Trade secrets actions are notorious for creating intractable discovery thickets. The fundamental problem usually revolves around interrelated concepts: the defendant's request to know exactly what trade secrets are at issue, and the plaintiff's need to know what the defendant has. The former automatically implicates grave intellectual property protection concerns, while the latter often is a ruse to obtain more information than really should be at issue.
Very few jurisdictions place the burden on the plaintiff to disclose the precise nature of trade secrets at the outset of the case. California mandates this by statute. Illinois should have, but legislation on this issue stalled while the General Assembly tried to clean up its own act.
In almost every trade secrets suit, the defendant issues initial discovery requests seeking to place some parameters on the case by asking for an identification of what the specific trade secrets are that the defendant is alleged to have misappropriated.
In a dispute between direct competitors in the office equipment business, this tension led to a common discovery log-jam. IKON Office Solutions, the plaintiff in the case, sued Konica Minolta and William Cimler (an ex-IKON employee) under a non-compete and trade secrets misappropriation theory. Not surprisingly, the defense wanted to know what trade secrets were the subject of the complaint.
IKON balked and would not disclose the precise trade secrets at issue, identifying only a broad range of customer information. This is inadequate and abusive, particularly in a case where the crux of the dispute focuses on customer solicitation.
But litigation is a common tactic over this issue, even in cases like the IKON-Konica Minolta case where the employee's non-compete expired prior to the start of litigation and the ex-employer defaults to a trade secrets claim. Not surprisingly, Konica Minolta prevailed in its contentious discovery battle, as the court would not allow IKON to simply identify broad categories of information and to fish for Konica's own confidential business information through vague, abusive written discovery requests. The intent in cases like this is obvious: the plaintiff wants to use the litigation process to unearth for itself who its ex-employee has contacted or solicited.
In a trade secrets action, plaintiffs can and should be required to identify the allegedly misappropriated trade secrets at the outset. It is a mystery why plaintiffs don't use the procedure Judge Milton Shadur approved of years ago and simply move for an order requiring the defendant to turn over any documents or electronically-stored information in his possession so that the Plaintiff can see what he or she has taken. There is nothing wrong with waiting for this to play out prior to disclosure of a trade secrets identification statement. Without some procedural safeguards and active court involvement in discovery, trade secrets claims frequently become an abyss of litigation, bogged down in discovery squabbles where the merits of the lawsuit are tertiary and only sometimes related to one party's desire to fish around for competitor information.
Court: United States District Court for the Western District of North Carolina
Opinion Date: 11/25/09
Cite: IKON Office Solutions, Inc. v. Konica Minolta Business Solutions, U.S.A., Inc., 2009 U.S. Dist. LEXIS 116372 (W.D.N.C. Nov. 25, 2009)
Law: North Carolina, Federal Rules of Civil Procedure