Case 1:20-cv-00393-LO-TCB Document 1241-1 Filed 05/27/22 Page 1 of 7 PageID# 32379
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`v.
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`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
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`Plaintiffs and Counterclaim Defendants,
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`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.,
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`Defendants and Counterclaim Plaintiffs.
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`Case No. 1:20-cv-00393-LO-TCB
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`[PROPOSED] ORDER GRANTING REYNOLDS’S MOTION TO SEAL
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`This matter is before the Court on the motion filed by RAI Strategic Holdings, Inc. and
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`R.J. Reynolds Vapor Company (collectively, “Reynolds”) to file under seal trial exhibits that
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`contain confidential information of Reynolds and of third parties, pursuant to Local Civil Rule
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`5(C) and 5(H).
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`Before this Court may seal documents, it must consider both substantive and procedural
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`requirements. Substantively, the Court must determine the nature of the information and the
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`public’s right to access. Stone v. Univ. of Md. Med. Sys. Corp., 855 F.2d 178, 180-81 (4th Cir.
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`1988). Although “the Supreme Court has not addressed whether the First Amendment’s right of
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`access extends to civil trials or other aspects of civil cases . . . , the Fourth Circuit[ ] ha[s]
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`recognized that the First Amendment right of access extends to civil trials and some civil filings.”
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`Am. Civil Liberties Union v. Holder, 673 F.3d 245, 252 (4th Cir. 2011). Even so, public access to
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`civil trial records “is not absolute,” and restrictions can be justified by concerns that such records
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`Case 1:20-cv-00393-LO-TCB Document 1241-1 Filed 05/27/22 Page 2 of 7 PageID# 32380
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`“might . . . become a vehicle for improper purposes,” such as where the records serve “as sources
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`of business information that might harm a litigant’s competitive standing.” Nixon v. Warner
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`Commc’ns, Inc., 435 U.S. 589, 598 (1978). In particular, a corporation’s “strong interest in
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`preserving the confidentiality of its proprietary and trade-secret information . . . may justify partial
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`sealing of court records.” Doe v. Pub. Citizen, 749 F.3d 246, 269 (4th Cir. 2014); see also Apple,
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`Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1218, 1228-29 (Fed. Cir. 2013).
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`The common law “presumes a right of access to all judicial records and documents.” Level
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`3 Commc’ns, LLC v. Limelight Networks, Inc., 611 F. Supp. 2d 572, 577 (E.D. Va. 2009).
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`However, the presumption “can be rebutted if countervailing interests heavily outweigh the public
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`interests in access.” Id. (quoting Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th
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`Cir. 1988)). For example, “courts have refused to permit their files to serve . . . as sources of
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`business information that might harm a litigant’s competitive standing” and have sealed such
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`information from the public. Id. (quoting Nixon, 435 U.S. at 598). Courts consider whether the
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`movant has borne its “burden of showing some significant interest that outweighs the
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`presumption.” Id. (quoting Rushford, 846 F.2d at 253). The First Amendment’s right of public
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`access is “much stronger than the guarantee provided by the common law.” Id. Accordingly, this
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`Court has held that the First Amendment guarantee of public access “applies where efforts are
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`made to seal documents offered into evidence before a court in the course of a public jury trial.”
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`Id. at 579. In determining whether “a particular document sought to be sealed is subject to the
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`First Amendment’s presumptive right of access, the court must weigh and balance competing
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`interests.” Id. The presumption may be overcome “by an overriding interest based on findings
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`that closure is essential to preserve higher values.” Id. at 580. Courts have recognized that the
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`Case 1:20-cv-00393-LO-TCB Document 1241-1 Filed 05/27/22 Page 3 of 7 PageID# 32381
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`presumption may be overcome where “confidential commercial information, such as a trade
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`secret,” must be protected. Id. at 582.
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`Procedurally, the Court must: “(1) provide public notice of the request to seal and allow
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`interested parties a reasonable opportunity to object, (2) consider less drastic alternatives to sealing
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`the documents, and (3) provide specific reasons and factual findings supporting its decision to seal
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`the documents and for rejecting the alternatives.” Ashcraft v. Conoco, Inc., 218 F.3d 288, 302 (4th
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`Cir. 2000) (citing Stone, 855 F.2d at 181). Public notice can be satisfied through the docketing of
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`a party’s motion to seal. Stone, 855 F.2d at 181 (explaining that to satisfy the notice requirement
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`courts must either “notify persons present in the courtroom of the request” or “docket it ‘reasonably
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`in advance of deciding the issue’”); Adams v. Object Innovation, Inc., No. 11-cv-00272-REP-
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`DWD, 2011 WL 7042224, at *4 (E.D. Va. Dec. 5, 2011), report & recommendation adopted, 2012
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`WL 135428 (E.D. Va. Jan. 17, 2012).
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`Upon consideration of Reynolds’s motion to seal and its memorandum in support thereof,
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`the Court hereby FINDS as follows:
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`1.
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`Reynolds’s request satisfies the substantive requirements. Its request is narrowly
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`tailored. Although the parties list over two thousand proposed trial exhibits, Reynolds seeks to
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`seal and redact from the public record only information designated by Reynolds and non-parties
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`as confidential. The information sought to be sealed includes Reynolds’s PMTAs for its VUSE
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`products, regulatory strategy, CAD files and source code, licensing agreements with non-parties,
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`technical documents from third-parties, and non-public financial information, including forecasts,
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`costs analyses, internal plans regarding distribution and marketing, and financial information for
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`individual VUSE product lines. These materials fall within the Protective Order and Reynolds has
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`maintained the confidentiality of these documents.
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`2.
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`Each of these documents serve “as sources of business information that might harm
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`[Reynolds’s] competitive standing.” Nixon, 435 U.S. at 598. Here, Reynolds’s “strong interest in
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`preserving the confidentiality of its proprietary and trade-secret information . . . justif[ies] partial
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`sealing of court records.” Doe, 749 F.3d at 269; see also Apple, Inc., 727 F.3d at 1218, 1228-29.
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`Moreover, the exhibits to be sealed are not necessary for the public to understand what will happen
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`at trial. This is a patent infringement case that does not turn on the data in the form submitted to
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`FDA, so the PMTAs “will shed no light” on the issues at trial. In re Incretin-Based Therapies
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`Prod. Liab. Litig., 2015 WL 11658712, at *3. The PMTAs also disclose the composition of the e-
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`liquid in the Vuse products which is a trade secret, and in addition to the product-related details,
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`the structure and content of Reynolds’s PMTA submissions are also confidential and competitively
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`sensitive, because they provide insight into Reynolds’s decisions and strategy regarding scientific
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`content, tests, and data and the organization of this information as provided in the PMTAs.
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`Witnesses, including expert witnesses, may properly describe facts also found in the PMTAs, or
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`even use images derived from the PMTAs, without disclosing the regulatory submissions
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`themselves. These exhibits contain innumerable “details that w[ill] not [be] referenced during
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`testimony or by counsel during opening statements or closing arguments.” Syngenta Crop Prot.,
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`LLC v. Willowood, LLC, No. 1:15-CV-274, 2017 WL 6001818, at *6 (M.D.N.C. Dec. 4, 2017);
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`see also Airboss Rubber Compounding (NC), Inc. v. Kardoes Rubber Co., No. 1:12-CV-352, 2013
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`WL 12380267, at *1 (M.D.N.C. July 23, 2013) (granting motion to seal “certain business and
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`proprietary information which is not ordinarily public” because “[t]he competitive and financial
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`interests of the parties would be harmed by public disclosure”).
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`The damages expert witnesses may rely on certain terms from the third-party agreement
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`with Fontem and the non-party termination with Nicoventures in stating their opinions, but that
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`does not justify disclosing the entire agreements and related documents, or the underlying
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`negotiations,
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`to
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`the public at
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`large.
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` See, e.g., LifeNet Health v. LifeCell Corp.,
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`No. 2:13cv486, 2015 WL 12517430, at *4 (E.D. Va. Feb. 12, 2015) (holding that the defendant’s
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`“interest in protecting its and third-parties confidential commercial information is significant
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`enough to outweigh the First Amendment right of access in this case”); In re Zetia (Ezetimibe)
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`Antitrust Litig., No. 2:18-md-2836, 2018 WL 6795835, at *1 (E.D. Va. Nov. 1, 2018) (granting
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`motion to seal agreement including “detailed licensing terms, covenants regarding the
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`enforceability of patents, and an express agreement that the parties would keep its terms
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`confidential”).
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`Although certain testimony regarding the technical drawings, schematics, and invoices of
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`Reynolds’s third party suppliers may be relevant to issues at trial, disclosing full copies of these
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`documents to the public would harm the third parties and Reynolds in future business dealings and
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`would provide an unfair advantage to competitors by giving them the benefit of the research and
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`development of the third parties and Reynolds without the same investment. At least some of the
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`third-party supplier documents are subject to contractual confidentiality obligations.
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`Similarly, the financial projections, costs analyses, and reference to Reynolds’s future
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`business plans will likely inform some part of the damages experts’ testimony, but given the nature
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`of the “hypothetical negotiation” analysis for patent damages, their ultimate opinions on royalty
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`rates and base amounts will be supported largely by historical financial and cost information, and
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`other evidence sufficient for the public “to evaluate the fairness of the proceedings and of the
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`result.” Syngenta, 2017 WL 6001818, at *6. The minimal interest that the public may have in this
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`specific information is heavily outweighed by the clear and substantial risk of competitive and
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`financial harm to Reynolds if the information is revealed. See id. (“The Court finds that Syngenta
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`has demonstrated that its compelling interest in protecting its competitive standing heavily
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`outweighs the public’s right to access these trial exhibits.”).
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`The CAD files and source code for the VUSE products are particularly sensitive technical
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`information that is confidential. If used at trial, the public has no need for the entire files
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`themselves. Instead, witnesses, including expert witnesses, may properly describe facts found in
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`the CAD files and source code, or even use images derived from the CAD files, without disclosing
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`the full CAD files or source code themselves. These exhibits contain innumerable “details that
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`w[ill] not [be] referenced during testimony or by counsel during opening statements or closing
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`arguments.” Syngenta, 2017 WL 6001818, at *6. Additionally, the source code has been subject
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`to special access restrictions under the Protective Order. Dkt. 103 at 4-11. See also Wisconsin
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`Alumni Rsch. Found. v. Apple, Inc., No. 14-CV-062-WMC, 2015 WL 6453837, at *1 (W.D. Wis.
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`Oct. 26, 2015) (“A party’s confidential source code falls within a trade secret or confidential
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`business information warranting protection.”); see also Apple, Inc. v. Samsung Electronics Co.,
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`No. 11–CV–01846–LHK, 2012 WL 6115623, at *2 (N.D.Cal. Dec. 10, 2012) (“Confidential
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`source code clearly meets the definition of a trade secret.”).
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`3.
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`Reynolds has also satisfied the procedural requirements. The public has received
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`notice of the request to seal and has had reasonable opportunity to object. Reynolds’s sealing
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`motion was publicly docketed in accordance with Local Civil Rule 5. Reynolds’s motion and
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`memorandum in support provided a non-confidential description of the exhibits Reynolds seeks to
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`have sealed. Altria Client Services LLC, Philip Morris USA, Inc., and Philip Morris Products S.A.
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`(collectively, “PM/Altria”) have had an opportunity to respond. The “public has had ample
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`opportunity to object” to Reynolds’s motion and, because “the Court has received no objections,”
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`the first requirement under Ashcraft, 218 F.3d at 302, has been satisfied. GTSI Corp. v. Wildflower
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`Case 1:20-cv-00393-LO-TCB Document 1241-1 Filed 05/27/22 Page 7 of 7 PageID# 32385
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`Int’l, Inc., No. 1:09cv123 (JCC), 2009 WL 1248114, at *9 (E.D. Va. Apr. 30, 2009); United States
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`ex rel Carter v. Halliburton Co., No. 1:10cv864 (JCC/TCB), 2011 WL 2077799, at *3 (E.D. Va.
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`May 24, 2011) (“[T]he parties provided public notice of the request to seal that allowed interested
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`parties a reasonable opportunity to object—nearly two weeks.”).
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`Reynolds has explained why sealing is necessary and has provided the appropriate
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`evidentiary support in the form of a supporting declaration for its sealing request. Reynolds’s
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`request referenced the governing case law and analyzed the appropriate standard for filing trial
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`exhibits under seal, and adequately described how that standard has been satisfied.
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`Therefore, based on the findings above, for good cause shown, it is hereby
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`ORDERED that the motion is GRANTED, and the trial exhibits identified in Reynolds’s
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`Memorandum in Support of Reynolds’s Motion to Seal Trial Exhibits will be SEALED from the
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`public record if used at trial.
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`And FURTHER ORDERED that the un-redacted versions of the trial exhibits identified
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`in Reynolds’s Memorandum in Support of Reynolds’s Motion to Seal Trial Exhibits shall remain
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`SEALED until further order of the Court.
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`ENTERED this _____ day of _________________, 2022.
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`Alexandria, Virginia
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`__________________________________________
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`LIAM O’GRADY
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`UNITED STATES DISTRICT JUDGE
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