County Materials v. Allan Block Corp ( 2007 )


Menu:
  •                            In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________
    No. 06-2857
    COUNTY MATERIALS CORPORATION,
    Plaintiff-Appellant,
    v.
    ALLAN BLOCK CORPORATION,
    Defendant-Appellee.
    ____________
    Appeal from the United States District Court
    for the Western District of Wisconsin.
    No. 05-C-675-S—John C. Shabaz, Judge.
    ____________
    ARGUED MARCH 27, 2007—DECIDED SEPTEMBER 18, 2007
    ____________
    Before MANION, KANNE, and WOOD, Circuit Judges.
    WOOD, Circuit Judge. This case is one of those non-
    patent patent cases that, as we explain more fully below,
    falls within the jurisdiction of the regional courts of
    appeals rather than the Federal Circuit. See 
    28 U.S.C. §§ 1295
    (a)(1), 1338; Holmes Group, Inc. v. Vornado Air
    Circulation Sys., Inc., 
    535 U.S. 826
    , 829-30 (2002) (apply-
    ing well-pleaded-complaint rule to § 1338). Two companies,
    County Materials Corporation and Allan Block Corpora-
    tion, entered into a production agreement (“the Agree-
    ment”) giving exclusive rights to County Materials to
    manufacture Allan Block’s patented concrete block; the
    issue is whether County Line was free to sell an allegedly
    non-infringing product, despite the presence of a covenant
    2                                               No. 06-2857
    not to compete in the Agreement in which County Line
    promised not to sell competing products for 18 months
    if it stopped making Allan Block’s product. Following
    the termination of the Agreement, County Line decided
    not to wait for the full 18 months before jumping back
    into the market with a competing product. Allan Block
    threatened to sue, but County Line beat it to the court-
    house with this suit for a declaratory judgment. County
    Line wanted the district court to declare that the covenant
    not to compete was unenforceable because it violated
    federal patent policy, essentially raising an anticipatory
    patent misuse defense to its planned breach of the Agree-
    ment. The district court granted summary judgment to
    Allan Block, finding no violation of federal patent policy
    or Minnesota law. We agree with the district court’s con-
    clusions and affirm.
    I
    County Materials is in the business of manufacturing
    concrete blocks. Allan Block develops, markets, and
    licenses technology for the manufacturing of concrete
    blocks; it does not manufacture blocks itself. In April 1993,
    County Materials’s predecessor in interest, County Con-
    crete Corporation, entered into a production agreement
    with Allan Block. The Agreement granted to County
    Materials the exclusive right to manufacture Allan Block’s
    patented block products in northwest Wisconsin. County
    also was granted the right to sell these products under
    the Allan Block trademark. Finally, Allan Block agreed
    to provide County Materials with significant technical,
    marketing, and strategic support while the Agreement
    was in effect.
    The Agreement included a limited covenant not to
    compete, which allowed County Materials to make and
    sell two specific competing block products, without any
    No. 06-2857                                                3
    time restrictions. The non-compete provision also re-
    quired that for the 18 months following the termination
    of the Agreement, County Materials could not “directly or
    indirectly engage in the manufacture and/or sale of any
    other [competing] . . . block.”
    In 2005, Allan Block notified County Materials that it
    would be terminating the Agreement. Shortly thereafter,
    County Materials completed its own design for a new
    concrete block that would compete directly with the
    Allan Block products that it had been manufacturing
    and selling in northwest Wisconsin. As County Materials
    took steps to begin producing this new block, Allan Block
    threatened that it would sue to enforce the non-compete
    provision from the terminated Agreement. County Materi-
    als decided to move first, and so it filed this suit alleging
    that the inclusion of the non-compete provision in the
    Agreement constituted patent misuse, which made the
    Agreement void.
    II
    The district court’s jurisdiction over this case was
    based on diversity. 
    28 U.S.C. § 1332
    (a)(1). County Materi-
    als is a Wisconsin corporation with its principal place of
    business in Wisconsin; Allan Block is a Minnesota corpora-
    tion with its principal place of business in Minnesota, and
    County Materials alleges damages exceeding $75,000.
    Even though the requirements of § 1332 are therefore
    satisfied, there is a second potential jurisdictional hurdle
    in our path. Allan Block, repeating an argument made to
    this court in advance of oral argument, contends that
    appellate jurisdiction over this appeal lies with the Fed-
    eral Circuit and not this court. The Supreme Court has
    held that the Federal Circuit has appellate jurisdiction
    4                                               No. 06-2857
    only [in] those cases in which a well-pleaded com-
    plaint establishes either that federal patent law
    creates the cause of action or that the plaintiff ’s right
    to relief necessarily depends on resolution of a sub-
    stantial question of federal patent law, in that patent
    law is a necessary element of one of the well-pleaded
    claims.
    Christianson v. Colt Indus. Operating Corp., 
    486 U.S. 800
    ,
    809 (1988); see also Holmes Group, 
    supra.
    Looking as we must at the well-pleaded complaint, it is
    apparent that federal patent law does not create the cause
    of action here. It is instead a claim about the enforceability
    of a contract or license agreement. Resolution of this
    appeal does not “necessarily require[ ] resolution of sub-
    stantial questions of federal patent law,” as Allan Block
    claims. We faced almost the same arguments in Scheiber
    v. Dolby Laboratories, Inc., 
    293 F.3d 1014
     (7th Cir. 2002),
    where we concluded:
    Federal jurisdiction over the suit is based on diversity
    of citizenship, because a suit to enforce a patent
    licensing agreement does not arise under federal
    patent law. E.g., Jim Arnold Corp. v. Hydrotech
    Sys., Inc., 
    109 F.3d 1567
    , 1575 (Fed. Cir. 1997). The
    presence of a federal defense (here, patent misuse) is
    irrelevant to jurisdiction. Christianson v. Colt Indus-
    tries Operating Corp., 
    486 U.S. 800
     (1988).
    
    293 F.3d at 1016
    . The same is true for a declaratory
    judgment action, where the roles of plaintiff and defendant
    are reversed. As we have held before, “[i]n declaratory
    judgment cases, the well-pleaded complaint rule dictates
    that jurisdiction is determined by whether federal juris-
    diction would exist over the presumed suit by the declara-
    tory judgment defendant.” Ne. Ill. Reg’l Commuter R.R.
    Corp. v. Hoey Farine & Downes, 
    212 F.3d 1010
    , 1014 (7th
    Cir. 2000), quoting GNB Battery Techs., Inc. v. Gould, Inc.,
    No. 06-2857                                                5
    
    65 F.3d 615
    , 619 (7th Cir. 1995). The Fifth Circuit case
    cited by Allan Block is not to the contrary, because that
    case involved the question whether an attempt to raise
    claims under a patent licensing agreement that had
    arisen out of the settlement of a patent infringement
    suit was barred by res judicata. NaTec, Inc. v. DeTer Co.,
    
    28 F.3d 28
     (5th Cir. 1994). Declining to reach the merits,
    the Fifth Circuit held that “[t]he right of the patent
    holder . . . to enforce the settlement agreements and
    obtain royalties for use of the patent after it expires is
    a substantial question of federal patent law.” 
    Id. at 28
    .
    This meant that the suit arose under 
    28 U.S.C. § 1338
    , and
    that appellate jurisdiction necessarily lay in the Fed-
    eral Circuit, under 
    28 U.S.C. § 1295
    . In our case, the
    district court’s jurisdiction over the present case was
    not based even in part on § 1338. Appellate jurisdic-
    tion therefore lies in this court, see 
    28 U.S.C. §§ 41
    , 1291,
    and we are free to proceed to the merits.
    III
    This court reviews a district court’s decision to grant
    summary judgment de novo. Balderston v. Fairbanks
    Morse Engine Div. of Coltec Indus., 
    328 F.3d 309
    , 320 (7th
    Cir. 2003). The parties appear to agree that the produc-
    tion agreement is a patent license, which is the way
    that we too would characterize it. County Materials
    essentially claims that the inclusion of the covenant not
    to compete in the patent license here was per se unlaw-
    ful patent misuse and the improper result of patent
    leverage. While at one time this argument might have
    had traction, in certain circumstances, it is at least
    disfavored today, if not entirely rejected. Today, the
    concept of patent misuse is cabined first by statute, 
    35 U.S.C. § 271
    (d), which essentially eliminates from the
    field of “patent misuse” claims based on tying and refusals
    6                                               No. 06-2857
    to deal, unless the patent owner has market power, and
    second by case law. As the Federal Circuit explained in
    Virginia Panel Corp. v. MAC Panel Co., 
    133 F.3d 860
    (Fed. Cir. 1997), there are certain practices that court
    identified as “constituting per se patent misuse,” including
    “arrangements in which a patentee effectively extends
    the term of its patent by requiring post-expiration royal-
    ties.” 
    Id. at 869
    ; see also Brulotte v. Thys Co., 
    379 U.S. 29
    ,
    32 (1964) (holding that “a patentee’s use of a royalty
    agreement that projects beyond the expiration date of
    the patent is unlawful per se”). The practices identified
    in § 271(d), in contrast, may not be branded “misuse.”
    Va. Panel Corp., 133 F.3d at 869.
    If a practice is not per se unlawful nor specifically
    excluded from a misuse analysis by § 271(d)
    a court must determine if that practice is reasonably
    within the patent grant, i.e., that it relates to subject
    matter within the scope of the patent claims. If so, the
    practice does not have the effect of broadening the
    scope of the patent claims and thus cannot con-
    stitute patent misuse. If, on the other hand, the
    practice has the effect of extending the patentee’s
    statutory rights and does so with an anti-competitive
    effect, that practice must then be analyzed in accor-
    dance with the rule of reason. Under the rule of
    reason, the finder of fact must decide whether the
    questioned practice imposes an unreasonable re-
    straint on competition, taking into account a variety
    of factors, including specific information about the
    relevant business, its condition before and after the
    restraint was imposed, and the restraint’s history,
    nature, and effect.
    Id. (internal citations and quotation marks omitted).
    County Materials is not claiming that Allan Block was
    trying to extend the term of its patent by requiring post-
    No. 06-2857                                               7
    expiration royalties. It is wrong, therefore, to argue that
    some form of per se analysis applies here. (By the same
    token, we have no need to explore further the question
    whether it makes any economic sense to treat these
    arrangements so harshly. See Scheiber, 
    293 F.3d at 1020
    ,
    which questions the economic soundness of per se condem-
    nation.) The covenant not to compete in the agreement
    before us must therefore be assessed under a rule of
    reason. County Materials argues that this clause is
    unreasonable because it allows Allan Block to use its
    patent to exclude competition in the market from
    unpatented products.
    As County Materials recognizes, it is essentially making
    a leveraging argument. It argues both that “[l]everage is
    presumed” and that there is a “proper method to con-
    clude whether patent leverage was used.” Whatever else
    one might say about leveraging theory (which as we noted
    in Scheiber has been criticized in academic circles),
    however, there is no doubt that there is nothing “pre-
    sumed” about it outside the narrow confines of post-
    expiration royalties. In Brulotte, the Supreme Court held
    that there are both proper and improper uses of patent
    leverage. It acknowledged that “[a] patent empowers the
    owner to exact royalties as high as he can negotiate with
    the leverage of that monopoly[, b]ut to use that leverage to
    project those royalty payments beyond the life of the
    patent is analogous to an effort to enlarge the monopoly of
    the patent.” 
    379 U.S. at 33
     (emphasis added). But as both
    Congress and the Court have come to recognize, it may
    not be possible to exercise any leverage at all from a
    patent, if that patent does not confer any market power
    upon its owner. See Ill. Tool Works Inc. v. Independent
    Ink, Inc., 
    547 U.S. 28
    , 42 (2006) (noting that Congress
    did not intend the mere existence of a patent to con-
    stitute the requisite “market power” for purposes of
    patent misuse and coming to the same conclusion for
    8                                              No. 06-2857
    antitrust purposes); see also Aronson v. Quick Point Pencil
    Co., 
    440 U.S. 257
     (1979) (holding that it was not against
    public policy to enforce an agreement providing for de-
    ferred royalties on an invention, whether or not a patent
    was ultimately granted).
    The Federal Circuit’s decision in Windsurfing Int’l, Inc.
    v. AMF, Inc., 
    782 F.2d 995
     (Fed. Cir. 1986), provides
    helpful guidance in deciding whether a particular use of a
    patent might amount to “misuse” and thus furnish the
    defense to a licensing agreement that County Materials is
    looking for. In Windsurfing, the Federal Circuit said that
    patent misuse does not exist unless the party asserting
    it can “show that the patentee has impermissibly broad-
    ened the ‘physical or temporal scope’ of the patent grant
    with anti-competitive effect.” 782 F.3d at 1001 (emphasis
    added). This standard is satisfied by showing some
    overall harm to competition, and so, contrary to County
    Materials’s contentions, it fully takes into account the
    fact that patents exist to “spur progress and innovation.”
    The Windsurfing standard for patent misuse necessarily
    considers whether progress and innovation have been
    stymied and allows courts concretely to answer the
    vague question whether progress has been slowed.
    Most of the cases on which County Materials relies
    come from an era before the Supreme Court recognized
    the efficiencies that might flow from vertical restrictions,
    which is the type of restriction we have when a patent
    owner (which does not compete in the manufacturing
    sector) imposes restraints on a manufacturing licensee.
    See generally Leegin Creative Leather Prods., Inc. v. PSKS,
    Inc., 
    127 S. Ct. 2705
    , 2714 (2007); Bus. Elecs. Corp. v.
    Sharp Elecs. Corp., 
    485 U.S. 717
    , 734-36 (1988); Cont’l
    T.V., Inc. v. GTE Sylvania Inc., 
    433 U.S. 36
    , 59 n.29
    (1977). So, for example, Columbus Auto. Corp. v. Oldberg
    Mfg. Co., 
    387 F.2d 643
    , 644 (10th Cir. 1968), assumed
    No. 06-2857                                                9
    that a clause in a patent license agreement that pro-
    hibited the licensee from handling competing products
    was unlawful. Similarly, the Third Circuit’s decision in
    National Lockwasher Co. v. George K. Garrett Co., 
    137 F.2d 255
    , 256 (3d Cir. 1943), assumed that an exclusive
    dealing arrangement, under which a patent licensee
    promised the licensor that it would work exclusively
    with the licensor’s technology, was impermissible. This
    is not the assumption that would govern today, either in
    the courts or in the federal enforcement agencies. In the
    Antitrust Guidelines for the Licensing of Intellectual
    Property § 5.4 (April 6, 1995), the Department of Justice
    and the Federal Trade Commission wrote that “[i]n the
    intellectual property context, exclusive dealing occurs
    when a license prevents the licensee from licensing,
    selling, distributing, or using competing technologies.
    Exclusive dealing arrangements are evaluated under the
    rule of reason.” As support for the latter statement, the
    Agencies cited Tampa Elec. Co. v. Nashville Coal Co., 
    365 U.S. 320
     (1961), in which the Supreme Court used the
    rule of reason to evaluate an exclusive dealing arrange-
    ment that did not involve intellectual property.
    Anticompetitive effects, in short, are a critical element
    of any patent misuse case that is evaluated under a rule
    of reason approach. Windsurfing was one of the first cases
    to recognize this; it required “a factual determination
    [that] . . . reveal[s] that the overall effect of the license
    tends to restrain competition unlawfully in an appropri-
    ately defined relevant market.” 
    782 F.2d at 1001-02
    (emphasis added). A plaintiff is not required to show a
    defendant’s subjective intent to obtain some kind of
    leverage over its patent. We assume, for the sake of
    argument, that it is also not necessary for a plaintiff to
    plead a case that would suffice to show that the antitrust
    laws have been violated. But, at the summary judgment
    stage, some evidence tending to show an adverse effect
    10                                            No. 06-2857
    in an economically sound relevant market is essential
    for any claim governed by the rule of reason.
    With these principles in mind, we are ready to assess
    County Materials’s case. To begin with, the Agreement
    between County Materials and Allan Block shows no sign
    of one-sidedness or abuse of power on Allan Block’s part.
    County Materials received significant benefits, starting
    with the right to use the patented technology for the
    manufacture of the concrete blocks, and continuing with
    the right to use Allan Block’s trademark and the right
    to receive supporting technical, marketing, and strategic
    services from Allan Block. In return, County Materials
    had to promise to pay royalties to Allan Block and to
    devote significant efforts to the exploitation of Allan
    Block’s patent. If County Materials had been free to pick
    and choose among all potentially competing products on
    the market, Allan Block may have signed over the rights
    to use its patent and know-how for little or nothing in
    return. Allan Block’s services alone have considerable
    value for any company undertaking the manufacture and
    sale of these products (or so the parties could have con-
    cluded), whether or not they are tied to a patented prod-
    uct. Nothing in these facts suggests that Allan Block
    needed or used any kind of leverage made possible by
    the patent to secure County Materials’s promise to re-
    frain from working with all but the designated two com-
    peting products, or its promise to refrain from using other
    products for 18 months after the expiration of the Agree-
    ment.
    In fact, this was not a particularly onerous covenant not
    to compete. It allowed County Materials to continue to
    manufacture and sell not one but two competing products,
    which the district court reasoned would “guarantee
    plaintiff could always compete with defendant in the
    landscape block market.” In addition, the clause had
    both temporal and geographical limits. It lasted for only
    No. 06-2857                                              11
    18 months after the Agreement’s termination (a period
    which no one contends goes beyond the duration of Allan
    Block’s patent) and applied only to County Materials’s
    exclusive production territory, which was a section of
    Wisconsin. Although the non-compete clause may have
    hurt County Materials’s ability to compete as aggressively
    as it would have liked in the concrete block market in
    northwest Wisconsin, there does not appear to be any
    evidence in the record showing that these limited require-
    ments have hurt competition for cement blocks in County
    Materials’s former exclusive territory. In the related field
    of antitrust, the Supreme Court has said that “[i]t is
    axiomatic that the antitrust laws were passed for the
    protection of competition, not competitors.” Brooke Group
    Ltd. v. Brown & Williamson Tobacco Corp., 
    509 U.S. 209
    ,
    224 (1993) (internal quotation marks omitted). Independ-
    ent Ink, 
    supra,
     held that the principles underlying the
    patent misuse doctrine are closely aligned to those under-
    lying antitrust law. Without a showing that this clause
    had any effect on the broader market for concrete block
    (as opposed to an effect only on County Materials), its
    purported patent misuse defense cannot succeed.
    IV
    Even if its patent misuse argument fails, County Materi-
    als maintains that the covenant not to compete violates
    general principles of Minnesota law, which applies here.
    Minnesota courts look to three factors in evaluating
    this kind of clause: it must (1) protect a legitimate inter-
    est of the party in whose favor it is imposed, (2) be rea-
    sonable as between the parties, and (3) not be injurious
    to the public. Haynes v. Monson, 
    224 N.W.2d 482
    , 484
    (Minn. 1974). Minnesota decisions on point do not allocate
    the burden of proving or disproving these factors, but
    rather look to the court to weigh the evidence in support
    of or against each factor.
    12                                             No. 06-2857
    As for the first factor, we are satisfied that Allan Block
    had a legitimate interest in the other resources and
    intangibles that it gave to County Materials as part of the
    Agreement. “Legitimate interests that may be protected
    include a company’s ‘goodwill, trade secrets, and confiden-
    tial information.’ ” Medtronic, Inc. v. Advanced Bionics
    Corp., 
    630 N.W.2d 438
    , 456 (Minn. Ct. App. 2001) (inter-
    nal quotation marks omitted). County Materials claims
    that Allan Block “admitted it could not even identify any
    confidential information supplied to [County Materials].”
    That is not, however, a fair account of what the Allan
    Block officials said. Allan Block officer Robert Gravier
    testified that Allan Block “provided a stream of informa-
    tion relating to the technology over a 12-year period of
    time and encompassing manufacturing, molds, engineer-
    ing, marketing and—and supporting the sale of the blocks
    under the license.” This suffices to show that goodwill,
    confidential information, and trade secrets were given to
    County Materials. Allan Block employee Timothy Bott
    testified,
    I made several person[al] trips over to the [County
    Materials] Eau Claire facility. . . . There were numer-
    ous phone calls over the 12- or 13-year history of us
    working together, everything from mix design to actual
    issues, making the product. I was at the Eau Claire
    facility when they initially produced the first block.
    I assisted with the molds and other issues, training
    their staff on the differences between the different
    products and the configurations of the molds.
    Bott also testified specifically as to the engineering
    support given to County Materials:
    We provide a service that’s both formal and informal.
    The formal service allows for someone to have us
    prepare preliminary designs, working with the local
    engineer to assist in the facilitation . . . of [County
    No. 06-2857                                              13
    Materials] . . . landing a project that requires engi-
    neering. We work with the engineers that locally will
    review and do the final design, to educate them on the
    subject matter. This product concept and this design
    concept . . . is relatively new, and so most engineers
    have little or no education relative to this.
    (emphasis added). None of this testimony has been dis-
    puted. The record shows that Allan Block had a legitimate
    interest in the resources and support that it gave to
    County Materials during their 12-year relationship.
    The second factor is whether the agreement is reason-
    able as between the parties. Minnesota courts require that
    non-compete agreements not be greater than necessary
    to protect the legitimate business interest. Dynamic Air,
    Inc. v. Bloch, 
    502 N.W.2d 796
    , 799 (Minn. Ct. App. 1993).
    The Dynamic decision requires courts to consider “the
    nature and character of the employment, the nature and
    extent of the business, the time for which the restriction
    is imposed, the territorial extent of the covenant, and
    other pertinent conditions.” 
    Id.
     Although these factors
    were used in assessing an employee’s non-compete clause
    in Dynamic, we find them equally useful in evaluating
    the non-compete provision at issue here. The provision is
    well-tailored to the legitimate interests of Allan Block. As
    part of its agreement, Allan Block provided a significant
    amount of start-up assistance and ongoing technical and
    marketing assistance to County Materials. These ser-
    vices presumably cost time and money. Requiring a lag
    time before County Materials can produce new products
    that compete with those previously licensed to it by Allan
    Block allows Allan Block to retain some of the value of its
    services. The Agreement was structured in a way that
    would eliminate any incentive on County Materials’s
    part to use Allan Block to get its own concrete block
    business started and then breach the contract once it
    had taken advantage of Allan Block’s assistance. Further
    14                                                No. 06-2857
    supporting the reasonableness of this restriction is the
    fact that it extends only to the geographic area in which
    County Materials sold the Allan Block blocks as part of
    the Agreement.
    Further, when a licensee gets an exclusive patent
    license, as County Materials did here, it is benefitting
    from the patentee’s property rights more than it would
    with a non-exclusive license. The licensee reaps the
    rewards of the patent up to the bounds of its exclusivity.
    Given this additional benefit, it seems only fair that the
    licensee can be assigned part of the responsibility of
    promoting the product in the broader market. Under a
    clause like this, the licensee has a stake in ensuring the
    success of the product. If the granting of an exclusive
    license is not itself a restraint on trade (as it is not, and no
    one in this case alleges otherwise), then requiring as a
    condition of that license that the licensee not undermine
    the value of the bargain is not unreasonable either.
    The final factor is that the challenged restraint must
    not be injurious to the public. Because covenants not to
    compete are not categorically prohibited by Minnesota
    law, it must be the case that such a clause would not be
    deemed injurious to the public unless some particular
    harm was alleged. Minnesota courts have upheld non-
    compete provisions in markets where multiple producers
    of like goods are present, reasoning that the general public
    is not injured by a non-compete agreement because
    competition in the relevant market is healthy. Bess v.
    Bothman, 
    257 N.W.2d 791
    , 795 (Minn. 1977). County
    Materials has made no attempt to produce evidence that
    the relevant geographic area here is subject to a
    monopoly in landscape bricks made with Allan Block’s
    technology. To the contrary, the fact that the production
    agreement listed two alternative products as exceptions
    to the non-compete provision is evidence that good sub-
    stitutes for Allan Block products existed and were sold
    No. 06-2857                                                  15
    within the territory covered by the Agreement. There is
    no basis to conclude that the non-compete provision
    violates Minnesota state law.
    V
    Finally, County Materials argues that the district court
    abused its discretion in denying its motion to unseal
    portions of the record. A district court’s decision to seal
    portions of the record is reviewed for abuse of discretion.
    Seattle Times Co. v. Rhinehart, 
    467 U.S. 20
    , 36 (1984).
    “The trial court is in the best position to weigh fairly the
    competing needs and interests of parties affected by
    discovery. The unique character of the discovery process
    requires that the trial court have substantial latitude to
    fashion protective orders.” Rhinehart, 
    467 U.S. at 36
    .
    Of course,
    [p]rotective orders entered during discovery in civil
    cases have . . . justification . . . and . . . limits. Confi-
    dentiality while information is being gathered not
    only protects trade secrets but also promotes disclo-
    sure: parties having arguable grounds to resist discov-
    ery are more likely to turn over their information if
    they know that the audience is limited and the court
    will entertain arguments focused on vital knowledge
    that a party wants to use later. . . . Information that
    is used at trial or otherwise becomes the basis of
    decision enters the public record. . . . Secrecy per-
    sists only if the court does not use the information to
    reach a decision on the merits.
    In re Krynicki, 
    983 F.2d 74
    , 75 (7th Cir. 1992). County
    Materials has not asserted that the district court’s deci-
    sion relied on sealed portions of the record (because it did
    not), and so it needs some other basis on which to chal-
    lenge the court’s ruling.
    16                                               No. 06-2857
    We have held that “the public at large pays for the courts
    and therefore has an interest in what goes on at all stages
    of a judicial proceeding[, but t]hat interest does not
    always trump the property and privacy interests of the
    litigants.” Citizens First Nat’l Bank v. Cincinnati Ins. Co.,
    
    178 F.3d 943
    , 945 (7th Cir. 1999). The public’s interest
    “can be overridden only if the . . . [privacy] interests
    predominate in the particular case, that is, only if there
    is good cause for sealing a part or the whole of the record
    in that case.” 
    Id.
     Citizens concluded that
    [t]here is no objection to an order that allows the
    parties to keep their trade secrets (or some other
    properly demarcated category of legitimately con-
    fidential information) out of the public record, provided
    the judge (1) satisfies himself that the parties know
    what a trade secret is and are acting in good faith in
    deciding which parts of the record are trade secrets
    and (2) makes explicit that either party and any
    interested member of the public can challenge the
    secreting of particular documents.
    
    Id. at 946
    . The district court gave Allan Block a limited
    ability to keep under seal certain confidential documents,
    including transcripts of certain Allan Block employees
    and a few papers. Even though the district court may
    have acted too quickly when it summarily rejected
    County Materials’s motion to unseal the documents, at
    this point in the case it is County Materials’s burden to
    show how this prejudiced it. It has not done so. Rather
    than pointing to particular documents and explaining
    why they should have been unsealed, County Materials
    has argued instead that everything should have been
    unsealed. In fact, the district court did unseal portions of
    the sealed documents, including everything on which it
    relied in its opinion. Without more information from
    County Materials, we are not in a position to say either
    that the court abused its discretion by failing to unseal
    No. 06-2857                                          17
    more or that County Materials was prejudiced by the
    court’s actions.
    The judgment of the district court is AFFIRMED.
    A true Copy:
    Teste:
    ________________________________
    Clerk of the United States Court of
    Appeals for the Seventh Circuit
    USCA-02-C-0072—9-18-07