UnIP (UnIntellectual Property): Trade Secrets for Certain Financial Information and Tax Structure

The highly followed patent litigation, Apple v. Samsung, has provided some insight into what may constitute a valid and protectable trade secret. The parties and non-parties (such as IBM and Microsoft) wanted certain information to be treated as a trade secret and thus sealed from view by the public, as typically occurs in a lawsuit involving a protective order. Reuters, in the interest of full disclosure to public, intervened into the lawsuit and challenged the parties’ and non-parties’ alleged trade secrets. Judge Koh issued an opinion as to what she deemed to be a valid and protectable trade secret, and thus subject to seal rather than disclosure.

As it relates to Apple, Judge Koh did not place Apple’s profits and other financial data under seal, despite Apple’s arguments that competitors could use it to predict future business plans. In doing so, the Judge explicitly recognized the $2.5 billion damages claim and the public’s interest in this lawsuit. Apple was, however, successful in having its production and supply capacity, source code, licensing information, and some marketing survey data sealed.

As it relates to Samsung, Judge Koh refused to seal information about certain financial information, product manufacturing and material costs, profit and revenue by unit information, and its tax structure.

The non-parties fared much better in protecting their alleged trade secret information. The terms of licensing agreements, including pricing, royalty rates, and payment information, were sealed. The Court further recognized that the parties and non-parties’ attempts to seal certain exhibits to prior motions are granted only consistent with her opinion.

Ultimately, it is important to recognize that this opinion holds, for evidentiary and procedural purposes, namely introduction at trial, whether or not such alleged information shall be available to the public. It may not necessarily adjudicate whether or not the alleged items are ultimately valid and protectable trade secrets under law. Here, the Court analyzed whether there were compelling reasons for sealing such data that outweigh the public’s interest in access. A similar analysis would not necessarily occur in a typical trade secret misappropriation lawsuit. Nonetheless, this opinion sheds light on what a Court may initially view as a valid and protectable trade secret. To that end, it appears that certain financial information and tax accounting procedures, strategy, and structure are not presumed to be trade secret worthy.


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