One of the most complicated parts of litigating a trade secret case is the discovery process. Plaintiffs often seek discovery immediately to determine the full extent of information that was taken and how it was used, and often seek expedited discovery to prevent the defendants from destroying or hiding evidence of wrongdoing. Defendants, on the other hand, resist discovery in order to prevent the plaintiff from using the defendant’s information to help structure its claims, and to prevent the plaintiff from acquiring the defendant’s trade secrets. Recognizing this danger, courts typically require the plaintiff to identify its trade secrets before the plaintiff may obtain any discovery from the defendant. Many states, including California, have made this preemptive disclosure requirement statutory.
This dynamic was flipped on its head somewhat in a recent discovery dispute in Aliphcom, Inc. (D/B/A/ Jawbone) v. Fitbit, Inc., et al, San Francisco Superior Court, Case No. CGC 15-546004. In the case, Jawbone accuses Fitbit of poaching its employees, who then misappropriated Jawbone’s trade secrets before leaving and brought them to Fitbit. Early on, Fitbit served broad discovery requests on Jawbone, seeking project “roadmaps” of Jawbone products, Jawbone’s internal policies for the handling of classified information, production and forensic analysis of ex-employees’ computers, and production of other storage devices. Jawbone refused to provide responses, contending that under California Code of Civil Procedure section 2019.210, discovery was inappropriate until Jawbone designated its trade secrets, which it had not yet done. Fitbit countered that the prohibition against discovery is one-way, and prohibits only the plaintiff from seeking discovery until the plaintiff has designated its trade secrets.
The court sided with Fitbit, finding that section 2019.210 applies only against the party asserting misappropriation of its trade secrets. The court rejected Jawbone’s contention that it was unfair to force Jawbone to provide this sensitive information to its competitor, noting that under Jawbone’s own allegations, Fitbit already has much of Jawbone’s information, and noting that under the terms of a preliminary injunction previously issued against Fitbit, Fitbit is prohibited from using any of the information it acquires in discovery. 1
The ruling reinforces that in many cases, a trade secret plaintiff should not delay in identifying its trade secrets. By identifying its trade secrets early, the plaintiff can put itself on a level playing field for discovery, and avoid being subject to a one-sided discovery process. The ruling also reinforces the importance of setting appropriate protective orders to help prevent information produced in discovery from being used against the party that produced it.
1It is unclear from the ruling itself how Jawbone could have secured a preliminary injunction against Fitbit without designating its trade secrets at least somewhat, as such a designation is typically a pre-requisite to injunctive relief.