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Business Law FLASHPOINTS June 2019

June 14, 2019Print This Post Print This Post

James H. Kallianis, Jr., Skarzynski Marick & Black LLP, Chicago
312-946-4230 | E-mail James H. Kallianis, Jr.

Below is an excerpt from §3.9 of BUISNESS AND COMMERCIAL LITIGATION — 2019 EDITION.

Trade Secrets and “Confidential” Information

While technically not a privilege, parties often seek to protect “confidential” or trade secret information from disclosure. Other than in unique cases, a party’s objection to the production of such materials typically is overridden by the placement of an appropriate protective order. A protective order can limit disclosure of sensitive information to a discreet set of people and, under certain circumstances, may limit disclosure to “attorney eyes” only to avoid the risk of disclosure to an opposing party.

Courts also must consider the possibility of a nonparty lodging an objection to discovery that seeks confidential or trade secret information. Under such circumstances, a nonparty may have a better chance of protecting the information based on it being a “stranger” to the litigation. In International Truck & Engine Corp. v. Caterpillar, Inc., 351 Ill.App.3d 576, 814 N.E.2d 182, 286 Ill.Dec. 532 (2d Dist. 2004), the court considered whether a nonparty could protect confidential information. Relying on the factors set forth by the federal district court in Greater Rockford Energy & Technology Corp. v. Shell Oil Co., 138 F.R.D. 530 (C.D.Ill. 1991), the Caterpillar court stated:

[W]e adopt the following test to apply to the discoverability of the confidential information of a nonparty competitor of a party to an action. First, the party seeking the protective order denying discovery of confidential information related to a nonparty competitor must establish that the information is indeed confidential. The trial court should determine whether information is confidential by examining both the nature of the information and the steps taken by the nonparty competitor to keep the information confidential. The more sensitive the information and the more measures employed to protect the information, the higher the likelihood that the information is confidential.

If the requested information is shown to be confidential, the burden then shifts to the party seeking discovery to show that the relevance of and the need for the information being sought outweigh any harm caused by its disclosure. The harm to the nonparty competitor itself should always be considered. . . .

If the need and relevance outweigh the harm, then the information should be produced. If the harm outweighs the relevance and need, then discovery should be denied. We note that a trial judge has discretion to allow redaction of information to the point where the balance shifts in favor of discovery or where redaction has removed all confidential information. Furthermore, a court may consider a protective order limiting access to any disclosed information when determining whether harm will be suffered and to what extent it will be suffered. 814 N.E.2d at 186 – 187.

For more information about business law, see BUSINESS AND COMMERCIAL LITIGATION — 2019 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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