Past Copyright Settlement Agreements Needn't Be Sealed When Directly Related to Merits of Current Claim

From Judge Thomas Rice (E.D. Wash.) Aug. 29 in Prepared Food Photos, Inc. v. Pool World, Inc., a copyright case in which the question is whether defendant has to redact certain materials from its summary judgment papers:

Defendant's motion for summary judgment rests on a statute of limitations defense, specifically that the discovery rule [under which the statute of limitations sometimes runs from when defendant discovered the infringement, rather than from when the infringement began -EV] is unavailable to Plaintiff as a matter of law in part due to Plaintiff's pattern of inequitable conduct toward Defendant and past accused infringers. The information Defendant seeks to [file not under seal] pertains to prior subscription fees and infringement settlement payments previously received by Plaintiffs. This information directly relates to the merits of Defendant's dispositive motion, and the "compelling reasons" standard [for determining whether the information should be sealed -EV] is appropriate….

Plaintiff asserts that settlement agreements entered into by Plaintiff and any infringer are subject to confidentiality clauses requiring the contracting terms be kept confidential. Therefore, unsealing documents that identify the infringer subject to the settlement agreement and the amount of the settlement paymhent would constitute a breach by Plaintiff for every respective settlement agreement. Plaintiff argues confidentiality of these terms is needed to protect both the infringer from revealing that it utilized copyrighted material and settled for a specified amount, thus inviting other copyright holders to pursue litigation against it, and Plaintiff from having prior settlements leveraged against it in future infringement claims.

The Court does not find compelling reasons exist to seal the payment terms of the settlement agreements but the payors identifying information may [be] redacted. While the Ninth Circuit has found private confidentiality agreements to satisfy the "good cause" standard for sealing non-dispositive motions and supporting documents, without more, they do not constitute a compelling reason to seal the information…. "That [the parties] agreed among themselves to keep the settlement details private, without more, is no reason to shield the information from … the public at large." ….

Plaintiff's concern of breach is likewise not supported. In its summary judgment papers, Defendant provides a copy of a proposed settlement agreement Plaintiff previously sent to an alleged infringer. The proposed agreement contains a confidentiality clause stating the terms of the agreement shall be kept confidential "except as required by an order from a court of law." Thus, to the extent other settlement agreements contained similar language, there would be no breach for a court ordered unsealing of settlement agreement terms. But as none have been provided to the Court, no such determination can be made. Even so, the Court does not find Plaintiff's conclusory statements of harm a compelling reason to keep the payment terms of each settlement agreement redacted….

As for names of the third parties making settlement payments pursuant to each settlement agreement in Exhibits SS and RR, the Court finds those redactions to be proper. Courts in this circuit have routinely found that an invasion of third-party's privacy interest constitutes a compelling reason to seal or redact identifying information of third parties….

Plaintiff's subscription pricing terms are available to the public, including any competitors, on its website (https://www.preparedfoodphotos.com/stock-photo-subscription/), as are the terms of use. Such available information does not qualify as a trade secret when it is already loose in the public domain. Moreover, Defendant does not seek to disclose the terms of each subscriber agreement in the entirety, only the name of the subscriber, the monthly payment amount, and the months of payment. To the extent the pricing terms vary from the advertised price on Plaintiff's website, the potential for resulting discord between Plaintiff and its customers is not a compelling reason to keep such terms sealed…. "The mere fact that the production of records may lead to a litigant's embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records." …

Finally, it is unclear how a competitor might poach Plaintiff's former subscribers as it argues will inevitably be the case. A review of Exhibit KK supports Defendant's contention that many of the subscribers listed in Exhibit OO appear to no longer be customers of Plaintiff. Plaintiff does not present any additional argument constituting a compelling reason why the identity of former customers should remain sealed. Therefore, Exhibit OO may be filed with the names of former subscribers unredacted. The names of current subscribers/customers shall remain redacted [presumably on the theory that current customer lists are generally treated as trade secrets and therefore presumptively confidential -EV].

Paul Alan Levy (Public Citizen), Phillip Malone (Stanford Law School, Juelsgaard Intellectual Property & Innovation Clinic), and Stephen Thomas Kirby (Kirby Law Office PLLC) represent defendant. Thanks to Griffin Klema for the pointer.