Access Denied: Foreign Experts and Third-Party Source Code

Administrative Law Judge Theodore Essex recently issued an order denying foreign experts access to third-party source code. Specifically, Judge Essex upheld non-party Microsoft Corporation’s (“Microsoft”) objections and precluded the disclosure of source code and other confidential business information (“CBI”) to experts located in France retained by complainants NXP B.V. and NXP Semiconductor USA, Inc. (collectively, “NXP”). See Certain Electronic Products, Including Products with Near Field Communication (“NFC”) System-Level Functionality and/or Battery Power-Up Functionality, Component Thereof, and Products Containing Same (“Electronic Products”), Inv. No. 337-TA-950, Order No. 10 (Sept. 9, 2015).

Judge Essex’s reasoning was twofold. First, he found that Microsoft had valid concerns over its lack of recourse if NXP’s foreign experts breached the protective order. In particular, because the experts had never appeared before the ITC and “do not appear likely to ever appear before the ITC again,” any sanctions against the experts would be “effectively useless.” Order at 3. Judge Essex did not credit NXP’s argument that the subject experts would be deterred from breaching the protective order because they derived income from speaking at conferences in the U.S. and because the experts hoped to secure work on future projects in the U.S.

Second, Judge Essex found that Microsoft’s right to restrict access to its source code and CBI outweighed NXP’s argument that the subject experts’ services were necessary, because NXP had not demonstrated that the experts had “any unique expertise that would make their participation in this investigation a necessity.” Id. Additionally, Judge Essex observed that NXP’s four other technical experts were qualified to review Microsoft’s source code and that NXP was free to hire additional experts to aid in such analysis.

Lessons and Practice Tips

At first blush, Judge Essex’s decision may appear to create a presumption against the disclosure of source code and CBI to foreign experts. However, Judge Essex limited his ruling to the specific circumstances of the case and cautioned that the “ruling is not intended to create a wholesale bar on any foreign national or non-U.S. citizen from signing onto the Protective Order.” Id. at n.1. Therefore, this decision should not be viewed as a blanket rule against the disclosure of source code and other CBI to foreign experts. See also Certain Hemostatic Products and Components Thereof, Inv. No. 337-TA-913, Order No. 17 (Sept. 16, 2014) (denying motion to preclude access to CBI by foreign experts). Rather, parties should consider certain key factors that appeared to play a role in Judge Essex’s decision to restrict access to CBI by foreign experts:

  • Whether the foreign experts have previously appeared before the ITC or in any U.S. proceeding and thus could be held accountable for breaches of the protective order. The effect of potential sanctions for breaches of a protective order appears to be among the most critical factors for Judges in analyzing whether to permit access to CBI in Section 337 investigations.
  • The nature of the CBI at issue. Source code can often be the most important and sensitive part of a company’s proprietary information in certain industries. Therefore, the type of CBI to be disclosed to a foreign expert should be considered.
  • Whether the foreign experts are seeking access to party or non-party source code or other sensitive CBI. The ITC provides assurances of confidentiality through its administration of protective orders to encourage and facilitate non-parties’ disclosure of CBI in Section 337 investigations. If a non-party moves to prevent disclosure of its CBI to a foreign expert, this may well increase the likelihood that access will be denied.
  • The availability of other experts and the resulting lack of prejudice from prohibiting access to CBI is another key factor to consider. The fact that a party has already retained U.S.-based experts to review and analyze the non-party’s source code, as was the case in Electronic Products, or a showing that there are non-foreign experts who can perform the required work, will cut against a grant of access to foreign experts who may be difficult to sanction in the event of a protective order breach.

Judge Essex’s ruling, along with other ITC precedent regarding the disclosure of CBI to foreign experts, indicates that parties should consider and be prepared to articulate why foreign experts should be granted access to CBI. See, e.g., Certain DC-DC Controllers and Products Containing the Same, Inv. No. 337-TA-698, Order No. 11 (Apr. 1, 2010) (prohibiting a foreign expert from accessing CBI under the protective order; “[w]hile there is no Commission rule prohibiting foreign experts from signing onto a protective order, the administrative law judge, based on the present record, finds potential harm from an inappropriate release of CBI in this investigation, and no showing of any particular need by Wu to have access to CBI”); Certain Hemostatic Products and Components Thereof, Inv. No. 337-TA-913, Order No. 17 (Sept. 16, 2014) (denying motion to preclude two U.K.-based experts’ access to CBI, holding that the movant failed to raise a specific objection to the use of such foreign experts). Moreover, parties should also give extra consideration to the sensitivity of the subject CBI. In cases where particularly sensitive information is subject to disclosure (in Electronic Products, Microsoft’s Windows® 8 and 10 source code), parties may face additional scrutiny in seeking access for foreign experts.