Historically, confidential and proprietary information, such as the formulas for Coca-Cola and Pepsi, is trade secret information that will not be made available to the public during litigation. While Coke and Pepsi are probably the two most famous examples of protectable trade secrets, many companies in varying industries rely on trade secret protection for financial success and competitive advantage. For example, manufacturing, pharmaceutical, and chemical companies often choose trade secret protection over patent protection either because a trade secret may enjoy a lifetime of protection, as opposed to twenty years, or simply because the trade secret formula or chemical composition does not rise to the level of non-obvious invention required for patent protection.
Regardless of the technological or business reason for choosing to protect your confidential and proprietary information as a trade secret as opposed to patent, that protection should not be threatened by discovery orders in a litigation that your company is not even a party to. However, recently a Pennsylvania state court decision highlights risk to trade secret protection for certain hydrofracturing fluid manufacturers in the oil and gas industry. The Superior Court of Pennsylvania recently upheld a decision by a Washington County Court issuing a discovery order that required Range Resources to identify the constituents in the fracturing fluid used at one of its well sites. See Stephanie Haney et al. v. Range Resources-Appalachia Inc., 1130 WDA 2014, 2012-3534 (Wash. Cty. Common Pleas).
Despite Range Resources’ opposition to this order in view of the trade secrets of its manufactures that may be exposed by its disclosure, the court has ordered it produce these materials, placing Range Resources in the precarious position of having to divulge its third party manufacturer’s trade secret information in order to comply with the court’s order. Ironically, because this highly confidential trade secret information is not proprietary to Range Resources, Range Resources does not have standing to challenge the order.
It is unknown whether the fracturing fluid manufacturer and supplier will intervene as a non-party and object to Range Resources’ request for this information and whether the court will consider an anticipated motion to quash any subpoena that Range Resources may be forced to pursue. But it would be shocking if Range Resources’ supplier did not assert every argument in their arsenal to protect this highly confidential, proprietary, and valuable information.
We expect there will be more to come on this case and this topic in general. Stay tuned.
