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What's a Trade Secret If I Don't Keep it Secret?

Posted February 4, 2018
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Nothing. Seriously, though, even large companies, like Ford Motor Company, seem to forget this. And it will probably end up costing it a lot of money in attorneys fees.

Under pretty much any trade secret analysis, the party seeking to protect the information must make reasonable efforts under the circumstances to keep it secret.  Makes sense. Every state that has adopted the Uniform Trade Secrets Act, including Connecticut, has this requirement.  If you don't try to keep it a secret than why should the Court?

In a products liability case out of West Virginia federal court, Ford consistently resisted producing the source code for its Electronic Throttle Control system (read about some issues here) to the Plaintiffs' attorneys, claiming they could only produce it in read only format, that Plaintiffs' experts could only review it in a secured room at a Ford facility, and could only review limited portions of the code. Ford convinced the court to enter a series of protective orders designed to protect the proprietary and trade secret nature of the source code.

Well, Plaintiffs didn't appreciate these restrictions and claimed the restrictions kept their experts from doing their job.

Ford said no way. The source code, it claimed, had "never been produced or provided to any third party, even a Ford supplier, in the manner that Plaintiffs propose, and for good reason." Ford said it would be catastrophic if competitors or terrorists (can you hear the "damn it" at the end) got a hold of the source code. Ford claimed in its filings that if a competitor could use the source code to improve its system even one mile an hour better than Ford's, Ford would suffer billions of dollars in lost revenue. That's why, said Ford, we never, NEVER, allow the source code to leave our possession, not even over a VPN (virtual private network).

Not so fast said Plaintiffs' counsel, then why have we found emails where Ford emailed source code in unprotected formats to, you guessed it, other car makers like Mazda and Aston Martin, and suppliers (damn it!) such that it could be read and manipulated in its native format.

Wow.  The case (Johnson v. Ford Motor Co.) offers a few lessons.  One is basic legal writing. Never use such strong adjectives like "never" or capitalize the "B" in billions to emphasize how much money you'd lose if the unimaginable happened, which it turns out actually happened because you did it!

Another lesson - for lawyers.  When seeking discovery sanctions, don't go for the juggler like a default judgment, because the court is not likely to give it to you.  Go for attorney's fees, or other relief.  Here, Plaintiffs made a creative request for an order that their theory of the case be established as true (probably never happen, and didn't) but also that the Court prohibit Ford from using undisclosed source code in their defense.  Plaintiffs didn't get that order either, but it is a creative way to litigate.  If Ford doesn't want to disclose its source code, fine, it cannot use it at trial. An exceptional attorney I had the pleasure of working with taught me that lesson, which I pass on to my civil procedure students at Quinnipiac Law School every year.

Q4U: Has your company looked close at its non-disclosure or confidentiality agreements? Because you may be asking employees to keep secrets that you don't.  Just asking.

About the Author

Business and Employment Litigation Attorney Anthony Minchella

Tony represents Fortune 50 financial services companies, retail giants, and small and large specialty products companies in employment litigation, trade secret and non-competition litigation, and unfair trade practice issues. When acting as local counsel, Tony, an adjunct professor of law on Connecticut Civil Procedure at Quinnipiac Law School, helps lead counsel navigate the nuances of Connecticut state and federal court practice. Tony graduated magna cum laude from Quinnipiac University School of Law. He passed the New Jersey, New York and Connecticut bar exams and then moved on to careers with large and small firms which led to his boutique litigation practice.