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A federal judge in Colorado declined to sanction Plaintiff DTC Energy Group Inc. (“DTC”) for disclosing information governed by a civil protective order. DTC Energy Group, Inc. v. Hirschfeld, 1:17-cv-01718 (D. Colo. July 27, 2020).

DTC, a consulting and staffing firm serving the oil and gas industry across the United States, filed suit in July 2017 against Defendants Ally Consulting, LLC (“Ally”), a former business partner and direct competitor of DTC, and two former DTC employees.

The amended complaint alleged a variety of claims, including trade secret misappropriation, unfair competition, breach of employment contract, and civil conspiracy to steal trade secrets.

During  discovery, and subject to an oral protective order issued by the court, Ally produced to DTC documents and information that contained certain of Ally’s trade secrets.  DTC later shared documents produced as “confidential” in the litigation with both its outside criminal attorney and with a Denver assistant district attorney after receiving a grand jury subpoena for those documents.  Ally and the other defendants accused DTC of malfeasance and of willful violation of the protective order, and sought sanctions in the  litigation.Continue Reading Caught between a rock and a hard place; that is, a subpoena and a protective order

Companies looking to protect valuable trade secrets and confidential information routinely employ multiple precautions ranging from employee training to technological safeguards.

Another potential tool in the arsenal, and worth careful consideration for companies operating in the government contract space, is the National Institute of Standards and Technology’s (NIST) recently released final public draft of enhanced security requirements. NIST Special Publication (SP) 800-172, formerly known as Draft NIST SP 800-171B, provides 34 enhanced requirements to protect Controlled Unclassified Information (CUI) associated with critical programs or high value assets from the risks posed by advanced persistent threats (APTs).
Continue Reading Companies Protecting Trade Secrets Should Consider Role of NIST’s Enhanced Security Requirements

Plaintiffs in trade secret cases are often torn between two conflicting interests: the need to state their trade secrets with enough specificity to survive a motion to dismiss, and the necessity of keeping their trade secrets confidential. In order to resolve this dilemma, plaintiffs often seek to file their complaints under seal, so that the contents are withheld from the public but still available to the parties and the court.

In deciding whether to seal a court filing, the court must balance the need for privacy against the public’s “general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Comm., 435 U.S. 589, 597 (1978). In federal court, in order to succeed on a motion to seal, a plaintiff must state compelling reasons, supported by specific factual findings, that outweigh the public’s right of access to court filings and the public policies favoring disclosure of court documents. In re Hewlett-Packard Co., 2015 WL 8570883, *2 (N.D. Cal. 2015); see also Sherwin Williams Co. v. Courtesy Oldsmobile Cadillac, Inc., 2015 WL 8665601, *1 (E.D. Cal. 2015). State courts employ similar standards.  For example, in California, in order to seal a document the moving party must demonstrate: (1) There is an overriding interest that overcomes the right to public access to the record; (2) the overriding interest supports sealing the record; (3) there is a substantial probability that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) there is no less restrictive means to achieve the overriding interest. California Rule of Court 2.550(d).Continue Reading Recent Decision Reinforces the Significance of Motions to Seal in Trade Secret Cases