S.C. Supreme Court Addresses Trade Secrets in Discovery

A previous post talked about how trade-secrets issues can come up in lawsuits having nothing to do with trade-secrets claims. Recently, the South Carolina Supreme Court examined when a party is entitled to discovery of its opponent’s trade secrets.

In Meadwestvaco Corp. v. Rayonier Performance Fibers, LLC, 2013 WL 3761622 (S.C. July 15, 2013), the plaintiff and defendant sued each other for breaching a contract. Under this contract, the defendant was to provide the plaintiff with certain materials to use in connection with the plaintiff’s cellulose fiber manufacturing business.

At several depositions of the defendant’s employees, the plaintiff asked for specific details about the defendant’s manufacturing process, including “the ‘recipe’ information for its mill processes.” The defendant’s counsel instructed the deponents not to answer and filed a motion for a protective order, arguing that these details were trade secrets.

The court applied S.C. Rule of Civil Procedure 26(c), which is identical to Federal Rule of Civil Procedure 26(c), and the South Carolina Trade Secrets Act. This analysis required a three-part inquiry: (1) the party opposing discovery must show that the information sought is a trade secret, after which (2) the requesting party must show that the information is relevant and necessary to bring the matter to trial, after which (3) the court must weight the potential harm of disclosure against the need for the information.

Here, the plaintiff did not dispute that the information sought was a trade secret. Thus, the court focused on whether disclosure was necessary, and concluded that it was not. Most importantly, the contract’s terms did not address the recipe behind the defendant’s mill processes, and the plaintiff did not offer any evidence showing that the recipe was necessary for, or even relevant to, its claims. On this latter point, the court took issue with the plaintiff’s failure to offer any expert testimony connecting the defendant’s trade secrets to its claims.

There are takeaways in this case for attorneys seeking and defending the disclosure of trade secrets. When trying to get an opposing party to produce trade-secret information, be sure to clearly explain the connection between the information sought and the claims/defenses in the case. If the information at issue is complicated or technical, consider using expert testimony. On the flip side, attorneys need to be aware of their clients’ trade secrets so that they can properly object to discovery and move for a protective order.

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  1. Pingback: Friday Wrap-Up (Aug. 16, 2013): Noteworthy Trade Secret, Non-Compete and Cybersecurity News from the Web | The Trade Secret Litigator

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