In complex commercial litigation generally, the questions typically arise concerning who can review or have access to the confidential documents or data of the adversary.  In international litigation, those questions also include “where” parties can have such access.  If a non-U.S. person or entity breaches a confidentiality order entered by a U.S. court, where can enforcement proceedings take place?  If the person or entity is a party, the Court in the action should have the requisite jurisdiction.  (See generally the discussion of jurisdiction in our ebook, International Litigation: Topics & Trends.)

It has recently been argued that courts in U.S. litigation should preclude transmission of confidential or highly confidential materials overseas.  In two recent decisions, the Courts have rejected the argument.  In Eon Corp. IP Holdings, LLC v. Landis+GYR Inc., et al., Civil Action No. 6:11-CV-317 (E.D. Texas 2012), the proposed order of confidentiality would have read:

31. Material designated HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY OR HIGHLY CONFIDENTIAL – SOURCE CODE (“HIGHLY CONFIDENTIAL MATERIAL”) shall not be disclosed to any person or entity located outside the United States and HIGHLY CONFIDENTIAL MATERIAL shall not be sent, distributed, or otherwise taken to any location outside the United States. Material designated CONFIDENTIAL shall not be disclosed to any person or entity located outside the United States and shall not be sent, distributed, or otherwise taken to any location outside the United States except that such material designated CONFIDENTIAL may be disclosed to principals and employees of a party outside the United States who a) would have access to such material under the provisions of this Protective Order if located in the United States; b) agree to be subject to the Court’s jurisdiction; and c) agree to be bound by the provisions of this Protective Order. Further, such disclosure of material designated CONFIDENTIAL is only permitted if allowable under the applicable United States national security laws and regulations.

The defendant argued that a U.S. jurisdiction limitation was justified because of a prior breach of a confidentiality order in an unrelated case.  The District Court rejected the argument, saying:

Although the Court is mindful of Defendants’ concerns regarding the disclosure of confidential or highly confidential information, it is not persuaded that one unfortunate incident that occurred in an unrelated case amounts to a “clearly defined and serious harm” such that all transmission of confidential material outside of the United States should be forbidden. Unfortunately, breaches of protective orders do occur; however, the Court has the ability to impose severe sanctions for noncompliance.

A similar result had previously been reached in an unreported order in Mobileye, Inc., et al. v. Picitup Corp., iOnRoad, Ltd., et al., Case No. 12-cv-1994 (S.D.N.Y. 2012) (JSR), in which the author it counsel.    There Judge Rakoff similarly refused to limit the production of computer source code to persons or at locations within the U.S. but instead directed that anyone being given access agree to submit to the jurisdiction of the Court.