Case Law Update: Trade Secret Confidentiality Outside the UTSA Context

Because trade secrets often have to be disclosed in connection to a litigation, it is extremely important to take the necessary precautions to prevent them from losing any chance of protection.

As an illistration of this point, last week, the Court of Appeals of California, Second Appellate District, Division Seven, rejected Respondents’ argument that court records from a 1998 California case should remain under seal because they contained documents relating to trade secrets.

In relevant part, the Court held:

Trade Secrets and Intellectual Property Rights. Courts have recognized trade secrets as a potential overriding interest for restricting public access to information. (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292.) However, a trade secret does not in itself require confidentiality as required by law unless the action is initiated pursuant to the Uniform Trade Secret Act. (Id. at p. 288.) Since that is not the case here, the law does not require the confidentiality of the alleged trade secrets. As such, we look to see whether there is an overriding interest in protecting the alleged trade secrets. The Legislature has defined a trade secret as "information, including a formula, pattern, compilation, program, device, method, technique, or process that: [¶] (1) Derives independent economic value, . . . from its disclosure or use; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." (Civ. Code, § 3426.1, subd. (d).) Here, the respondents did not identify the trade secrets at issue, nor did they identify any prior efforts to maintain the secrecy of the alleged trade secrets. All of the documents purportedly containing trade secrets were disclosed publicly when they were originally filed in the court's record during the litigation of the 1998 California Case. As in In re Providian, where the court held that certain scripts were not trade secrets because they had been exposed to the public, here it appears that the alleged "trade secrets" were for 18 months prior to the settlement of this case available to the public in the court files. (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 305.)

For the entire decision, click here.