Why Apple always shields its eDiscovery vendor invoices from public view

Apple’s recent legal victories seem to precipitate common maneuvering that, in its totality, has the effect of wiping the details of eDiscovery costs and pricing information from the public record. While these isolated instances on their own are unremarkable, because they constitute such a small and generally unrepresentative sample, the spread of such a phenomenon — with validation of the courts — has the potential to further obscure important data points from researchers, legislators, public officials and others who seek to better understand one of the major drivers of litigation costs, and their broader impact on society.

The post-judgement jockeying generally unfolds like this:

  1. Apple’s attorneys move to recover discovery costs from the opposing loser (in this particular instance, about $5 million).
  2. Apple’s attorneys submit declarations supporting recovery of those costs, as well as partially redacted vendor invoices that would otherwise give insight into the price at which those costs were incurred.
  3. Apple’s attorneys move to have those invoices sealed, filing supporting declarations that attest to the “harm to Apple” of disclosing “confidential and proprietary business information that could be used by Apple’s competitors to its disadvantage.”
  4. The presiding judge — seemingly without fail or much consideration — grants the motion to seal, reasoning that the “public’s interest in access to the courts” is outweighed by protecting the moving party’s “competitive interests.”

Chad Main, an attorney and CEO at the service provider Percipient, brought to light one such ruling in a blog post noting that US district Judge Lucy Koh, who has presided over some of the highest profile patent litigation, recently deemed Apple’s vendor’s pricing information to be an Apple “trade secret.”

That case involves Apple’s victory at trial over “patent troll” GPNE Corp., but the company and its lawyers have also secured the sealing of the invoices of its eDiscovery vendors in successful cases against Golden Bridge, Samsung, Unwired Planet and, it seems, every other recent case wherein unvarnished invoices could potentially come to light.

It isn’t immediately clear, given the absence of any material in the invoices that could be construed as attorney work product or privileges, why information regarding Apple’s financial relationship with it eDiscovery vendor constitutes confidential information, or how it “could be used by Apple’s competitors to its disadvantage.” On these fronts, judges have only said that case law gives them broad authority to protect “business information that might harm a litigant’s competitive standing,” including pricing terms. Their surface-level analyses in the cases noted above have been brief.

What is much more clear is that the vendors at issue almost certainly have an incentive to protect the details of their relationships with major clients from coming into view — in part because the terms they are giving those clients may not reflect the rates to which others, including clients of the vendors’ resellers, have agreed.

The fact that Apple has only repeatedly moved to seal the pricing terms, at least in these cases, of one of its eDiscovery vendors, but not others (though the activities each has performed are different), is perhaps evidence that service providers are influencing these decisions.

And to be sure, such vendor input is indication of nothing other than wise business dealings. Any well-managed company when faced with the prospect of disclosing terms it gave its biggest client would do the same.

Does transparency outweigh competitive ‘harm?’

Whether this shielding of pricing information constitutes a “trend” or not is hard to say, but it is a potentially disconcerting sign to those who have called for more transparency into litigation costs, and who argue that public policy considerations do indeed outweigh any real or imagined “harm” a company might suffer from its competition knowing how it is being charged. At the very least, these rulings would perhaps benefit from more explanation of why, if at all, disclosing vendor pricing information disadvantages the client — or whether the real disadvantage is imposed upon the vendor itself.

Surely there are perfectly legitimate reasons why a vendor would not want these materials to become public — both because it would undermine relationships with other clients and partners, and because, in general, it is not desirable to make available for public scrutiny without the benefit of context esoteric line items dealing with “begcontrols,” “prodhistory” and “post burn QC.”

Is Apple’s argument that if the details of this pricing becomes known to others, its vendor would have to raise prices to do right by the clients it is charging more? That seems hard to believe. The billable rates of Apple’s attorneys are generally made available for reasons of transparency, and Apple does not seem to have suffered any competitive disadvantage from the disclosure of that information.

It is perhaps easier to believe that, should the shielding of vendor-related information take broader hold, that not only could transparency into the sheer costs of eDiscovery be further obscured, but so also could the details of how, in fact, eDiscovery — particularly in its most complicated and opaque forms — is conducted.

Robert Hilson is a director at Logikcull. He can be reached at robert.hilson@logikcull.com.