Protective Orders Dead In Canada? – Not So Fast

Parties involved in patent litigation in the Federal Court often exchange sensitive confidential documents of an economic, scientific or technical nature as part of the documentary discovery process. Historically, such parties have obtained Orders from the Federal Court setting out how these documents are to be treated by the parties in order to ensure that the confidential information is not misused. This, however, began to change as the Court began to refuse to issue protective orders in Live Face on Web and Seedlings Life Sciences (see our post here) in light of similar protections available, without the need of a Court Order, from the implied undertaking rule.

Whether the Court should or should not regularly issue protective orders was considered by Justice Ahmed in the appeal of the Prothonotary’s decision in Seedlings Life Sciences. While noting that the concerns expressed by the Prothonotary, including the administrative burden imposed on the Court in relation to issuing such Orders, had “substantial merit”, Justice Ahmed held that the test for a protective order was a question of law, reviewable on the standard of correctness. While the Prothonotary below had held that test set out by the Supreme Court of Canada in Sierra Club did not apply to protective orders, Justice Ahmed came to the opposite conclusion, holding:

[26] My own review of Sierra Club suggests that the Prothonotary’s distinction cannot be maintained. The Prothonotary has not explained why the test in Sierra Club must be understood to exclusively apply to the filing of materials with the Court under seal. To be certain, it is clear that the issue in that case was the filing of sensitive information with the Court, and the need to balance the parties’ confidentiality interests with that of the open court principle. However, there is nothing in the text of Sierra Club which supports the distinction offered by the Prothonotary. Rather, in my view, the Supreme Court of Canada stated the test concerning protective orders in the context of patent litigation by recalling the decision of this Court in AB Hassle (and modifying it slightly). We have the benefit of knowing what was in the AB Hassle order (it was annexed to the decision) and it is clear that it contained provisions relating to the exchange of confidential information between parties – in other words, the same subject matter which is contained in contemporary protective agreements. Admittedly, today the order in AB Hassle would be characterized as a “hybrid” order, but that fact alone does not, in my view, justify a departure from the existing test. The rationale behind the Sierra Club test, whether one is considering a confidentiality order, a protective order, or a hybrid order, is the same: that is, the protection of sensitive information – whether from the general public or other business adversaries – from abuse or use in activities collateral to the litigation. In this sense, the Prothonotary’s attempt to read Sierra Club as exclusive to confidentiality orders is effectively an exercise in splitting hairs.

Applying the legal test from Sierra Club, Justice Ahmed allowed the appeal and granted the Protective Order as agreed to by the parties.

While not necessary to decide the appeal, Justice Ahmed appeared to accept that that it may be time for a change in how the Court deals with Protective Orders, but that it was not appropriate for him to do so in this case, holding:

[30] …However, it is not appropriate, in my view, for a fundamental shift in longstanding practice to arise from the jurisprudence of this Court. That is the role of the legislature, or perhaps the courts above. Moreover, in my view it would be unjust to the litigants in the case at bar to have the so-called “rules of the game” changed partway through these proceedings.

A copy of Justice Ahmed’s order and Reasons may be found here.