Can Defendants Access Trade Secrets?

One of the most frustrating problems in defending a trade secrets lawsuit comes when the plaintiff refuses to agree that the accused defendant may have access to, and thus learn about, the specific alleged secrets the defendant is accused of misappropriating. There are, however, two arguments defense counsel can use to win a motion for access to that information ' a victory that alone can turn the momentum in the defendant's favor.

The Problem

In trade secrets cases, plaintiffs often deny the defendant access under the protective order to the precise information at issue and argue that if the defendant were to learn it, he might misappropriate it. Without such access, defense counsel can describe the charges to the client in only general terms. This prevents the accused individual from drawing upon his personal knowledge to provide evidence that the information is in the public domain (and is thus not secret) or was independently derived. In other words, the person in the best position to refute the accusations is sidelined. In such cases, trade secrets defendants are often forced to spend large sums to hire an expert witness to rebut the plaintiff's evidence that the material is a trade secret.

Trade secret plaintiffs know well the advantages they gain from refusing such access, and the tactic is a standard one. An accused individual who does not know the specific accusations at issue can be ambushed during a deposition or at trial without adequate time to recall and prepare an answer that reflects the whole truth. For example, the witness might not be able to remember on the spot that an item of information was in a publication he read years ago. In turn, expert costs are higher and adequate trial preparation is made difficult. And without the input of the accused, certain defenses may never be raised because defense counsel is unable to learn all the facts. This also hinders favorable settlements.

Despite the use of this tactic and the problems it causes, it has received virtually no attention in the trade secrets treatises or published case law. The few treatises that mention the issue merely note without analysis that the accused defendants may be barred from learning the information at issue when that information is deemed 'attorneys eyes only.' See James Pooley, Trade Secrets Section 11.03[2] (2002); Roger Milgrim, Milgrim on Trade Secrets Section 14.02[4] (2002).

There are two powerful arguments that, when raised in a discovery motion, can win access to the precise information that the defendant is accused of stealing.

Using The Right To Attend Trial To Gain Access

The first argument is that the accused individual will, at trial, learn all of the information that the plaintiff seeks to withhold. That is, such access is inevitable, and there is no basis for putting off the inevitable. This is the case because all (or virtually all) jurisdictions have general-purpose statutes that guarantee the right of an individual defendant or a corporate defendant's appointed representative to be present during trial. Examples include Federal Rule of Evidence 615, California Evidence Code section 777(c), Texas Rules of Civil Procedure Section 267(b), and New York's state Constitution Article 1, Section 6.

The argument focuses on the unfairness to the defendant of depriving the accused individual of access to information that he will eventually learn as a matter of right. If the defendant will necessarily learn the information, the only question is whether there is any policy basis for delaying that knowledge. (If the defendant is a company, typically, the company that hired the accused individual, it need only inform the court that the accused individual will be its appointed representative at trial.)

To win, defense counsel can list the tactical advantages, described above, that plaintiffs gain over the defendant from withholding information until trial. In light of these considerations and the inevitability of access at trial, the denial of access may not withstand scrutiny.

This argument also educates judges, who may not be familiar with trade secret law, about key defenses in advance of trial or a motion for summary judgment. By explaining that access is crucial for proving that information is in the public domain or independently derived, the defense can set the stage for dispositive arguments later in the case.

Importantly, the general statutes permitting defendants to be present at trial are consistent with the trade secrets statutes and practices governing lawsuit confidentiality. Any restrictions on public access do not apply to the parties. A key example is that the Uniform Trade Secrets Act (adopted in most states) provides that courts may preserve the alleged trade secrets by various measures including 'ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval' ' a phrase that implies that parties will have access to the information at issue. See, eg, Cal. Civ. Code Section 3426.5 (California UTSA).

Tying The Accusations To What The Plaintiff Actually Contends Was Stolen

The second argument is to highlight the logical flaw in the plaintiff's claimed fear that the accused individual will misappropriate information that the plaintiff has already accused him of stealing. In most jurisdictions, plaintiffs must identify in detail what claimed trade secrets they accuse the defendant of using. See, eg, California Civ. Proc. Code. Section 2019(d) (pre-discovery identification of claimed secrets with 'reasonable particularity' required); Porous Media Corp. v. Midland Brake Inc., 187 F.R.D. 598, 600 (D. Minn. 1999) (similar common law requirement under Minnesota law). If the plaintiff turns around and denies access to that very information on the basis that if the accused individual learns it, he may steal it, the plaintiff is open to serious charges of having made overbroad or even bad faith allegations.

This argument is effective for several reasons. First, it exposes the fundamental irrationality of the claim that a person might steal what he is already accused of stealing.

Second, the defendant can again contrast the tactical advantages the plaintiff gains from its position with the illogical argument being advanced. If the plaintiff's motive is to gain such unfair advantages, this may well become apparent to the court. Third, this argument shifts the focus to whether the plaintiff identified its claimed trade secrets in good faith. If a plaintiff was required to specifically identify the trade secrets it claims were stolen but later claims that the accused individual might steal that very same information if he learns about it, it follows that the plaintiff is either making an argument it does not believe or has raised overbroad trade secret allegations. The defendant can point out the disconnect between the plaintiff's argument and its prior identification of its alleged secrets, and it can also use the disconnect to argue that the plaintiff's trade secrets identification must be overbroad and should be narrowed to just those items of information the plaintiff actually claims the accused individual knew about and misappropriated. One victory can lead to another.

James A. DiBoise is a partner and Tait Graves is an associate at Wilson Sonsini Goodrich & Rosati in Palo Alto, CA .

One of the most frustrating problems in defending a trade secrets lawsuit comes when the plaintiff refuses to agree that the accused defendant may have access to, and thus learn about, the specific alleged secrets the defendant is accused of misappropriating. There are, however, two arguments defense counsel can use to win a motion for access to that information ' a victory that alone can turn the momentum in the defendant's favor.

The Problem

In trade secrets cases, plaintiffs often deny the defendant access under the protective order to the precise information at issue and argue that if the defendant were to learn it, he might misappropriate it. Without such access, defense counsel can describe the charges to the client in only general terms. This prevents the accused individual from drawing upon his personal knowledge to provide evidence that the information is in the public domain (and is thus not secret) or was independently derived. In other words, the person in the best position to refute the accusations is sidelined. In such cases, trade secrets defendants are often forced to spend large sums to hire an expert witness to rebut the plaintiff's evidence that the material is a trade secret.

Trade secret plaintiffs know well the advantages they gain from refusing such access, and the tactic is a standard one. An accused individual who does not know the specific accusations at issue can be ambushed during a deposition or at trial without adequate time to recall and prepare an answer that reflects the whole truth. For example, the witness might not be able to remember on the spot that an item of information was in a publication he read years ago. In turn, expert costs are higher and adequate trial preparation is made difficult. And without the input of the accused, certain defenses may never be raised because defense counsel is unable to learn all the facts. This also hinders favorable settlements.

Despite the use of this tactic and the problems it causes, it has received virtually no attention in the trade secrets treatises or published case law. The few treatises that mention the issue merely note without analysis that the accused defendants may be barred from learning the information at issue when that information is deemed 'attorneys eyes only.' See James Pooley, Trade Secrets Section 11.03[2] (2002); Roger Milgrim, Milgrim on Trade Secrets Section 14.02[4] (2002).

There are two powerful arguments that, when raised in a discovery motion, can win access to the precise information that the defendant is accused of stealing.

Using The Right To Attend Trial To Gain Access

The first argument is that the accused individual will, at trial, learn all of the information that the plaintiff seeks to withhold. That is, such access is inevitable, and there is no basis for putting off the inevitable. This is the case because all (or virtually all) jurisdictions have general-purpose statutes that guarantee the right of an individual defendant or a corporate defendant's appointed representative to be present during trial. Examples include Federal Rule of Evidence 615, California Evidence Code section 777(c), Texas Rules of Civil Procedure Section 267(b), and New York's state Constitution Article 1, Section 6.

The argument focuses on the unfairness to the defendant of depriving the accused individual of access to information that he will eventually learn as a matter of right. If the defendant will necessarily learn the information, the only question is whether there is any policy basis for delaying that knowledge. (If the defendant is a company, typically, the company that hired the accused individual, it need only inform the court that the accused individual will be its appointed representative at trial.)

To win, defense counsel can list the tactical advantages, described above, that plaintiffs gain over the defendant from withholding information until trial. In light of these considerations and the inevitability of access at trial, the denial of access may not withstand scrutiny.

This argument also educates judges, who may not be familiar with trade secret law, about key defenses in advance of trial or a motion for summary judgment. By explaining that access is crucial for proving that information is in the public domain or independently derived, the defense can set the stage for dispositive arguments later in the case.

Importantly, the general statutes permitting defendants to be present at trial are consistent with the trade secrets statutes and practices governing lawsuit confidentiality. Any restrictions on public access do not apply to the parties. A key example is that the Uniform Trade Secrets Act (adopted in most states) provides that courts may preserve the alleged trade secrets by various measures including 'ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval' ' a phrase that implies that parties will have access to the information at issue. See, eg, Cal. Civ. Code Section 3426.5 (California UTSA).

Tying The Accusations To What The Plaintiff Actually Contends Was Stolen

The second argument is to highlight the logical flaw in the plaintiff's claimed fear that the accused individual will misappropriate information that the plaintiff has already accused him of stealing. In most jurisdictions, plaintiffs must identify in detail what claimed trade secrets they accuse the defendant of using. See, eg, California Civ. Proc. Code. Section 2019(d) (pre-discovery identification of claimed secrets with 'reasonable particularity' required); Porous Media Corp. v. Midland Brake Inc. , 187 F.R.D. 598, 600 (D. Minn. 1999) (similar common law requirement under Minnesota law). If the plaintiff turns around and denies access to that very information on the basis that if the accused individual learns it, he may steal it, the plaintiff is open to serious charges of having made overbroad or even bad faith allegations.

This argument is effective for several reasons. First, it exposes the fundamental irrationality of the claim that a person might steal what he is already accused of stealing.

Second, the defendant can again contrast the tactical advantages the plaintiff gains from its position with the illogical argument being advanced. If the plaintiff's motive is to gain such unfair advantages, this may well become apparent to the court. Third, this argument shifts the focus to whether the plaintiff identified its claimed trade secrets in good faith. If a plaintiff was required to specifically identify the trade secrets it claims were stolen but later claims that the accused individual might steal that very same information if he learns about it, it follows that the plaintiff is either making an argument it does not believe or has raised overbroad trade secret allegations. The defendant can point out the disconnect between the plaintiff's argument and its prior identification of its alleged secrets, and it can also use the disconnect to argue that the plaintiff's trade secrets identification must be overbroad and should be narrowed to just those items of information the plaintiff actually claims the accused individual knew about and misappropriated. One victory can lead to another.

James A. DiBoise is a partner and Tait Graves is an associate at Wilson Sonsini Goodrich & Rosati in Palo Alto, CA .