The Federal Court Sidesteps the Issue of Exporting Personal Information to the US

DataTreasury Corporation (DataTreasury), a US-based corporation, launched an action against a number of Canadian banks (Banks) in the Federal Court for allegedly infringing its patent rights pertaining to cheque imaging and processing technology. On a preliminary motion to settle the terms of a protective order (Datatreasury Corporation v Royal Bank of CanadaDatatreasury Corporation v Royal Bank of Canada (2008 FC 955)), the Court was faced with balancing the risk of the disclosure of personal information with the requirement that documents relevant to ongoing litigation be produced. The Banks sought to include a provision in the protective order that would prevent the export or delivery of any protected information outside Canada, unless the party wishing to export the information brought a motion in Federal Court. The Banks argued that such a provision was necessary because of the risk that personal information contained in the protected information would be otherwise exposed to scrutiny by the US government under the USA PATRIOT Act. Even the potential for such disclosure would damage the Banks' goodwill with its customers, they alleged. The plaintiff opposed the inclusion of the provision on several grounds, including that it would cause DataTreasury great logistical difficulties. It had launched parallel litigation in the US, and has centralized the processing of litigation documents in one US location. In its decision, the Court held that although the Banks raised a legitimate concern, the provision they proposed was too onerous. Instead, the protective order made by the Court would permit the Banks to redact any personal information from any produced documents, and would require DataTreasury to obtain express permission from the Banks to use any produced document for any purpose other than the current litigation. Because the Court held that the personal information was not relevant to the proceedings, the result neatly avoids the risk of disclosure. It also removes the need to rule on the issue as originally formulated, which was whether personal information could be exported to the US in the context of litigation, given the risk of disclosure there. Summary by: James Kosa