ILNews

Court rules on discovery of trade secrets

Michael W. Hoskins
January 1, 2007
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A tire making formula is considered a trade secret and doesn't have to be disclosed in discovery, the Indiana Supreme Court ruled today.

The unanimous 11-page ruling comes in a much-anticipated first impression case of Bridgestone Americas Holding, Inc. v. Violet Mayberry, et al., No. 48A02-0504-CV-368, which stemmed from a fatal August 2001 accident in which a woman lost control of her vehicle on Interstate 69 after one of the tires came apart. Her family sued the tire maker; during discovery they asked for certain documents that included the skim stock formula to determine what contributed to the tire tread coming apart and, ultimately, Harmony B. Wigley's death.

Madison Superior Judge Thomas Newman ultimately issued a protective order compelling Bridgestone to disclose its skim stock formula, and the tire maker appealed. The Court of Appeals affirmed the decision in August 2006, and the Supreme Court took the case earlier this year.

In accepting the case, justices considered how closely trade secrets should be guarded when it comes to discovery and whether certain information should be disclosed at all.

"We encounter here a question of first impression: how should an Indiana court analyze a request to protect a trade secret from pre-trial discovery?" Chief Justice Randall T. Shepard wrote. "We conclude that the test prevailing in other jurisdictions is suitable for application under Indiana Trial Rule 26(C). In this case, the demanding party did not demonstrate the necessity of disclosing the secret."

The chief justice wrote that the application of Rule 26 to trade secrets should be informed by Indiana's adoption of the Uniform Trade Secrets Act (UTSA), which has been adopted in all but five states and provides a common legal framework for protecting trade secrets from misappropriation.

In turning to the UTSA, the court focuses on a three-part balancing test as the proper analysis for determining whether "good cause" has been shown to protect a trade secret.

Justices agree that happened here, that Bridgestone showed the formula was a trade secret, and the family didn't show why it was necessary. But the court also issued a word of caution:

"Of course, trade secrets may be valuable during the course of litigation not involving misappropriation claims, and there are moments when justice requires disclosure," Chief Justice Shepard wrote. "Still, courts must proceed with care when supervising the discovery of trade secrets, lest the judiciary be used to achieve misappropriation or mere leverage."

Today's ruling reverses the trial court's protective order directing disclosure of Bridgestone's skim stock formula and remands the case for further proceedings on the merits.
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  1. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

  2. Don't we have bigger issues to concern ourselves with?

  3. Anyone who takes the time to study disciplinary and bar admission cases in Indiana ... much of which is, as a matter of course and by intent, off the record, would have a very difficult time drawing lines that did not take into account things which are not supposed to matter, such as affiliations, associations, associates and the like. Justice Hoosier style is a far departure than what issues in most other parts of North America. (More like Central America, in fact.) See, e.g., http://www.theindianalawyer.com/indiana-attorney-illegally-practicing-in-florida-suspended-for-18-months/PARAMS/article/42200 When while the Indiana court system end the cruel practice of killing prophets of due process and those advocating for blind justice?

  4. Wouldn't this call for an investigation of Government corruption? Chief Justice Loretta Rush, wrote that the case warranted the high court’s review because the method the Indiana Court of Appeals used to reach its decision was “a significant departure from the law.” Specifically, David wrote that the appellate panel ruled after reweighing of the evidence, which is NOT permissible at the appellate level. **But yet, they look the other way while an innocent child was taken by a loving mother who did nothing wrong"

  5. Different rules for different folks....

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