Sedona Conference Issues Commentary on Equitable Remedies in Trade Secret Litigation

Earlier this month, the Sedona Conference published its “Commentary on Equitable Remedies in Trade Secret Litigation” (Mar. 2022). The comprehensive Sedona Commentary offers five Principles and 24 Guidelines. Its premise is that: “Obtaining or resisting some form of equitable relief is a key component of many trade secret disputes, both at an early stage and following trial on the merits.”

Misappropriation of trade secrets cases are increasingly digital. See Using Digital Forensics to Protect Trade Secrets and Trade Secret – Can Damaged Party Obtain Ex-Worker’s Emails Sent on New Employer’s System?

Several of the Sedona Conference Guidelines impact ESI directly.  “[I]n trade secret disputes, the details matter.”  Id. at 34.

For example, Guideline 2 suggests consideration of preservation orders.  Trade secret litigation often involves requests for such orders.[1]  I addressed the substantive standard, and differing tests, in Requests for a Preservation Order.  Frequently a temporary restraining order is used to obtain what is essentially a preservation order.  See, e.g.,  “The Gang That Couldn’t Spoliate Straight.” [2] An often-litigated issue, discussed in the first blog, is whether the four-part test for a TRO or a three-part balancing test that omits “likelihood of success on the merits” applies to such motions.

Guideline 5 states that: “Orders directing forensic review should, where time permits, be drafted in conjunction with forensic specialists and should give due regard to proportionality and to legitimate privacy or other interests of the nonmoving party.”  Guideline 6 states that: “Courts may be able to address the need for urgent relief concerning electronic files by appointing an expert to make and retain a forensic image of specified devices and accounts, pending further court order.”

One excellent resource available to implement these concepts is Crag Ball’s blog, including What’s in a Name (or Hash Value)? | Ball in your Court (craigball.net) and “Drafting_Forensic_Examination_Protocols_2018 (craigball.com).”  Craig wrote that:

A well‐conceived examination protocol serves  to protect  the legitimate interests of all parties, curtails  needless delay and expense and forestalls fishing expeditions.  Protocols may afford a forensic examiner broad  leeway  to  adapt  procedures  and  follow  the  evidence,  or  a  protocol  may  tightly  constrain  an examiner’s discretion to defend against waiver of privilege or disclosure of irrelevant, prejudicial material.  A good protocol helps an examiner know where to start his or her analysis, how to proceed and, crucially, when the job is done.

Trade secret litigation may present a number of novel ESI issues.  One such issue is, given the imprecision of searching and the limitations of Fed.R.Evid. 502 to attorney-client privilege and work product protection, how can trade secrets be protected against waiver by inadvertent production in discovery?  In Expanding Privilege Protection to Fill the Gaps Left by Fed.R.Evid. 502, I discussed use of a “Hopson-Immunized Clawback Agreement” as way to protect confidentiality of trade secrets in discovery.[3]

The Sedona Conference’s comprehensive work is an authoritative resource.

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[1] Fed.R.Civ.P. 16(b)(3)(B)(iii) expressly provides for preservation orders.  See also Fed.R.Civ.P. 26(c).

[2] In Guideline 3, Sedona suggests that there may be situations where a litigation hold obviates the need for a preservation order.  In my experience, the level of distrust accompanying trade secret litigation often precludes that approach.

[3] Fed.R.Civ.P. 26(c) authorizes a protective order “requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way….”  Md. Rule 2-403(a)(8) permits a protective order specifying “that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way….”