Courts Increasingly Require Early Trade Secret Claim Identification

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On June 19, 2012, a federal court in Nevada joined many other courts around the country in requiring a plaintiff in a trade secret lawsuit to provide a more detailed identification of its trade secret claims before it could seek discovery from the defendant about those claims. In Switch Communications Group v. Ballard, the court ruled on a discovery dispute where the defendant sought to require the plaintiff to provide more specificity regarding its trade secret claims through an interrogatory.

In ruling that the defendant need not respond to the plaintiff's discovery requests until the latter first identified its trade secret claims with "reasonable particularity," the court reviewed trade secret case law from around the country—as well as a 2006 study written by two Wilson Sonsini Goodrich & Rosati attorneys—and policy considerations favoring early claim identification.

California is the only state that has a statute requiring that a plaintiff identify its trade secret claims with "reasonable particularity" before it can seek discovery about the trade secret claims from the defendant. Nonetheless, courts nationwide increasingly have been reaching the same result by relying on courts' general discretion to manage discovery, as well as on the growing body of cases ruling in favor of early claim identification.

Early identification of trade secret claims poses challenges for both sides. Trade secret plaintiffs often must plan a claim identification at the same time a complaint is drafted, and must be prepared to defend the specificity of the identification in light of recent case law. Trade secret defendants must plan how and when to challenge a plaintiff's early identification, without asking for more than courts have been willing to require at the earliest stages of a case. Ultimately, many technology-based trade secret lawsuits bear some resemblance to patent cases, where Markman hearings focus attention on the specific definition of intellectual property claims.

Wilson Sonsini Goodrich & Rosati is actively following developments around the country with respect to trade secret claim identification, and the firm is available to assist employers, employees, newly formed businesses, and investors with every aspect of trade secret litigation and counseling. For more information, please contact Fred Alvarez, Rico Rosales, Marina Tsatalis, Charles Tait Graves, Laura Merritt, or another member of the firm's trade secrets and employee mobility practice.

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