Confidentiality clubs in the Netherlands
Since the implementation of the EU Trade Secrets Directive last year, Dutch procedural law provides that in trade secret misappropriation proceedings, Courts can determine that access to alleged trade secrets introduced in the proceedings is only granted to (at least) one person of the opposing party and that party’s lawyer under confidentiality (Article 1019ib Dutch Code of Civil Procedure). This is referred to as a confidentiality club.
Another new provision provides the opportunity for Courts to order that certain documents are only accessed by a lawyer or another authorized representative, if the protection of a trade secret would otherwise be disproportionately affected (Article 22a(3) DCCP). This provision also applies outside the context of trade secret misappropriation proceedings and is referred to as an external eyes only confidentiality club.
In a recent case (Dutch language) before the Court of Appeal, the party that was accused of trademark infringement wished to respond to statements made by the trademark owner, but indicated that it could only do so by submitting confidential documents. The confidential documents related to the supply chain of the alleged infringer.
In view of the confidential nature of the information to be submitted, the Court of Appeal classified the information as confidential and ordered the trademark owner not to use or disclose the information other than in relation to legal proceedings in the Netherlands relating to the dispute. The Court of Appeal also ordered that the access to said confidential documents would be limited to a confidentiality club consisting of two persons:
- One person within the company of the trademark owner (a director or employee, or the trademark owner’s usual accountant); and
- One lawyer representing the trademark owner.
The Court of Appeal also decided that the members of the confidentiality club could share the confidential documents with others, provided that the confidential information contained therein would be removed. These confidentiality obligations were made subject to a penalty payment of € 300,000 for each violation, up to a maximum of € 3,000,000. The basis for these orders was Article 1019ib DCCP.
This is the first time that a Dutch Court has applied the new Article 1019ib DCCP on confidentiality clubs. It did so in an IP case and thus outside the context for which this provision was originally written (trade secret misappropriation proceedings). This is a promising development, as it improves possibilities for the parties in IP proceedings to submit confidential documents while safeguarding said confidentiality as well as the opportunity for at least one internal person from the opposing party to review the information and thus to discuss that information with its lawyer. This also makes it more difficult for parties to withhold relevant information by invoking confidentiality, as the Court now has an appropriate mechanism to deal with such confidentiality issues. In overview, this development improves fact-finding possibilities in IP proceedings in the Netherlands.
Authored by Ruud van der Velden and Joost Duijm