Protecting Trade Secrets – A Case Study in Media Conflicts
 
January 10, 2003
 
Alfred B. "Al" Adams- Atlanta

The media is often quite active in trying to unseal trade secret documents under the auspices of the “public interest.” To protect trade secrets in a case with potential media scrutiny, a manufacturer must consider what assertions the media may make, how to counter those assertions, and will also need to seek to avail itself of additional possible protections, such as having documents returned, by agreement or with the court’s support, after their use in the proceedings, or possible stipulations of non-secret facts to avoid filing the documents initially.  Of course, the public nature of a trial or court hearing will make for heightened conflicts when media scrutiny is present.  This case study sustains the blanket protective order method of protecting trade secrets, but with several cautionary twists and turns.

Related to the protection of trade secrets at trial is the press-industry conflict of protecting manufacturers’ secrets against the scrutiny of the media, who assert First Amendment claims to attempt to overcome privilege arguments.   This conflict is well-illustrated in the recent case of Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304 (11th Cir. 2001). 

This wrongful death case involved a vehicle rollover and an alleged tire failure.  In order to gain access to certain tire manufacturer technical information, plaintiffs’ counsel entered into a blanket protective order under Rule 26(c)(7) of the Federal Rules of Civil Procedure.  No “good cause” hearing was held, but Firestone reserved its right to assert good cause if produced documents were challenged as not privileged.  The typically worded order called for filing protected documents and oral evidence under seal.  Later, both in connection with a discovery motion, and a defense motion for summary judgment, certain protected documents were so filed.  After these motions were ruled on, the case was settled.  The protected documents remained under seal with the court until media intervenors, following a tire recall by Firestone, sought to “unseal” the documents.  The trial court applied a test known as the “compelling government interest” test, derived from criminal cases, and found that Firestone had failed to show this level of interest, and ordered the documents unsealed and given to the media.

On appeal, the U.S. Court of Appeals for the Eleventh Circuit reversed and remanded.  The court considered the constitutional right of access under the First Amendment and found that discovery materials are not subject to any special constitutional protection, but are governed by the terms of Rule 26(c), which require a showing of good cause to protect trade secret materials.

Similarly, the media had  asserted common law claims for records disclosure, which were accepted by the trial court.  The trial court found that the records, being on file with the court, were judicial records.  This argument was not simply accepted by the appellate court.  The appellate court distinguished those materials used only in discovery disputes and those used in case resolution, i.e., the motion for summary judgment.  The latter requires a “balancing test,” balancing the press’ interest in disclosure versus the manufacturer’s interest in protecting the competitive secrets.  This balancing test under Rule 26(c), requires the manufacturer to show good cause to prevent the disclosure. 

Since Firestone’s documents appeared to meet the Rule 26 criteria, the case was remanded to the trial court to balance the trade secret needs of Firestone against the argued public health and safety needs the media asserted. 

For more information, contact Al Adams, toll free, at 1-888-688-8500, or via e-mail at al.adams@hklaw.com.