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Tuesday, December 18, 2007

Ind. Decisons - Supreme Court answers a question of first impression: how should an Indiana court analyze a request to protect a trade secret from pre-trial discovery?

In Bridgestone Americas Holding, Inc., et al v. Violet Mayberry, et al, an 11-page, 5-0 opinion, Chief Justice Shepard writes:

We encounter here a question of first impression: how should an Indiana court analyze a request to protect a trade secret from pre-trial discovery? We conclude that the test prevailing in other jurisdictions is suitable for application under Indiana Trial Rule 26(C).

In this case, the demanding party did not demonstrate the necessity of disclosing the secret. Hence, the trial court erred in ordering it produced. * * *

The issue in this case centers on the burden each party bears and the analysis the trial court must follow when one party seeks discovery of a trade secret. Bridgestone advocates a multi-part, burden-shifting analysis for applying Trial Rule 26(C), which governs discovery protective orders. (Appellants’ Br. at 9-19; Amicus Br. at 10-15.) Using its proposed analysis, Bridgestone argues the appellees have not demonstrated sufficient need for the skim stock formula to outweigh the harm of disclosure to Bridgestone. (Appellants’ Br. at 17-19.) Appellees contend that the trial court’s analysis was adequate and that it properly followed the rubric of Rule 26(C). (Appellees’ Br. at 15-28.) * * *

Because appellees did not meet their burden for showing necessity, a final balancing of the interests is unnecessary to the outcome of this case. Bridgestone demonstrated that the skim stock formula is a trade secret, but appellees could not demonstrate that they needed the formula in presenting their product liability action. Disclosure was therefore inappropriately ordered.

Conclusion. We reverse the trial court’s protective order directing disclosure of Bridgestone’s skim stock formula, and we remand for further proceedings on the merits.

This case has been the subject of several ILB entries, including this one from March 13, 2007, which inlcuded this quote from a Jon Ketzenberger Indianapolis Star column:
The question to be decided by Indiana's top court: whether Bridgestone can protect the formula for a rubber compound as a trade secret.

Amid the lawyers arguing the case are two for the Indiana Legal Foundation, a pro- business group established by Harry Ice nearly 30 years ago. It's typical of the foundation's cases, said Jon Laramore, one of the attorneys in the case. "This is not a glamorous case that would make the front page," Laramore said. "But the issue is of importance to business and the community at large."

Laramore worked closely with Eli Lilly and Co. and Zimmer Holdings, which have many trade secrets they want to shelter.

Indiana law protects trade secrets, but the companies worry the information-gathering process during lawsuits could give away those secrets.

Posted by Marcia Oddi on December 18, 2007 11:09 AM
Posted to Ind. Sup.Ct. Decisions