This post continues the discussion from my last post regarding common mistakes that can cause a loss of trade secrets. To qualify as a trade secret, information must be the subject of reasonable precautions to maintain secrecy. This rule applies beyond the procedures that the trade secret owner follows outside of the courthouse. Parties to lawsuits also need to be careful not to waive their trade secrets by publishing the trade secrets in open court.
Texas Rule of Civil Procedure 76a specifies the procedures for sealing court records. It is understandable that litigants might lose sight of those procedures in the rush of event surrounding an application for an injunction to prevent a competitor from using stolen trade secrets or during the heat of battle at trial. This can lead to trader secret owners disclosing their trade secrets in open court (for example, by admitting exhibits into evidence at a trial open to the public; allowing witnesses to testify about trade secrets in open court; or attaching exhibits to court filings). Later, when they file a motion seeking to retroactively seal the court’s file, the motion may be denied because the business information no longer qualifies as a trade secret. This is because the information was made public through the disclosure in the court proceedings.
An example of a Texas case where a court denied a motion to seal business records under these circumstances is Burlington Northern RR Co. v. Southwestern Electric Power Co., 905 S.W.2d 683, 685 (Tex. App.—Texarkana 1995, writ denied). In that case, Burlington Northern sought to seal business records that the trial court found had previously been published to those attending the trial (which included non-parties watching the trial), in a court filing in the case, and in filings in connection with other litigation. The Court of Appeals of Texarkana affirmed the trial court’s ruling denying the motion to seal the records.
So, be careful.
Photograph by Meredith Atwater pursuant to the licence located at: https://creativecommons.org/licenses/by/2.0/legalcode