Trade secret litigation is contentious by its very nature, and the issue that never fails to cause a litigant’s blood to boil is the effort by an opponent to discover trade secrets not directly at issue in a case. A decision last week in the high profile case brought by Apple over Samsung’s new Galaxy cell phone and computer tablet strikes a welcome blow in favor of confining discovery to the actual issues of the case.
Typically in a discovery dispute over confidential information, the party claiming confidential status must make a prima facie showing of that status and show any disclosure might be harmful (this harm is presumed with competitors); the burden then shifts to the party seeking the discovery to show that such information is both relevant and necessary to the underlying action. Universal Del., Inc. v. Comdata Network, Inc., 2011 U.S. Dist. LEXIS 28963 (M.D. Tenn. Mar. 21, 2011); Spartanburg Reg’l Healthcare Sys. v. Hillenbrand Indus., 2005 U.S. Dist. LEXIS 30594 (W.D. Mich. Aug. 24, 2005). Where both parties meet their competing burdens, “the court then balances the need for discovery of the information against the alleged injury which will result from disclosure.” Universal Del., Inc., 2011 U.S. Dist. LEXIS 28963, at *6.
In Apple Inc. v. Samsung Electronics, Ltd., et al., Case No. 11:CV-01846-LHK, U.S. District Court for the Northern District of California, San Jose Division (June 21, 2011), Apple claims that Samsung’s Galaxy cell phones and computer tablets infringe its trade dress, trademarks, and utility and design patents. When Apple moved for expedited discovery against Samsung, Samsung insisted on “reciprocal” discovery on future Apple products, arguing that Apple had “opened the door to discovery of unreleased products” and its trade secrets.
Apple opposed that request and argued its case was expressly limited to infringement of its existing product line, not on any next generation products that it might release in the future, and that those trade secrets as to subsequent product lines were irrelevant. On June 21, 2011, the court rejected Samsung’s motion to compel. Its clean and logical reasoning is best reflected in the following quote:
Ultimately, the essence of Apple’s claims is that Samsung has copied Apple’s products. Common sense suggests that allegations of copying are necessarily directed at Apple’s existing products, to which Samsung has access and could potentially mimic, and not at Apple’s unreleased, inaccessible, next generation products. Samsung has cited no case requiring a plaintiff in a trade dress or trademark case to produce its future products in a context similar to this one. Given these circumstances, the Court agrees with Apple that it simply has not put is next generation products at issue, at least with respect to its anticipated motion for a preliminary injunction, and Samsung does not need access to these products in order to oppose such a motion.
(Opinion at p. 9) (A link to that opinion can be found below).
This decision benefits trade secret plaintiffs and defendants alike. Too frequently, a party perceives that it can gain leverage by trying to use discovery on this basis as a pressure point to secure an unfair tactical or strategic advantage. The purpose of the request may be to cause delay, distract the court from the merits of the dispute, to squeeze the opposing party to make him or her feel further at risk, or to simply wear down an adversary with the potential cost associated with this discovery. Although there will always be parties who will insist on pushing this envelope, one can hope that the clean and unassailable logic of this decision will be followed in other trade secret cases.