Caselaw Digest
Caselaw Digest

IBM United Kingdom Limited v Lzlabs GmbH & Ors

28 February 2024
[2024] EWHC 423 (TCC)
High Court
IBM sued LzLabs for copying its software. They disagreed on what documents should be kept secret for the trial. The judge said they need to review each document individually, keeping some secrets but making sure the trial is fair and open.

Key Facts

  • IBM sued LzLabs for allegedly breaching a license agreement by reverse engineering IBM software to develop its 'Software Defined Mainframe' (SDM).
  • The case involves complex technical issues concerning software source code and development processes.
  • A confidentiality order was in place to manage the disclosure of sensitive documents.
  • IBM sought clarification on the designation of confidential documents for trial.
  • LzLabs agreed to a review but disagreed with IBM's proposed principles for determining confidentiality.

Legal Principles

Open justice is a fundamental principle of English law, but it is not absolute and can be derogated from to protect confidential information.

Attorney General v Leveller Magazine Ltd [1979] AC 440, Al Rawi & Others v The Security Service & Others [2011] UKSC 34, R (Guardian News and Media Ltd) v City of Westminster Magistrates’ Court [2012] EWCA Civ 420

The court must balance the competing interests of open justice and the protection of confidential information when ordering disclosure.

Riddick v Thames Board Mills Limited [1977] QB 881

The designation of documents as confidential during disclosure is not conclusive for the purpose of the trial. The burden is on the party seeking to maintain confidentiality to justify it.

None explicitly cited, but derived from discussion in sections 33-37

CPR 31.22 provides protection against misuse of disclosed documents, but may not be sufficient for commercially sensitive information used in court.

CPR 31.22

The court must consider the administration of justice, including the parties' ability to understand the evidence and the practicalities of the trial.

None explicitly cited, but derived from discussion in section 36

Confidential information is private information not in the public domain, communicated with an obligation of confidentiality. It's a relative, fact-sensitive concept.

Bamford v Manitou (above) at [37]-[42]

The definition of 'trade secret' under the Trade Secrets (Enforcement etc.) Regulations 2018 provides further guidance.

Article 2 of the Trade Secrets Directive and Regulation 2 of the Trade Secrets (Enforcement etc.) Regulations 2018

Outcomes

The court rejected IBM's proposed principles for determining confidentiality but ordered a review of the documents' confidentiality designations.

The court found that a blanket application of IBM's principles was inappropriate and that each document should be assessed individually in context. The court prioritized a practical approach, focusing on a core bundle of key documents for initial review.

The court ruled that source code, customer identities, and IP addresses should remain confidential (Inner Confidentiality Ring or Source Code Information).

This was largely agreed upon by the parties.

The court deferred decisions on other disputed documents to a further hearing.

The court lacked sufficient information to rule on these without further context-specific submissions.

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