In what has been a growing trend across the country, on April 20, 2012, a New York state court has required that a plaintiff specifically plead its trade secrets in detail before proceeding with discovery. In MSCI et al. v. Jacob, Axioma, New York State Supreme Court, New York County, No. 651451/2011, the complaint alleged misappropriation of source code trade secrets by Axioma and Jacob, a former MSCI employee who now works for Axioma. Defendants argued that plaintiffs should be required to identify and describe their alleged trade secrets early in a litigation before the trade secret defendant produces its own confidential information and trade secrets.
At a conference held on November 21, 2011, the Court stated that as a plaintiff MSCI is required to identify its trade secrets; and, in response to MSCI’s proposal, as a first step, ordered that MSCI identify with specificity the information that it is not claiming to be trade secret. Despite the Court’s instruction, five months later defendant MSCI again sought judicial intervention because it claimed that Axioma was seeking to delay discovery in order to avoid having to submit its own source code for inspection.
The New York Court agreed with the defendants noting that “[m]erely providing defendants with plaintiffs’ ‘reference library’ to establish what portions of their source code are in the public domain shifts the burden to defendants to clarify plaintiffs’ claim.” The Court went on to hold that: “[o]nly by distinguishing between the general knowledge in their field and their trade secrets, will the court be capable of setting the parameters of discovery and will defendants be able to prepare their defense.”