Council, above n 3; Wallace Smith Trust Co Ltd (in liquidation) v Deloitte Haskins & Sells and anor [1997] 1 WLR 257, 272 (CA).

(8) [2001] FCA 271. This case is discussed more fully in the longer version of this article to be published at www.pharmiweb.com

(9) As to which see Part 31 of the CPR.

(10) See GE Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172, 174 (CA) in which Hoffman LJ, as he then was, said that it "has long been the practice that a party is entitled to seal up or cover up parts of a document which he claims to be irrelevant" and that the oath of the party giving discovery is conclusive unless the court has good reason to think otherwise; applied in Paddick v Associated Newspapers Ltd [2003] EWHC 2991 (QB).

(11) Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 (CA); Oxford Gene Technology Ltd v Affymetrix Inc [2002] EWCA Civ 253.

(12) Unreported, 15 November 2000, High Court of England. Discussed in the longer version of this article to be published at www.pharmiweb.com.

(13) Arundel Corporation v Khokher [2003] EWCA Civ 491, para 27.

(14) One may note that, although it appears to have been argued that cases involving regulatory issues ought never to be heard in private (given, presumably, the public interest at stake), in R v Secretary of State for the Environment, Food & Rural Affairs and another, ex parte Amvac Chemical UK Ltd and another [2001] EWHC Admin 1011, Crane J said: "I am not prepared to agree with counsel for the Defendants that there could never be a case involving a regulatory issue in which a private hearing of argument (or part of the argument) would be ordered in the light of CPR 39.2(3)(a) or (c)."

(15) [2002] 1 All ER 842 (CA).

(16) [1999] FCA 1390. Disussed in the longer version of this article to be published at www.pharmiweb.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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