“You mean there’s a catch?”
“Sure there’s a catch,” Doc Daneeka replied. “Catch-22. Anyone who wants to get out of combat duty isn’t really crazy.”
There was only one catch and that was Catch-22, which specified that a concern for one’s own safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn’t, but if he was sane, he had to fly them. If he flew them, he was crazy and didn’t have to; but if he didn’t want to, he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.
[Heller, Catch-22, at 52 (1999, S &S Classics Edition))]
I. Introduction
Trade secret litigators (and especially trade secret trial attorneys) and their clients let out a similar whistle often—Because “trade-secret litigation” is an oxymoron in many ways. The very desire to protect one’s trade secrets, i.e. to keep them secret, requires disclosing them to a certain extent in certain ways to certain people (in other words making them less secret). Thus, the whistle is usually more regretful than respectful, as those forced to litigate to defend their trade secrets face a classic Catch-22 scenario. Rather than whistling a happy tune to overcome the fear of losing one’s trade secret protection, these litigants and litigators are whistling past the graveyard, knowing that all manner of frights, scares, and dangers—real and imagined—lurk in the pleading, discovery, motion and trial phases of such litigation. The goal here is give such litigants and litigators a few hints for making that a safer trip.
II. ABA Formal Opinion 477
This trip should begin with a review of ABA Formal Opinion 477, the May 2017 ethics opinion entitled “Securing Communication of Protected Client Information.” That opinion is an updated, after roughly eighteen years, of Formal Opinion 99-413, an earlier ABA foray into the issues surrounding the use of email and other forms of electronic means for communicating with clients. According to Opinion 477, it was time for a renewed analysis because the world had changed:
Unlike 1999 where multiple methods of communication were prevalent, today, many lawyers primarily use electronic means to communicate and exchange documents with clients, other lawyers, and even with other persons who are assisting a lawyer in delivering legal services to clients.
Since 1999, those providing legal services now regularly use a variety of devices to create, transmit and store confidential communications, including desktop, laptop and notebook computers, tablet devices, smartphones, and cloud resource and storage locations. Each device and each storage location offer an opportunity for the inadvertent or unauthorized disclosure of information relating to the representation, and thus implicate a lawyer’s ethical duties.***
…Cybersecurity recognizes a post-Opinion 99-413 world where law enforcement discusses hacking and data loss in terms of “when,” and not “if.” Law firms are targets for two general reasons: (1) they obtain, store and use highly sensitive information about their clients while at times utilizing safeguards to shield that information that may be inferior to those deployed by the client, and (2) the information in their possession is more likely to be of interest to a hacker and likely less voluminous than that held by the client.
The Model Rules do not impose greater or different duties of confidentiality based upon the method by which a lawyer communicates with a client. But how a lawyer should comply with the core duty of confidentiality in an ever-changing technological world requires some reflection.
[Opinion 477, pp. 1-2 (footnotes omitted)]
The opinion proceeds from that foundational understanding.
A. Competence, Confidentiality and Communication
The opinion then focuses on the core ethical duties of competence under RPC 1.1 and confidentiality under RPC 1.6, and how one must understand their requirements in this modern world. Key to that understanding are the 2012 amendments to those rules and comments, amendments that “recognized the increasing impact of technology on the practice of law and the duty of lawyers to develop an understanding of that technology.” Op. 477, p. 2.
First, Op. 477 noted that Comment [8] to Rule 1.1 was modified to read:
To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.
Next, the Opinion explained why that change took place: “The Commission concluded that, in order to keep abreast of changes in law practice in a digital age, lawyers necessarily need to understand basic features of relevant technology and that this aspect of competence should be expressed in the Comment.” [Op. 477 at 2].
Then the opinion focuses on the next to protect confidentiality when using electronic means of communications, noting that:
Recognizing the necessity of employing a fact-based analysis, Comment [18] to Model Rule 1.6(c) includes nonexclusive factors to guide lawyers in making a “reasonable efforts” determination. Those factors include the:
- sensitivity of the information,
- likelihood of disclosure if additional safeguards are not employed,
- cost of employing additional safeguards,
- difficulty of implementing the safeguards, and
- extent to which the safeguards adversely affect the lawyer’s ability to represent clients (g., by making a device or important piece of software excessively difficult to use).
The opinion then returns to provide advice on analyzing the risks involved in certain communications. It suggests that one should analyze those risk under several factors:
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Understand the nature of the threat
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Understand How Client Confidential Information is Transmitted and Where It Is Stored.
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Understand and Use Reasonable Electronic Security Measures
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Determine How Electronic Communications About Clients Matters Should Be Protected.
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Label Client Confidential Information.
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Train Lawyers and Nonlawyer Assistants in Technology and Information Security.
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Conduct Due Diligence on Vendors Providing Communication Technology
Then, finally, the Opinion address the duty under RPC 1.4 to communicate with clients, noting that “[w]hen the lawyer reasonably believes that highly sensitive confidential client information is being transmitted so that extra measures to protect the email transmission are warranted, the lawyer should inform the client about the risks involved. The lawyer and client then should decide whether another mode of transmission, such as high level encryption or personal delivery is warranted.” Op. 477 at 10.
B. 477 Provides The Minimums For Communications Involving Trade Secret
While these generalized “tips” are helpful, they really are only directed to the basic rudiments of lawyers and their trade-secret-holding clients communicating within one another with reasonable care. In other words, they aim to prevent mistakes of omission, and to assure that the initial transmitting information about a client’s trade secrets is done securely, and maintained securely thereafter. It has little to do with the important affirmative decisions and acts that one must consider and accomplish to bring and prosecute trade secrets claims successfully, by which one means here bringing them without having that very act or process evaporate the very rights for which vindication and relief are sought. Indeed, returning to Heller, these foundational steps are about whether the plane is safe to fly anywhere, and says little about the Catch-22 of flying it into combat.
III. Litigating Trade Secret Cases
A. Pleadings
When one gets to the pleading stage, numerous conflicting requirements emerge in a trade secret case. Naturally, one must describe one’s cause of action in “simple, concise, and direct” terms that provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R. Civ.P. 8(a)(2) and (d)(1). Additionally, this often requires in a trade secret case making plain that the elements of a trade secret claim have been met. When such detail is not included, courts dismiss claims. See M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F. Supp. 3d 1349 (S.D. Fla. Aug. 8, 2016); ChatterPlug, Inc. v. Digital Intent, LLC, 2016 WL 6395409 (N.D. Ill. Oct. 28, 2016); Space Data Corp. v. X, 2017 U.S. Dist. LEXIS 22571 (N.D. Cal. Feb. 16, 2017). The prospect of such dismissal requires trade secret claims be stated with some level of specificity to avoid dismissal. Syntel Sterling Best Shores Mauritius Ltd. v. TriZetto Grp., Inc., 2016 WL 5338550 (S.D.N.Y. Sept. 23, 2016); Mission Measurement Corp. v. Blackbaud, Inc., 216 F. Supp. 3d 915 (N.D. Ill. Oct. 27, 2016); Chubb INA Holdings Inc. v. Chang, 2017 WL 499682 (D.N.J. Feb. 7, 2017). In the age of Ashcroft v. Iqbal and Bell Atlantic v. Twombly, where the mere notice pleading of the past no longer really suffices, that means going beyond labels and catchphrases, and actually “describe[ing] the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.” Space Data Corp., 2017 U.S. Dist. LEXIS 22571, *4-5.
But, of course, much of that sort of detail is inconsistent with the very notion of a trade secret. As the United States Supreme Court wrote in Ruckelshaus v. Monsanto, 467 U.S. 986 (1984), once secrecy is lost, the property interest is forever destroyed:
With respect to a trade secret, the right to exclude others is central to the very definition of the property interest. Once the data that constitute a trade secret are disclosed to others … the holder of the trade secret has lost his property interest in the data.
Thus, one must consider well seeking protective orders and filing matters under seal from the first in order to assure that the integrity of the trade secret is maintained. [Ruckelshaus is an interesting case in that it recognized that trade secrets are “property” protected by the Takings Clause of the Fifth Amendment. This is an important proposition to keep in mind, especially when a court is ruling that trade secrets need to be disclosed during discovery or at trial.] The Federal Rules of Civil Procedure, the local of rules of federal districts, and state counterparts all offer mechanisms for such relief and protection.
B. Discovery
Of course, trade secrets are revealed in much greater detail in the process off discovery. It is important that one take appropriate steps throughout the discovery process to assure that documents and information exchanged concerning trade secrets be maintained as confidential. This goes beyond merely labeling certain documents as “Confidential,” but also potentially segregating even Confidential documents into those protected from disclosure to those outside the case from those to which even certain parties to or personnel involved in the case are denied access through so called AEO or “attorneys-eyes-only” designations. It also involves making sure everyone involved in the discovery phase is aware of the need for confidentiality, and is tasked to adhere to it. While this can make depositions (and the review of transcripts from them) a bit more stilted and formal, it is a necessary discipline.
C. In The Courtroom
Motion practice and actual courtroom hearings also requires an attention to detail. This includes appropriate filing under seal of trade secret documents, but it may also require that counsels’ arguments be delivered in a manner that is somewhat circumspect so that the protected information does not slip out in court.
This concern was well illustrated in Gates Rubber Co. v. Bando Chemical Industries, Ltd., 9 F.3d 823 (10th Cir. 1993), where the defendant contended that the disclosure of the constants during a permanent injunction hearing, in open court, deprived them of their status as trade secrets. Id. at 849. The Tenth Circuit disagreed, noting that “Gates evidenced a continuing intent to maintain the secrecy of the constants. … The record indicates that counsel for Gates monitored the presence of observers in the courtroom. Furthermore, after the hearing was completed, Gates had the permanent injunction hearing record placed under seal. Similarly, Gates has moved to place certain exhibits on appeal under seal. We conclude that Gates’ post-hearing measures, including sealing the record, were adequate to maintain the secrecy of the constants under the facts of this case.” [Id.]. This case illustrates that one should always make the effort to preserve, or more accurately reimpose, secrecy, though it certainly would have been less risky to have sought to maintain secrecy throughout. See also Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d 411, 50 U.S.P.Q.2d (BNA) 1332 (4th Cir. 1999) (mere presence of a document in the open court record did not automatically destroy its secrecy because the plaintiff had obtained a protective order that required the secrets to be filed under seal, which amounted to reasonable measures to preserve secrecy).
Littlejohn v. Bic Corp., 851 F.2d 673 (3d Cir. 1988), illustrates just such risk, as the Court there found that after the fact motions to seal were insufficient, especially where there was no objections made during trial. There, the appeal court decided that the trial court had “properly found BIC waived whatever rights to confidentiality that might have been created by the PO” because BIC failed to raise the issue of confidentiality when, “[i]n her pre-trial memorandum, the plaintiff signaled her intention to use some confidential documents as trial exhibits” because “BIC also failed to assert its interest at trial when the plaintiff referred to and discussed portions of the confidential exhibits with her experts,” and because “BIC did not object when the plaintiff moved to have the disputed exhibits admitted into evidence.” [Littlejohn, 851 F.2d at 680]. The failure to make a record at every step ultimately doomed BIC’s efforts.
This contrasts with the approach of the trade secret holder in Rosenberg v. Becton Dickinson, Rosenberg v. Becton, Dickinson & Co., 2010 N.J. Super. Unpub. LEXIS 1204 (App. Div. 2010), and In re M-I, LLC, 505 S.W.3d 569 (Texas 2016).
In M-I, the Texas Supreme Court addressed the issue of whether protecting trade secrets during a preliminary injunction hearing by excluding defendant’s principals was appropriate. The trial court had held that it was not appropriate to exclude defendant’s principals. But the Texas Supreme Court, on mandamus, vacated that order. While the Texas Supreme Court did not mandate their exclusion, it did send the matter back to trial court after concluding that the trial court’s rejection of that possibility was an abuse of discretion:
The record before us is clear that the trial court did not balance the competing interests. Without even hearing Moore’s testimony identifying M-I’s alleged trade secrets, the trial court concluded: “You sued them. They stay, period.” Without knowing what M-I’s alleged trade secrets were, the trial court simply could not have conducted the required balancing.
The trial court apparently believed NOV had an absolute due process right to have its designated representative present at the temporary injunction hearing. However, the due — process right of a party to be present at a civil trial — much less the right of a party to have a designated representative present at a temporary-injunction hearing — is not absolute.
[In re M-I, LLC, 505 S.W.3d at 576]
In Rosenberg, BD was able to maintain the secrecy of its information by making a record at nearly every step, as the court noted that “Prior to trial, Becton moved for a protective order of the META Report and Documents,” that “The original order provided that the META Documents could be used for litigation purposes only,” that “The trial judge subsequently modified the order so that the META Documents could be used during the trial as evidence. [Rosenberg, 2010 N.J. Super. Unpub. LEXIS 1204]. The judge reserved judgment on how to treat the META Documents after trial,” and that “After the trial concluded, Becton filed a motion to seal portions of the record and to maintain the protective order over the META Documents.” [Rosenberg, 2010 N.J. Super. Unpub. LEXIS 1204, *3-5]. Though not expressly stated in the appellate opinion, courtroom visitors were monitored by BD’s counsel, and it did not appear that any third parties were present when testimony on this document was elicited; additionally, the court was reminded when the document was discussed at trial that BD considered the document confidential and that BD would seek its sealing at the appropriate time. [The author was BD’s counsel in this matter]. Indeed, that was why the trial judge had specifically reserved judgment on the document’s ultimate treatment and established the law of the case before in limine motions were made. [The trial judge also stated sua sponte that she would not close the courtroom. For those interested in how such requests are to be reviewed by courts, see In re Iowa Freedom of Information Council, 724 F.2d 658 (8th Cir. 1983), and Publicker Industries, Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984). These sorts of requests involve not only the parties, but also the public, and courts often require that the public be provided notice. See, e.g., U.S. Tobacco v. Big South Wholesale of Virginia, 2013 U.S. Dist. LEXIS 165638 (E.D.N.C. 2013).] Other courts have similarly emphasized the need for such diligence and compelling case for confidentiality at every step. See, e.g., Carnegie Mellon Univ. v. Marvell Tech. Group, 2013 U.S. Dist. LEXIS 54429, 2013 WL 1674190 (W.D. Pa. 2013).
D. Getting To And From The Courtroom
One should also take care to act appropriately to keep information secure as one moves to and from the courtroom. Security checkpoints, be they in courthouses, at airports or at border crossings, are places where extra should be used, as illustrated by New York City Bar Association Opinion 2017-5 (attorney must make reasonable efforts to assert the attorney-client privilege and to otherwise avert or limit the disclosure of confidential information in response to a border agent’s claim of lawful authority to inspect electronic devices). Though technically dealing only with border crossings, the opinion’s suggestions have merit in many contexts.
IV. Conclusion
Courts have themselves described the choices involved in balancing secrecy and disclosure of confidential information in litigation. Indeed, in Publicker Industries, Inc., 733 F. 2d at 1063, the court explained its varying orders concerning confidentiality procedures by saying that “the most intelligible explanation of [the Court’s] conduct is that it is a `Catch-22.'” See also Vesta Corp. v. Amdocs Management Ltd., 147 F. Supp. 3d 1147, 1152 (D. Oregon 2015); and see Nike, Inc. v. Enter Play Sports, Inc., 305 F.R.D. 642, 644-46 (D. Or. 2015) (declining to require plaintiff to more specifically identify trade secrets allegedly misappropriated by defendant, noting to do so would place plaintiff in a “catch-22″ in light of the uncertainty over what defendant actually had taken). The various cases illustrate a need to be pervasive and persistent in one’s demands for ongoing confidentiality and limitation of access to the trade secrets that one is seeking to protect. While courts will often balk at the inconvenience that such processes will occasion, one has to at least ask for them to avoid later claims of waiver or disclosure. One must also renew and repeat such requests, even after public use within a courtroom, as many cases have shown the efficacy of making such post-trial efforts to seal records.
Though these cases and comments may help one navigate these issues, the Catch-22 remains, and bringing a trade secret action remains fraught with the possibility of divulging just what one seeks to keep to him or herself: as Heller also wrote in that novel, “he was jeopardizing his traditional rights … by daring to exercise them.” Heller, Catch-22, at 373 (1999, S &S Classics Edition). Heller might have been talking about the trade secret plaintiff.
