AIPLA Committee on Trade Secrets

1. 1 AIPLA Committee on Trade Secrets The Shrinking Scope of Protective Orders in Litigation: What the Litigator Needs to Know York M. Faulkner Presented at the AIPLA Mid-Winter Institute January 27, 2005 Lake Buena Vista, Florida

2. 2 The Conundrum: Federal Rules permit the discovery of sensitive information.

3. Judicial Goal -- Protect litigants

4. Judicial Goal: Protect Public Interest

5. 5 Due to the differing interests—on one hand the interest of the parties in keeping their confidential information from the public domain, and on the other hand, the interest of the public in open judicial proceedings—the Supreme Court has stated that protective orders will be imposed for “good cause”. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 37 (1984).

6. 6 A protective order will issue “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense ….” FRCP 26(c)

7. A protective may permit documents to be filed under seal, including an order “that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way.” FRCP 26(c)

8. 8 Pre-Trial Discovery Documents: The practical problem of showing good cause.

9. The Traditional Answer: Blanket Protective Orders

10. 10 Farewell to Blanket Protective Orders? One court has noted: “Blanket protective orders are inherently subject to challenge and modification, as the party resisting disclosure generally has not made a particularized showing of good cause with respect to any particular document.” San Jose Mercury News, Inc. v. U.S. District Court, 187 F.3d 1096, 1103 (9th Cir. 1999).

11. 11 Farewell to Blanket Protective Orders? When a blanket protective order is challenged, particularly on First Amendment right to access grounds, as it was in San Jose Mercury News, a blanket protective order will be subject to almost automatic modification.

12. 12 What if the Parties Stipulate to the Protective Order? The courts are the “primary representative of the public interest.” In re Bridgestone/Firestone Inc., 198 F.R.D. 654, 657-58 (S.D. Ind. 2001).

13. 13 The Criteria for Protecting Pre-Trial Discovery Documents • The parties may designate documents under the order if: • The parties know what a trade secret is and are acting in good faith in deciding which parts of the record are trade secret; and • The protective order makes clear that the secreting of any document may be challenged not only by the parties to the litigation, but also by the public. • See United States v. Amodeo, 71 F.3d 1044, 1049 (2d Cir. 1995).

14. 14 Enter: “Judicial Documents” • There is a presumption of access to judicial documents. Gulino v. Board of Educ. Of City School Dist. Of City of New York, 2003 WL 1878235, *2 (S.D.N.Y. 2003)

15. 15 “Judicial Documents” • What is a ‘Judicial Document’? • Judicial documents are: “items filed with the court that are relevant to the performance of the judicial function and useful to the judicial process.” Gulino, 2003 WL 1878235, at *2 (S.D.N.Y. 2003) (quoting SEC v. TheStreet.com, 273 F.3d 222, 231 (2d Cir. 2001).

16. 16 “Judicial Documents” • The Following Were Found to be Judicial Documents: • Exhibits filed in connection with a bench trial. Gulino, 2003 WL 1878235 (S.D.N.Y. 2003). • “[D]iscovery material filed in connection with pretrial motions that require judicial resolution of the merits[.]” Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304, 1312-13 (11th Cir. 2001).

17. 17 “Judicial Documents” • The Following Were Found NOT to be Judicial Documents: • Deposition testimony under FRCP 26. SEC v. The Street.com, 273 F.3d 222, 233-34 (S.D.N.Y. 2003). • Material filed in connection with a discovery motion. Chicago Tribune Co., 263 F.3d at 1312-13 (11th Cir. case law). • Documents exchanged through the discovery process. Citizen’s First National Bank v. Cincinnati Ins. Co., 178 F.3d 943, 946 (7th Cir. 1999).

18. 18 What Does This Mean for Litigators? Judge Easterbrook has gone so far to suggest that: “[p]eople who want secrecy should opt for arbitration. [Trade secret litigation] regularly is conducted in public; … no one would dream of saying that every dispute about trade secrets must be litigated in private.”

19. 19 What Does This Mean for Litigators? Carefully Draft Protective Orders.

20. 20 What Does This Mean for Litigators? • Suggestions for Stipulated Protective Orders: • Include a proposed finding that discovery will require the parties to turn over trade secrets and that good cause exists to protect that information; • Define trade secrets and other applicable levels of proprietary information;

21. 21 What Does This Mean for Litigators? Suggestions for Stipulated Protective Orders (cont’d): (3) Provide express means by which the parties and the public may contest the protective order; and (4) Acknowledge that the protective order is applicable to the pretrial and discovery phase of the trial and include additional provisions governing evidence presented at trial.

22. 22 What Does This Mean for Litigators? As one court has stated: “[d]isclosing the [trade] secrets to the world is not an appropriate price for the privilege of enjoining one person’s use of them.” Pepsico, Inc. v. Redmond, 46 F.3d 29, 31 (7th Cir. 1995).

23. 23 Additional Reference York Moody Faulkner, Pulling the Threads from Blanket Protective Orders: Courts More Carefully Scrutinize Litigant’s Requests for Secrecy, IP Litigator 23-24 (Feb. 2001). Special thanks to Andrew Sommer who took the laboring oar in preparing this presentation.