BALANCING TRADE SECRETS AND FULL DISCLOSURE

TOMMY JACKS DREW WRIGHT

Mithoff & Jacks, L.L.P. Austin, Texas

State Bar of Texas ELECTRONIC DISCOVERY AND DIGITAL EVIDENCE INSTITUTE

March 31, 2004 Dallas

CHAPTER 2

TOMMY JACKS Tommy Jacks lives in Austin, Texas, and is a partner in Mithoff & Jacks, L.L.P., which has offices in Austin and Houston. He was a 1971 honors graduate of the University of Texas School of Law, where he was Projects-Research Editor of the Texas Law Review and a member of the Order of the Coif, Chancellors, and Phi Delta Phi. He was admitted to practice before the Texas Supreme Court in 1971, and was subsequently admitted to the Bar of the United States Supreme Court and the Courts of the District of Columbia, and a number of United States District Courts and United States Courts of Appeals in Texas and elsewhere. He is certified by the Texas Board of Legal Specialization as a specialist in the fields of Civil Trial Law and Personal Injury Trial Law. Mr. Jacks has served as President of the Texas Trial Lawyers Association (1990-1991), President of the Capitol Area Trial Lawyers Association (1988-1990), and President of the Legal Aid Society of Central Texas (1982). He has served as a member of the Council of Presidents of the Association of Trial Lawyers of America. He is a Fellow of the American College of Trial Lawyers and the International Academy of Trial Lawyers, and a member of the American Board of Trial Advocates (ABOTA) and the International Society of Barristers. He is also a Fellow of the Texas Bar Foundation. He was named “Trial Lawyer of the Year” by the Texas Chapters of ABOTA in 1998. He is past recipient of the Texas Bar Foundation Journal Award (1983), and was named Outstanding Young Lawyer by the Austin Young Lawyers Association (1982). He is listed in "The Best Lawyers in America” (1994- ). He was named “Best of the Bar 2003" by the Austin Business Journal. Mr. Jacks has been appointed by the Texas Supreme Court to serve on its Rules Advisory Committee (1993- ) and its Task Forces on the Jury System and on Judicial Selection. He currently serves on the Texas Supreme Court Committee on the Civil Justice System. He has also served for the State Bar of Texas as both Chair and Vice-Chair of its Pattern Jury Charge Committee dealing with “Products Liability, Professional Negligence and Premises Liability” (1996-date). Additionally, he has served on both the Magistrate Selection Committee and the Local Rules Revision Committee for the United States District Courts for the Western District of Texas. Mr. Jacks was appointed by Governor Ann Richards as a member of the Texas Health Policy Task Force (1991-1993); he also served as a member of the Trauma Technical Advisory Committee, Texas Health Department and has served as a member of the Board of Directors and the Advisory Board of the Texas Head Injury Association. Mr. Jacks has authored several journal articles in publications such as the Texas Law Review, Texas Trial Lawyers Forum and Trial magazine, and is a frequent speaker at legal seminars.

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TABLE OF CONTENTS

I. THE MAIN WORD IS SECRET.................................................................................................................. 1

II. TRADE SECRETS CHECKLIST................................................................................................................. 1

III. WHAT IF TRADE SECRETS ARE STOLEN?............................................................................................. 2 A. An injunction ....................................................................................................................................... 2 B. A Civil Search Warrant......................................................................................................................... 2

IV. CONCLUSION........................................................................................................................................... 3 ATTACHMENT

“Protecting Secret Information in Open Courts,” by Timothy S. Durst and C. Lee Winkelman, Baker Botts LLP, from the State Bar of Texas Litigation in the High Tech Industry Course,March 4-5, 2004

Balancing Trade Secrets and Full Disclosure Chapter 2

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BALANCING TRADE SECRETS AND FULL DISCLOSURE: CATS AND DOGS Constitutional issues and Trade Secrets tend to fight it out in the courts like cats and dogs. And no wonder – they are often diametrically opposed. The First Amendment’s Freedom of Speech is generally about open access to information. Trade Secrets are by definition about very limited access to information. The Fourth Amendment’s prohibitions against search and seizure are generally about allowing citizens to maintain their privacy. Stolen by a disgruntled ex-employee or hacker, Trade Secrets may only be discovered by invading that person’s privacy. Timothy Durst and Lee Winkelman dealt well with Trade Secrets in court proceedings, and especially in litigation discovery. Their paper from this spring’s High Tech Litigation Course is attached. This paper will try to deal briefly with a few other issues dealing with trade secrets outside the courtroom – protecting those trade secrets, and then pre-trial remedies for theft of trade secrets. Dovetailing with these issues are the competing need to maintain secrecy and yet preserve Constitutional protections, the balance between trade secrets and full disclosure. I. THE MAIN WORD IS SECRET

Trade Secrets must remain secret to retain their value. Indeed property rights in Trade Secrets are “defined by the extent to which the owner of the secret protects his interest from disclosure to others.” Ruckelshaus v. Monsanto , 467 U.S. 986, 1002 (1984); see also: Keane v. Fox Television Stations, Inc., 297 F.Supp.2d 921, 939 (S.D.Tex. 2004); Lawfinders Associates, Inc. v. Legal Research Center, Inc., 65 F.Supp.2d 414, 419 (N.D.Tex. 1998); Sheets v. Yamaha Motors Corp., U.S.A., 849 F.2d 179, 184 (5th Cir. [La.] 1988).

In Lawfinders v. Legal Research Center, a legal research company sought to enjoin a competitor, in part for misappropriation of trade secrets. The court rejected Lawfinders’ trade secrets claims, holding that the three business practices claimed as trade secrets were all revealed to other non-confidential parties. 65 F.Supp.2d at 422-424.

In Keane v. Fox Television Stations, Inc. the plaintiff Keane claimed that his trade secret had been misappropriated and then used to create the hit television show “American Idol.” 297 F.Supp.2d 925-926. Unfortunately, Mr. Keane also failed to keep his trade idea secret, by “(1) mailing a "descriptive sales packet" to various production companies whose names and addresses he got out of a trade magazine, (2) advertising his idea on the Internet, and (3) discussing the idea with potential investors and family members

intermittently over the course of several years.” Id. at 939-940.

The Court held that when Mr. Keane sent the packet, gratuitously, to the production companies, he “extinguished any property right to a trade secret that he might have had” Id. at 940. The Court further held that Mr. Keane’s advertising the idea on the Internet, “entirely eviscerate[d] his ability to characterize that concept as a trade secret.” Id. at 941. II. TRADE SECRETS CHECKLIST

So what should Mr. Keane have done to preserve his Trade Secret? Obviously, as courts have held, he needed to keep it secret. The following checklist provides some guidance for people or companies trying to maintain a trade secret. Equally, if you are trying to prove someone’s idea is not a Trade Secret, then you can use the same checklist for what he or she did not do to maintain secrecy.

IF THE TRADE SECRET IS CONTAINED IN A PHYSICAL DOCUMENT • Are notices on the face of the document saying

such things as “confidential, do not distribute, do not copy?”

• Is distribution of the document limited to a discrete group people who have signed confidentiality, and/or non-compete agreements before viewing the document?

• Has that limited group of people received instruction, including written guidelines, about use and disclosure of the information in the document?

• Is the document kept in a secure area, with limited access not open to the public or to visitors, under lock and key?

• Is access to the secure area monitored, using sign-in/sign-out sheets, surveillance cameras, security personnel?

Of course physical documents are no longer the bulk of any companies trade secrets. Databases, email, and other electronic documents are the lifeblood of companies and individuals around the world. In addition to the checklist for physical documents, Electronic Document protection involves additiona l questions. IF AN ELECTRONIC DOCUMENT • Is the information only accessible by a limited

group of people – and not freely available on a computer, or on a company intranet?

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• Is the information accessible only to those who possess a secure password, or protected by other limitations on access by employees?

• Is the information encrypted, protected with secure firewalls, or otherwise protected from hackers and other outsiders?

• Are all electronic documents accessed only by a visible path, with electronic check-in, check-out procedures, so that access history is available if needed?

Even if your documents are locked up tighter than Fort Knox, you may still lose trade secrets when employees leave. The presumption that former employees possess confidential information from their job is strong in Texas. In a recent case, the El Paso court extended that presumption to disqualify a law firm for hiring as a consulting expert a former employee of the defendant. In re Bell Helicopter Textron, Inc., 87 S.W.3d 139 (Tex.App. – Fort Worth 2002, orig. proceeding).

The presumption that an employee leaves with trade secrets comes from somewhere. Anyone protecting trade secrets should be aware of it, and should employ the following checklist. WITH EMPLOYEES • Have all employees with access to company

confidential information signed confidentiality and non-compete agreements?

• Are there exit interviews for departing employees, documenting the return of any confidential information I their possession, and reminding them of their confidentiality and non-compete agreements? [For the requirements of enforceable non-compete agreements, see: Tex. Bus. & Com. Code Sec. 15.50 et seq. (Vernon’s 2002); see also: In re Halliburton Co,. 80 S.W.3d 566 (Tex. 2002)].

• Do exit interviews for departing employees include finding out where they are going, who they are working for, and what their duties will be?

But what if even your best-laid plans go awry? What if even with all of your protections, you suspect some current employee, former employee, hacker, industrial espionage agent, or simple thief has stolen your trade secrets? What then. III. WHAT IF TRADE SECRETS ARE STOLEN?

Again, the key component of trade secrets is secrecy. If you have information that your secrecy has been compromised then you may have a duty to take reasonable steps to retain the secrecy. And theses reasonable steps may require quick action. A long

drawn out lawsuit may not help at all. The quick, reasonable steps may include: an injunction, a civil search warrant, or other actions.

A. An injunction

Injunctions are a “proper remedy to protect confidential information and trade secrets.” Rugen v. Interactive Business Systems, Inc., 864 S.W.2d 548, 551 (Tex.App. – Dallas 1993, no writ); Tex.R.Civ.Pro 680, et. seq. (Setting out the Rules for injunctions). Injunctions are often used against ex-employees leaving a job, and being accused of taking trade secrets with them to the detriment of their former company. The employee in Rugen was accused of using trade secrets to solicit former customers. Id. at 550.

In another Texas case, former employees of a car customizing shop were enjoined from using that shop’s trade secrets. T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 20 (Tex.App.-Houston [1 Dist.] 1998, pet. dismd).

In a federal case, one company sought an injunction against another company with similar allegations as the employee cases – that the company was improperly using trade secrets. Lawfinders Legal Research Center, Inc., 65 F.Supp.2d 414, discussed supra. The Court here refused the injunction, holding that the trade secrets had already been disclosed to the public. 65 F.Supp.2d at 418.

Federal court injunctions, however are "an extraordinary and drastic remedy, not to be granted routinely, but only when the movant, by a clear showing, carries the burden of persuasion." White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir.1989). Another drastic remedy is a civil search warrant.

B. A Civil Search Warrant Obtaining a civil search warrant is an even more aggressive approach to be reserved only for the most blatant cases of trade secret theft, but this may be the most effective way to recover misappropriated trade secrets. A civil search warrant involves presenting solid proof that someone has taken information that undoubtedly deserves trade secret protection, The predicate for obtaining a civil search warrant is a rigorous one: presenting sufficient proof to establish probable cause for the issuance of a search warrant. When issued by a federal court, he warrant will order the U.S. Marshal’s office to accompany your designee to the sites where you expect to find the purloined (usually electronic) files containing the trade secrets. Your designee may well be a neutral computer expert. Simultaneous “raids” of the thief’s home, office, ISP provider, offsite bank of servers, or other likely repositories of the stolen information may well be advisable lest the evidence be destroyed before you can spring the trap.

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Courts have understandably curtailed the use of civil search warrants. The U.S. District Court for the Eastern District of California held that civil search warrants “are not exempted from the principles of the Fourth Amendment or the Federal Rules of Criminal Procedure.” In re Truck-A-Way, 300 B.R. 31, 36 (E.D.Cal. 2003).

There are no published case decisions squarely on point from Texas state or federal courts, but there are cases in other jurisdictions. Civil search warrants have been employed, for example, by: immigration officials -- Kotler Industries, Inc. v. I.N.S., 586 F.Supp. 72 (D.C.Ill. 1984); city inspectors -- Hassell v. City of Philadelphia, 507 F.Supp. 814 (D.C.Pa. 1981); sheriffs looking for chattels -- Iovinella v. Sheriff of Schenectady County, 67 A.D.2d 1037, 1038, 413 N.Y.S.2d 497, 499 (N.Y.A.D., 1979); and OSHA inspectors -- Matter of Restland Memorial Park, 540 F.2d 626 (C.A.Pa. 1976). IV. CONCLUSION

Trade secrets are being litigated with increasing frequency in the courts. In Texas alone, since the groundbreaking In re Continental Tire case in 1998, at least 6 mandamus petitions in Texas state and federal courts have been published. Kenneth Moran, Steven Jansma, “Discovery of Trade Secrets: How Courts Analyze Disclosure Issues,” Product Liability Law and Strategy (February 2004), at 7. Often at odds with the protection of trade secrets are the underpinnings of our court system favoring public access and full disclosure. Thus, it seems likely that our courts will continue to confront these issues as they seek to balance the competing interests of protecting trade secrets with careful regard for the policy favoring full public access to our courts.

ATTACHMENT: “Protecting Secret Information in Open Courts,” by Timothy S. Durst and C. Lee Winkelman, Baker Botts LLP,

from the State Bar of Texas Litigation in the High Tech Industry Course,

March 4-5, 2004

PROTECTING SECRET INFORMATION IN OPEN COURTS

TIMOTHY S. DURST C. LEE WINKELMAN

Baker Botts L.L.P. 2001 Ross Avenue, Suite 600

Dallas, Texas 75201

Reprinted from:

State Bar of Texas LITIGATION IN THE HIGH TECH INDUSTRY COURSE

March 4-5, 2004 San Antonio

CHAPTER 13

TIMOTHY S. DURST Baker Botts L.L.P.

2001 Ross Avenue, Suite 600 Dallas, Texas 75201

214-953-6816 FAX: 214-661-4816

tim.durst@bakerbotts.com

BIOGRAPHICAL INFORMATION

EDUCATION

J.D. (cum laude), Northwestern University School of Law B.A. (summa cum laude), Political Science and Communication Arts, Washburn University of

Topeka PROFESSIONAL AND COMMUNITY ACTIVITIES

Partner, Baker Botts L.L.P. Leukemia & Lymphoma Society

• President, Board of Trustees • Team-in-Training Anchorage Marathon (top fundraiser)

Northwestern University School of Law, Alumni Admission Interviewer Northway Christian Church, Deacon American Bar Association, Litigation and Intellectual Property Law Sections Dallas Bar Association, Litigation and Intellectual Property Law Sections

LAW RELATED PUBLICATIONS, ACADEMIC APPOINTMENTS AND HONORS

Infringement Letters, Declaratory Judgments and Vornado," Dallas-Fort Worth Intellectual Property Law Association, Dallas, May 2003

"Winning Negotiation Techniques: A Litigation Perspective," Annual In-House Symposium: Hot Topics and Cool Skills, American Corporate Counsel Association, Dallas, May 2002

"How to Keep Trade Secrets 'Secret' During Litigation," National Law Journal, December 2000 (Cheryl L. Mann, co-author)

"Behind Closed Doors: Closing the Courtroom in Trade Secrets Cases," Texas Intellectual Property Law Journal, Spring 2000 (Cheryl L. Mann, co-author)

"The Hearsay Rule and Its Exceptions: A Roadmap to the Admission of Evidence," University of Houston, Houston, August 1997

"Evidence Update," University of Houston, Houston, August 1996 Selected by D Magazine as one of the "Best Lawyers Under 40" in the Dallas/Fort Worth area, 2002

C. LEE WINKELMAN Baker Botts L.L.P.

2001 Ross Avenue, Suite 600 Dallas, Texas 75201

214-953-6698 FAX: 214-661-4698

lee.winkelman@bakerbotts.com

BIOGRAPHICAL INFORMATION

EDUCATION

J.D. (cum laude), Southern Methodist University, Dedman School of Law Order of the Coif Comment Editor, SMU Law Review Phi Delta Phi B.A. (with honors), Philosophy, The University of Texas at Austin

PROFESSIONAL AND COMMUNITY ACTIVITIES

Associate, Baker Botts L.L.P. American Bar Association, Labor and Employment Law Section Dallas Bar Association Dallas Association of Young Lawyers

LAW RELATED PUBLICATIONS, ACADEMIC APPOINTMENTS AND HONORS "Bibby v. Philadelphia Coca-Cola Bottling Co. and Same-Sex Sexual Harassment in the Workplace," 55 SMU L. Rev. 1825 (2002).

Protecting Secret In formation In Open Court Chapter 13

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TABLE OF CONTENTS

I. INTRODUCTION....................................................................................................................................... 1

II. TRADE SECRETS AND THE PRIMACY OF SECRECY............................................................................ 1 A. The Nature of Trade Secrets.................................................................................................................. 1 B. Losing Secrecy During Litigation .......................................................................................................... 2

1. Trade secret status not lost.............................................................................................................. 2 2. Trade secret status lost ................................................................................................................... 2 3. Guidance for the practicioner.......................................................................................................... 3

III. TRADITIONAL SAFEGUARDS DURING LITIGATION............................................................................ 3 A. Texas State Courts................................................................................................................................ 3

1. Protective orders............................................................................................................................ 4 2. Sealing orders................................................................................................................................ 4

B. Federal Courts...................................................................................................................................... 5 1. Protective orders............................................................................................................................ 5 2. Sealing orders................................................................................................................................ 5

C. Closing the Courtroom.......................................................................................................................... 6

IV. KEEPING TRADE SECRETS OUT OF THE PUBLIC EYE AT THE TRIAL................................................ 6 A. Texas and Federal Constitutions ............................................................................................................ 6 B. Federal Precedent ................................................................................................................................. 8 C. Applying Federal Precedent at the State Level........................................................................................ 9

V. CONCLUSION......................................................................................................................................... 10

APPENDIX A .................................................................................................................................................. 11

APPENDIX B................................................................................................................................................... 13

APPENDIX C................................................................................................................................................... 23

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TABLE OF AUTHORITIES CASES

American Derringer Corp. v. Bond, 924 S.W.2d 773 (Tex. App. - Waco 1996, no writ)...........................................1

Boeing Co. v. Sierracin Corp. , 738 P.2d 665, 4 U.S.P.Q.2d 1417 (Wash. 1987).......................................................2

Citizens First Nat'l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943 (7th Cir. 1999)................................... 5, 6

Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453 (Tex. 1994) ..................................................................1

Dallas Morning News v. Fifth Court of Appeals, 842 S.W.2d at 655 (Tex. 1992) ....................................................5

Decker v. Lindsay, 824 S.W.2d 247 (Tex. App. - Houston [1st Dis.] 1992, no writ).................................................7

Doe v. Stegal, 653 F.2d 180 (5th Cir. 1981) ..........................................................................................................2

Elcor Chem. Corp. v. United Specialty Advertising, 494 S.W.2d 204 (Tex. Civ. App.—Dallas 1973, writ ref'd n.r.e.)6

Eli Lilly & Co v. Marshall, 829 S.W.2d 157 (Tex. 1992) ................................................................................... 4, 5

Encyclopedia Brown Prods., Ltd. v. Home Box Office, Inc., 26 F. Supp. 2d 606 (S.D.N.Y. 1998) ........................ 5, 6

Federal Sign v. Texas S. Univ., 951 S.W.2d 401 (Tex. 1997) .................................................................................7

Garcia v. Peeples, 734 S.W.2d 343 (Tex. 1987) .....................................................................................................8

Gates Rubber Co. v. Bando Chem. Indus., Inc., 9 F.3d 823 (10th Cir. 1993) ....................................................... 2, 3

Glaxo Inc.v. Novopharm, 931 F. Supp. 1280 (E.D.N.C. 1996) ...............................................................................2

General Tire, Inc. v. Kepple , 970 S.W.2d 520 (Tex. 1998) .....................................................................................4

Glyn-Jones v. Bridgestone/Firestone, Inc., 857 S.W.2d 640 (Tex. App. - Dallas 1993).............................................7

Hoechst Diafoil Co. v. Nan Ya Plastic s Corp., 174 F.3d 411 (4th Cir. 1999) ...........................................................2

In re Continental Gen. Tire, Inc., 979 S.W.2d 609 (Tex. 1998) ...............................................................................4

In re Dallas Morning News, Inc., No. 05-99-01959-CV, 1999 WL 1081071 (Tex. App. - Dallas Dec. 2, 1999, no pet.)................................................................................................................................................................. 10

In re Iowa Freedom of Info. Council, 724 F.2d 660 (8th Cir. 1983)..................................................................... 8, 9

In re Kuntz, __ S.W.3d ___, No. 02-0375, 2003 WL 22999366 (Tex. Dec. 19, 2003) ..............................................3

In re Samsung Telecommunications of America, Inc., Nos. 05-99-01949-CV and 05-99-01969-CV, 1999 WL 1081387 (Tex. App. - Dallas Dec. 2, 1999, pet. denied) ................................................................................ 10

Littlejohn v. Bic Corp., 851 F.2d 673 (3d Cir. 1988) ..............................................................................................3

Moreno v. Sterling Drug, Inc., 787 S.W.2d 348 (Tex. 1990)...................................................................................7

M.R.S. Datascope Inc. v. Exchange Data Corp., Inc., 745 S.W.2d 542 (Tex. App.—Houston [1st Dist.] 1988,

no writ) .......................................................................................................................................................2

Nixon v. Warner Communications, Inc., 435 U.S. 589 (1978) ................................................................................2

Northwest Airlines Inc., 870 F. Supp. 1504 (D. Minn. 1994) ..................................................................................3

Procter & Gamble., 724 F.2d 658 (8th Cir. 1983) ..................................................................................................8

Publicker Indus., Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984) ................................................................................9

Religious Tech. Ctr. v. Netcom On-Line Servs., Inc., 923 F. Supp. 1231 (N.D. Cal. 1995) .......................................2

Richmond Newspapers, Inc. v. Virginia , 448 U.S. 555 (1980) ............................................................................ 2, 6

Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) .......................................................................................... 1, 7

S.E.C. v. Van Waeyenberghe, 990 F.2d 845 (5th Cir. 1993) ...................................................................................6

Sega Enters, Ltd v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993) ..........................................................................5

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Stamicarbon, N.V. v. Am. Cyanamid , 506 F.2d 532 (2d Cir. 1974).........................................................................6

Standard & Poor's Corp., Inc. v. Commodity Exch. Inc., 541 F. Supp. 1273 (S.D.N.Y. 1983)...................................6

State ex rel. Ampco Metal, Inc. v. O'Neill, 78 N.W.2d 921 (Wis. 1956) ..................................................................7

Taco Cabana Int'l, Inc. v. Two Pesos, 932 F.2d 1113 (5th Cir. 1991) ......................................................................2

Uniroyal Goodrich Tire Co. v. Hudson, 873 F. Supp. 1037 (E.D. Mich. 1994) ........................................................6

STATUTES

FED. R. CIV. P. 26(c)...........................................................................................................................................5

TEX. R. CIV. P. 76a ............................................................................................................................. 2, 5, 11, 23

TEX. R. CIV. P. 192.6...................................................................................................................................2, 3, 4

TEX. R. EVID. 507......................................................................................................................................2, 4, 10

ARTICLES

Aurthur R. Miller, Confidentiality, Protective Orders, and Public Access to the Courts, 105 HARV. L. REV.

427, 470 (1991) ...........................................................................................................................................8

James R. McKown, Taking Property: Constitutional Ramifications of Litigation Involving Trade Secrets, 13 REV. LITIG. 253, 254-55 (1994) ............................................................................................................................8

Jennifer S. Sickler & Michael F. Heim, The Impact of rule 76a: Trade Secrets Crash and Burn in Texas, 1 TEX. INTELL. PROP. L.J. 95, 96-97 (1995) .............................................................................................................5

Note, Trade Secrets in Discovery: From First Amendment Disclosure to Fifth Amendment Protection, 104 HARV. L. REV. 1330 (1991) .........................................................................................................................................8

MISCELLANEOUS

RESTATEMENT OF TORTS § 757 cmt. b (1939) .......................................................................................................1

TEX. CONST. art. I, § 13.......................................................................................................................................7

TEXAS RULES OF EVIDENCE HANDBOOK at 442 (3d ed. 1998).............................................................................. 10

U.S. CONST. amend. V ........................................................................................................................................7

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PROTECTING SECRET INFORMATION IN OPEN COURTS I. INTRODUCTION

Cases involving trade secrets and other confidential business information present the secret's owner with a unique dilemma. In Texas – at both the state and federal levels – there is a strong presumption in favor of public access to judicial proceedings and court documents. Yet, public access in trade secrets cases may result in disclosure of the secrets and possible destruction of the very property rights the lawsuit was brought to protect. Consequently, there is a tension between the litigant's need for secrecy and the public's right to an open judicial system. In many instances, courts try to strike a balance between these competing interests in the form of protective orders and sealing orders. And in some cases, the courts may even close the courtroom to the public during some parts of the trial.

This article will explore the tension between open courts and trade secret information at both the state and federal levels. It discusses the processes for preventing disclosure of trade secrets during litigation and methods to prevent this disclosure, such as protective orders, sealing orders, and court closures. Specifically, the article focuses on the apparent lack of reported precedent in Texas for excluding the public from at least parts of a civil trial to prevent trade secret disclosure, but ultimately concludes that there is sufficient federal case law and Texas public policy to persuade courts to limit public access.

II. TRADE SECRETS AND THE PRIMACY OF

SECRECY A. The Nature of Trade Secrets

A trade secret can consist of any formula, pattern, device, or compilation of information which is used in one's business, and which gives the owner an opportunity to obtain an advantage over competitors who do not know or use it. RESTATEMENT OF TORTS § 757 cmt. b (1939); Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1994). The subject matter of a trade secret must, as its name implies, be kept secret. But persons other than the owner may know of the secret. Confidential disclosures to employees or others pledged to secrecy, for example, will not destroy the information's status as a trade secret. Nevertheless, a substantial element of secrecy must exist. RESTATEMENT OF TORTS § 757 cmt. b (1939).1

1 See also RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 39 (1993) (defining a trade secret as any valuable information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to

A precise definition of a trade secret is not possible, though a non-exclusive list of factors is often considered in determining whether information is, in fact, a trade secret. These are:

1. The extent to which the information is known

outside the owner's business; 2. The extent to which the information is known

to the owner's employees and others involved in the owner's business;

3. The extent of measures taken by the owner to guard the secrecy of the information;

4. The value of the information to the owner and its competitors;

5. The amount of effort or money the owner expended in developing the information; and

6. The ease or difficulty with which the information could be properly acquired or duplicated by others.

RESTATEMENT OF TORTS § 757 cmt. b (1939); American Derringer Corp. v. Bond, 924 S.W.2d 773, 777 n.2 (Tex. App. – Waco 1996, no writ).

As the list demonstrates, the de facto secrecy of information and the owner's continued efforts to maintain secrecy are key ingredients of a trade secret. Thus, once secrecy is lost, the property interest may forever be destroyed. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1011(1984) ("once the data that constitute a trade secret are disclosed to others...the holder of the trade secret has lost his property interest in the data).

The Texas Supreme Court has recognized this primacy of secrecy, and the need to protect trade secrets from disclosure during litigation. In Dallas Morning News v. Fifth Court of Appeals, the Court considered a media challenge to an appellate court order that temporarily sealed trial exhibits containing trade secrets during the pendency of the trial. 842 S.W.2d 655, 659 (Tex. 1992). The Court rejected the media's free speech and press claims, and Justice Gonzales even remarked that, absent measures such as the appellate court's restrictions on public access to the trial exhibits, "little purpose would be served by suing based on a theft of trade secrets or invasion of privacy because the litigation itself would guarantee that both interests would be destroyed. Id. at 660.

Litigation, especially trials, can result in the destruction of trade secrets because, in Texas, court records and judicial proceedings are presumptively open to the public. See id. at 657 ("The press and the public have a right to be present at all proceedings in the trial of the underlying case, and to report all that afford an actual or potential economic advantage over others).

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they observe."); TEX. R. CIV. P. 76a (1) ("court records, as defined in this rule, are presumed to be open to the general public "). Federal courts also recognize a presumption in favor of public access. See, e.g., Richmond Newspapers, Inc. v. Virginia , 448 U.S. 555, 580 n.17 (1980); Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978); Doe v. Stegal, 653 F.2d 180, 185 (5th Cir. 1981). But the inherent tension between the need to preserve secrecy in trade secrets litigation and the presumption of public access to judicial proceedings is not necessarily irreconcilable. There are trade secrets exceptions to the presumption of openness. At the federal level, they are embodied in Federal Rule of Civil Procedure 26(c)(7) and, in Texas, embedded in Texas Rule of Evidence 507, Texas Rule of Civil Procedure 192.6 and parts of Texas Rule of Civil Procedure 76a. To minimize the risk of disclosing trade secrets or fueling an argument that the secrets somehow have been waived, trade secrets owners should invoke the protections afforded by this body of law.

B. Losing Secrecy During Litigation

Although there is a paucity of case law on this topic from state courts in Texas, several reported decisions outside of Texas have addressed the claim that trade secrets are destroyed or waived by disclosure during litigation. 2 The results in these cases seem to turn on the measures the owners took to protect the trade secret. Thus, the prevailing view is that trade secrets are not automatically destroyed by disclosure during litigation as long as the owner took reasonable measures to maintain the secrecy of the information. While the following are by no means an exclusive list of the cases confronting this issue, they exemplify the analysis that most courts engage in when asked to decide whether public disclosure during litigation destroys trade secret status.

1. Trade secret status not lost

Trade secret status may not be lost even when documents containing those secrets are filed unsealed. In Hoechst Diafoil Co. v. Nan Ya Plastics Corp., the defendant filed a motion for summary judgment, arguing that the plaintiff's trade secret misappropriation claim should fail because a twenty-eight page

2 Only one reported Texas case confronts the issue, albeit rather tangentially. In M.R.S. Datascope Inc. v. Exchange Data Corp., Inc., the Houston Court of Appeals (1st Dist.) summarily held that a customer list filed with the court in the course of litigation became public information and could not be enforced as a trade secret. 745 S.W.2d 542, 546 (Tex. App.—Houston [1st Dist.] 1988, no writ). While it is not clear from the opinion, the trade secret owner apparently did not file the list under seal or take any other steps to protect the list.

description of the technology at issue had been found in an unsealed court file in previous litigation. 174 F.3d 411 (4th Cir. 1999) . The Fourth Circuit Court of Appeals rejected that argument, finding that the plaintiff had taken reasonable measures to preserve the secrecy of its information in the other litigation. Such measures included obtaining a protective order in the earlier case requiring all documents relating to the technology to be filed under seal. Although the twenty-eight page description inadvertently was filed unsealed, the court held that the mere presence of that document in the open court record did not automatically destroy its secrecy. The court did caution that secrecy might have been ruined if there was evidence of other publication Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d 411, 418-19 (4th Cir. 1999).3

Similarly, trade secret status is not necessarily destroyed by disclosures during the pending litigation. In Gates Rubber Co. v. Bando Chem. Indus., Ltd. , the defendant claimed on appeal that the secrecy of certain mathematical constants used with the plaintiff's computer program was destroyed because the constants were disclosed during an injunction hearing in the district court. 9 F.3d 823, 28 (10th Cir. 1993). The Tenth Circuit Court of Appeals held that secrecy was not lost as a result of that disclosure because the plaintiff took reasonable safeguards, such as monitoring the presence of observers in the courtroom and filing a post-hearing request to place the injunction hearing record under seal. Id. at 849.

2. Trade secret status lost

The potential consequence of failing to protect trade secrets is illustrated by Glaxo Inc.v. Novopharm. Glaxo sued Novopharm for trade secret misappropriation alleging that Novopharm had misappropriated Glaxo's method for producing ranitidine hydrochloride. 931 F. Supp. 1280 (E.D.N.C. 1996). Novopharm moved for summary judgment arguing that the method was not entitled to trade secret protection because Glaxo had disclosed it at prior 3 See also Religious Tech. Ctr. v. Netcom On-Line Servs., Inc., 923 F. Supp. 1231, 1255 (N.D. Cal. 1995) (finding that absent evidence of publication, plaintiff did not forfeit trade secret status of works that were temporarily left unsealed in a court record in another litigation); Boeing Co. v. Sierracin Corp., 738 P.2d 665, 4 U.S.P.Q.2d 1417, 1422 (Wash. 1987) (finding that trade secret did not lose trade secret status after it was submitted in exhibits at misappropriation trial because exhibits were subject to protective order). Aside from disclosure during litigation, other courts have held that filing trade secrets in public records does not vitiate trade secret status. See e.g., Taco Cabana Int'l, Inc. v. Two Pesos, 932 F.2d 1113, 1124 (5th Cir. 1991) (filing of architectural plans with a city did not eviscerate Taco Cabana's proprietary rights in the plans).

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litigation in trial transcripts and trial exhibits without taking steps to seal the record. The trial court agreed, and granted Novopharm's motion. The court specifically pointed to the fact that, at the previous trial, Glaxo admitted 135 of its own documents, which it claimed contained trade secrets, without seal. Id. at 301. The court stated, "it is a 'well-established principle of American jurisprudence that the release of information in open trial is a publication of that information and, if no effort is made to limit its disclosure, operates as a waiver of any rights a party had to restrict its further use.'" Id. at 1301 (citing Nat'l Polymer Prods. v. Borg-Warner Corp., 641 F.2d 418, 421 (6th Cir. 1981)). Consequently, Glaxo's failure to take reasonable efforts to protect its trade secrets resulted in their destruction.

Failing to take steps to protect confidential information also proved determinative in Littlejohn v. Bic Corp., 851 F.2d 673, 685 (3d Cir. 1988). Cynthia Littlejohn filed a products liability claim against Bic Corporation. The court entered a protective order during discovery designed to protect Bic's trade secrets and other confidential information from public disclosure. Under the terms of the protective order, Bic's confidential materials were to be made available only to the court and counsel, and the materials were to be maintained under seal. Id. at 676. At the liability phase of the products trial, however, Littlejohn introduced exhibits covered by the protective order. Bic did not object to the admission of the exhibits or otherwise raise the issue of confidentiality at trial. Id. The parties settled the case before the damage phase of the trial. Bic made a post-settlement attempt to seal the trial record, but the district court refused Bic's belated request. Id.

Some time after the lawsuit was resolved, a newspaper sought access to the confidential exhibits admitted at trial. Bic resisted, but the Third Circuit Court of Appeals held that the public gained a right of access to the exhibits once they were admitted in evidence. Bic argued, based on the promise of confidentiality in the court's protective order, that the public did not gain access to its confidential materials. The Third Circuit, however, found that Bic waived its rights under the protective order by failing to raise the issue of confidentiality at trial Littlejohn v. Bic. Corp., 851 F.2d 673, 680 (3d Cir. 1998). Although the information in Littlejohn did not rise to the level of a trade secret, at least one court has invoked its rationale in the trade secret context. See Gates Rubber Co. v. Bando Chem. Indus., Inc., 9 F.3d 823, 849 (10th Cir. 1993). But see Northwest Airlines Inc., 870 F. Supp. 1504, 1511 (D. Minn. 1994) (distinguishing Littlejohn on the basis that the relevant documents did not contain trade secrets).

3. Guidance for the practicioner The cases cited in this section teach that a trade

secret owner significantly lessens the chances of having its intangible property rights destroyed by requesting the court to protect its trade secrets throughout the course of litigation.4 Counsel for trade secret owners should consider some or all of the following mechanisms:

• Request that the court seal discovery,

exhibits, and transcripts that may contain trade secret information, and object to the admission of any confidential information without seal;

• Obtain protective orders to cover documents produced during discovery;

• At trial, request that the courtroom be closed during those portions where trade secrets will be revealed in open court;

• If the courtroom is not closed, request that those in attendance sign confidentiality agreements, and otherwise monitor the presence of observers in the courtroom.

III. TRADITIONAL SAFEGUARDS DURING

LITIGATION As discussed above, procedural safeguards may

assure that trade secrets are protected during litigation. These safeguards include protective orders entered by courts during the discovery phase of litigation. In addition, Texas Rule of Civil Procedure 76a sets forth the substantive and procedural requirements for sealing records from the public eye. Yet, the protection afforded by these safeguards ends when a lawsuit requires that trade secrets be discussed or displayed in open court. In this situation, counsel may want to conduct some proceedings behind closed doors.

A. Texas State Courts

At the state level, trade secret owners have traditionally utilized protective orders under Texas Rule of Civil Procedure 192.6 and sealing orders under Texas Rule of Civil Procedure 76a to prevent public

4 Indeed, several Justices on the Texas Supreme Court recently reiterated this "reasonable measures" principle in In re Kuntz, __ S.W.3d ___, No. 02-0375, 2003 WL 22999366 (Tex. Dec. 19, 2003). In a concurring opinion, Justices Hecht, Owen, Schneider, and Wainwright held that trade secret status was retained even though the information was shared with competitors and employees and was inadvertently transferred to a third party. Despite these facts, the justices found that despite these facts trade secret status was not lost because the owner took reasonable measures to protect secrets, including requiring all those who were privy to the information to sign confidentiality or non-compete agreements.

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disclosure of their trade secrets. Protective orders are generally sufficient to protect trade secrets during discovery. But once trade secret information gets to the court house, a Rule 76a sealing order is required to prevent the secret from becoming public information.

1. Protective orders

Texas Rule of Civil Procedure 192.6 and Texas Rule of Evidence 507 authorize Texas trial courts to issue protective orders specifically designed to protect trade secrets See, e.g., General Tire, Inc. v. Kepple , 970 S.W.2d 520, 523 (Tex. 1998) (stating that Rule 166b(5), the precursor to Rule 192.6, allows courts "to issue protective orders to protect trade secrets contained in discovery"). Texas Rule of Evidence 507, which sets forth the Texas trade secret privilege, provides:

A person has a privilege . . . to refuse to disclose and to prevent other persons from disclosing a trade secret owned by a person, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice. When disclosure is directed, the judge shall take such protective measure as the interests of the holder of the privilege and of the parties and the furtherance of justice may require

TEX. R. EVID. 507 (emphasis added).

The trade secret privilege seeks to accommodate two competing interests In re Continental Gen. Tire, Inc., 979 S.W.2d 609, 612 (Tex. 1998). First, the privilege recognizes that trade secrets are an important property interest worthy of protection. Id. Second, the privilege recognizes the importance of fair adjudication of lawsuits by providing a means to elicit facts necessary for the full presentation of a case. Id.

If trade secrets must be disclosed to adjudicate a dispute fairly, the trial court should require disclosure subject to an appropriate protective order. Id. Protective orders may limit those who can review material containing trade secrets and restrict the use of such information to purposes solely related to the underlying lawsuit. For example, a protective order can provide that only counsel, the parties, and their respective experts may review the trade secret information revealed during discovery. See, e.g., id. at 613 n.3 (stating with apparent approval that the trial court issued a protective order that limited access to the trade secret data to "the parties in this lawsuit, their lawyers, consultants, investigators, experts and other necessary persons employed by counsel to assist in the preparation and trial of this case"). Protective orders may condition access to trade secrets upon a person's written agreement to keep the information confidential.

See, e.g., In re Continental Gen. Tire, Inc., 979 S.W.2d at 613 n.3. Such orders also can govern how documents containing trade secrets are to be maintained and disposed of at the conclusion of the litigation. Id.

In many cases in which documents evidencing trade secrets are discoverable, protective orders might be a sufficient means to preserve secrecy during the entire litigation process. But in other cases, especially those in which the subject matter of the trade secrets is central to the controversy, protective orders may not be enough. The critical factor in every case is whether a discovery product constitutes a court record for purposes of Texas Rule of Civil Procedure 76a. If so, then the trial court must follow the stricter standards of Rule 76a to shield the information from the public. Consequently, any time a discovery product qualifies as a court record, a traditional protective order is probably only a starting point when it comes to protecting trade secrets from public disclosure – a sealing order may be necessary. General Tire, Inc.v Kepple, 970 S.W.2d 520, 523 (Tex. 1998) ("To the extent that discovery . . . is a "court record" under Rule 76a, the court must follow the stricter standards of that rule to limit its dissemination.") (citing Eli Lilly and Co. v. Marshall, 829 S.W.2d 157, 158 (Tex. 1992)). See also TEX. R. CIV. P. 192.6(b)(5) (providing that the court may order that "the results of discovery be sealed or otherwise protected, subject to the provisions of Rule 76a.").

2. Sealing orders The next step in protecting trade secrets is to obtain appropriate sealing orders under Texas Rule of Civil Procedure 76a. Rule 76a provides that court records are presumptively open to the public and defines the phrase "court records" as:

(a) all documents of any nature filed in connection with any matter before any civil court, except:

(1) documents filed with a court in camera,

solely for the purpose of obtaining a ruling on the discoverability of such documents;

(2) documents in court files to which access is otherwise restricted by law;

(3) documents filed in an action originally arising under the Family Code.

* * * (c) discovery, not filed of record, concerning

matters that have a probable adverse effect upon the general public health or safety, or the administration of public office, or the

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operation of government, except discovery in cases originally brought to preserve bona fide trade secrets or other intangible property rights.

TEX. R. CIV. P. 76a (emphasis added). Under the terms of Rule 76a, documents filed in the record of a civil case constitute court records, even if they contain trade secrets. These include documents filed in connection with substantive motions and exhibits admitted into evidence, or even proffered, at trial. See TEX. R. CIV. P. 75a ("The court reporter . . . shall file with the clerk of court all exhibits which were admitted in evidence or tendered on bill of exception during the course of any hearing, proceeding, or trial."). See also Dallas Morning News, 842 S.W.2d at 659 ("exhibits introduced into evidence are . . . court records"). Some unfiled discovery also could constitute court records, namely discovery "concerning matters that have a probable adverse effect upon the general health or safety." TEX. R. CIV. P. 76a(2)(c). Rule 76a(2)(c) does contain a trade secrets exception for unfiled discovery in cases "originally initiated to preserve bona fide trade secrets or other intangible property rights," but the Texas Supreme Court has yet to define the parameters of that exception. See Jennifer S. Sickler & Michael F. Heim, The Impact of rule 76a: Trade Secrets Crash and Burn in Texas, 1 TEX. INTELL. PROP. L.J. 95, 96-97 (1995) (criticizing the trade secret exception in Rule 76a(2)(c) for its lack of clarity). To the extent documents constitute court records under Rule 76a, they cannot be sealed by a protective order unless the requirements of Rule 76a have been satisfied. Thus, in order to have a court record sealed, a trade secret owner must show all the following:

(a) a specific, serious and substantial interest which clearly outweighs:

(1) [the] presumption of openness; (2) any probable adverse effect that sealing

will have upon the general public health or safety;

(b) no less restrictive means than sealing records

will adequately and effectively protect the specific interest asserted.

TEX. R. CIV. P. 76a(1) Fortunately for trade secrets owners, a trade secret can constitute "a specific, serious and substantial interest" justifying restrictions on public access See Eli Lilly & Co v. Marshall, 829 S.W.2d 157, 158 (Tex. 1992) ("Regardless of the cause of action, a properly proven trade secret is an interest that should be

considered in making the determination required by Rule 76a.") In Texas, a Rule 76a sealing order may restrict public access to court records. A trade secrets owner who relies on a protective order that does not meet the requirements of Rule 76a could find itself lacking full protection from public disclosure, at least as it relates to "court documents." A trade secret owner also would also be well advised to resolve sealing and court closure issues with the defendant early on when the litigation is less contentious. Some defendants may oppose sealing and closure, attempting to use the open nature of the courts and the expense to close them to its tactical or substantive advantage. Thus, it may be good practice to attempt to obtain agreement early on in the protective order that neither side will oppose sealing or closure. See Tips for Drafting State and Federal Protective Orders, attached as Appendix A. B. Federal Courts 1. Protective orders

Federal Rule of Civil Procedure 26(c)(7) authorizes Federal trial courts to issue protective orders "that a trade secret or other confidential research development, or commercial information not be revealed or be revealed only in a designated way." FED. R. CIV. P. 26(c)(7). Like a state order, a federal protective order may limit those who can review material containing the trade secrets at issue, as well as restrict the use of the information to purposes solely related to the underlying lawsuit. Sega Enters, Ltd v. Accolade, Inc., 977 F.2d 1510, 1532 (9th Cir. 1993). In short, a federal protective order will provide the same protections to trade secrets as the state protective orders discussed above. 2. Sealing orders Obtaining sealing orders in federal court is somewhat different than in Texas state court. There is no federal analog to Texas Rule of Civil Procedure 76a. But for the most part, the parties can dispose of the issue in their Rule 26(c) protective order. That is, the litigants may obtain a protective order allowing either party to file discovery documents that contain trade secrets under seal and preemptively seal confidential materials that will be introduced at trial. See Citizens First Nat'l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 946 (7th Cir. 1999). In addition, if the subject is not dealt with in the protective order, the parties may move under Rule 26(c) – during or after trial – to have trial exhibits and transcripts placed under seal as well. Encyclopedia Brown Prods., Ltd. v. Home Box Office, Inc., 26 F. Supp. 2d 606, 611 (S.D.N.Y. 1998). A federal court has fairly wide latitude in ordering court documents placed under seal. But some cases suggest that sealing all documents designated by the

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parties as containing or constituting trade secrets may be too broad. Citizens First Nat'l Bank, 178 F.3d at 946. There is a strong presumption in favor of public access to federal court records; consequently, before sealing court records the trial court has a duty to independently determine whether (1) the information sought to be sealed does in fact contain trade secrets; (2) the harm to the proponent's competitive position from disclosure would outweigh the interest in public access, and (3) there is no less restrictive means to protect the interest of the trade secret owner. Encyclopedia Brown Prods., Ltd., 26 F. Supp. 2d at 611; S.E.C. v. Van Waeyenberghe, 990 F.2d 845, 848-49 (5th Cir. 1993). This standard is virtually identical to Rule 76a; and like Texas state courts most federal courts considering the issue have held that potential damage from release of trade secrets is a legitimate basis for sealing documents. See, e.g., Richmond Newspapers, Inc. v. Virginia , 448 U.S. 555, 600 (1980). See also Encyclopedia Brown Prods., Ltd., 26 F. Supp. 2d at 611; Standard & Poor's Corp., Inc. v. Commodity Exch. Inc., 541 F. Supp. 1273, 1276-78 (S.D.N.Y. 1983); Stamicarbon, N.V. v. Am. Cyanamid, 506 F.2d 532, 539-41 (2d Cir. 1974). As in state court, protective orders sealing documents must meet the standard laid out above, and trade secret owners should not rely on those that do not. Citizens First Nat'l Bank, 178 F.3d at 947. C. Closing the Courtroom

Even if protective orders and sealing orders are entered in a particular case, trade secret owners may wish to go further in preventing public disclosure of trade secrets. The protections afforded by protective and sealing orders potentially leave – for lack of a better term – a "gap." The gap occurs when oral testimony concerning trade secrets takes place during a trial or hearing, and when trade secrets are publicly revealed in demonstratives and graphics in open court. Traditional protective orders do not cover the disclosure of trade secrets during a hearing or trial; sealing orders generally do not apply to live testimony or visual presentations in open court. Orders that restrict public access to the courtroom in these scenarios may fill the gap.5

5 There also may be another problem. In some instances, a trade secret misappropriation claim requires a showing by the owner that the defendant acquired the trade secret by "improper means." Elcor Chem. Corp. v. United Specialty Advertising, 494 S.W.2d 204, 211 (Tex. Civ. App.—Dallas 1973, writ ref'd n.r.e.). What is not clear is whether one who obtains trade secret information at a public trial obtains it by "improper means." Thus, even though the trade secret might not be destroyed by disclosure, the owner may face some difficulty enforcing its property interest against those who obtained the secret at the open trial.

Although there seems to be no Texas case on point, the practitioner should not be deterred from considering restrictions on public access to civil trials. Indeed, litigants may want to request that the courtroom be closed to the public when it is appropriate. And courts should grant such requests when circumstances involve the revelation of trade secrets in an otherwise presumptively open courtroom. IV. KEEPING TRADE SECRETS OUT OF THE

PUBLIC EYE AT THE TRIAL Just as the United States Supreme Court has

recognized that the public right of access to judicial records can be restricted to protect a litigant's competitive posture, the Court also has recognized that the public's right to attend trials can be restricted to preserve trade secrets. See Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 600 n.5 (1980) ("The preservation of trade secrets, for example, might justify the exclusion of the public from at least some segments of a civil trial.") (Stewart, J., concurring). Both the Texas and Federal Constitutions may entitle trade secret owners to court orders closing courtrooms. In addition, there is federal precedent for court closure, as lower federal courts have closed courtrooms for the purpose of preventing the disclosure of trade secrets, while others have posited closure as a viable option. See, e.g., Encyclopedia Brown Prods., Ltd. v. Home Box Office, Inc., 26 F. Supp. 2d 606, 612 (S.D.N.Y. 1998) ("Potential damage from release of trade secrets is a legitimate basis for sealing documents and restricting public access during trial."); Uniroyal Goodrich Tire Co. v. Hudson, 873 F. Supp. 1037, 1040 (E.D. Mich. 1994) (granting plaintiff's request to close the courtroom during a trade secret misappropriation trial), aff'd, 97 F.3d 1452 (6th Cir. 1992) (table). Only a few courts have enunciated guidelines for passing on closure requests, but courts that have established guidelines have done so within a framework easily adaptable in Texas. A. Texas and Federal Constitutions Trade secrets owners may be entitled to court orders closing courtrooms at both the state and federal levels under both the Texas and federal constitutions. The Texas Constitution guarantees trade secrets owners, like other litigants, a forum in which to seek redress for injury to property. The constitutional guarantee for such redress is called the Open Courts provision, and, though it may seem ironic, that provision should result in a "closed" courtroom during at least parts of some trade secrets trials. The Open Courts provision, which is found in Section 13 of the Texas Bill of Rights, provides in part:

All courts shall be open, and every person for an injury done him, in his lands, goods,

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person or reputation, shall have remedy by due course of law

TEX. CONST. art. I, § 13. The Open Courts guarantee is a facet of due process and prohibits unreasonable denials of the right to redress. See Glyn-Jones v. Bridgestone/Firestone, Inc., 857 S.W.2d 640, 643 (Tex. App. – Dallas 1993), aff'd , 878 S.W.2d 132 (Tex. 1994). The provision is founded on the belief that the legislature lacks power "to make a remedy by due course of law contingent upon an impossible condition." Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 355 (Tex. 1990). To establish an Open Courts violation, a party needs to show that a common law cause of action is being restricted and that the restriction is unreasonable when balanced against the purpose of the statute. Id. To date, the Texas Supreme Court seems to have limited the Open Courts provision to legislative enactments, see, e.g., Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 410 (Tex. 1997), but the judiciary should have no more power than the legislature to restrict unreasonably a party's right to seek redress in Texas courts. Indeed, at least one Texas court has upheld an Open Courts challenge to judicial action. See Decker v. Lindsay, 824 S.W.2d 247 (Tex. App. - Houston [1st Dis.] 1992, no writ) (orig. proceeding). Conditioning a party's ability to protect trade secrets upon its willingness to disclose and therefore destroy the very property interest the party seeks to enforce should be beyond judicial power. Such an impossible condition could even eliminate an entire class of claims. See, e.g., Glyn-Jones, 857 S.W.2d at 643-44 (statute prohibiting the introduction of seat belt evidence violated Open Courts provision because it effectively eliminated an entire class of products liability claims). An example of the Open Courts analysis can be found in State ex rel. Ampco Metal, Inc. v. O'Neill, 78 N.W.2d 921 (Wis. 1956). In that case, the plaintiff sought an injunction to prevent the defendant from using the plaintiff's trade secrets. The Wisconsin Supreme Court ordered the trial judge to take testimony concerning the trade secrets in camera and to seal the record of the hearing. The Ampco Metal court began its opinion by acknowledging that, if the plaintiff had to give evidence in public regarding the nature of its trade secrets, the public disclosure would destroy the value of the very trade secrets sought to be protected. Id. at 923. Relying in part on a Wisconsin constitutional provision similar to the Texas Open Courts guarantee,6 the Ampco Metal court held that "unless the testimony as to plaintiff's claimed trade

6 The Wisconsin provision stated that "Every person is entitled to a certain remedy in the laws for all injuries, or wrongs, which he may receive in his person, property, or character." Id. at 927 (quoting WIS. CONST . art. I, § 9).

secrets be taken in camera, [plaintiff] will be denied any effective remedy for the wrong it has sustained, assuming the truth of the allegations of its complaint." Id. at 927. The same or at least a similar analysis under the Texas Open Courts provision should lead courts in Texas to restrict public attendance and close the courtroom when trade secrets are to be revealed in court. Indeed, the Honorable David W. Evans of the 193rd Judicial District Court in Dallas County employed an Open Courts analysis in a series of temporary sealing orders and a final sealing order in a case styled Alcatel USA, Inc., et al. v. Samsung Electronics Co., Ltd., et al. In this trade secret misappropriation lawsuit, the trade secrets owners requested restrictions on public access to the trade secrets portions of the trial. Judge Evans found that:

the State's interest in its open courts provision of its Constitution to provide alleged trade secrets owners a forum in which to enforce their rights, and the imminent and irreparable harm to the property right in the alleged trade secrets by the disclosure of the secrets in an open courtroom which would destroy the secrecy of the trade secret . . . outweigh the public's interest in an open courtroom during the limited duration of testimony about the exhibits that reveal the trade secrets or the explicit subject matter of the trade secrets[.]

Alcatel USA, Inc., et al. v. Samsung Electronics Co., Ltd., et al., Cause No. 96-08262-L (193rd Jud. Dist. Ct., Dallas County, Texas) Agreed Order Sealing Court Records Pursuant to Rule 76a at ¶10(h) (Jan. 21, 2000), attached as Appendix B. In addition to the Texas Open Courts guarantee, trade secrets owners seeking to protect their secrets during litigation may have claims under the federal Takings Clause, which prohibits the taking of pr ivate property for public use without just compensation. U.S. CONST. amend. V. In Ruckelshaus v. Monsanto Co., the United States Supreme Court held that trade secrets are property deserving protection under the Takings Clause. 467 U.S. 986, 1003-04 (1984). Ruckelshaus involved a complaint that certain environmental statutes were unconstitutional because they required the owner to divulge trade secret information on applications filed with the Environmental Protection Agency, which then could disclose portions of the data to the public. While Ruckelshaus did not involve a court's refusal to order appropriate protective measures during litigation, commentators have argued that the Supreme Court's recognition of trade secrets as property for purposes of

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the Takings Clause lays the foundation for litigants to urge takings claims in response to such judicial refusal. See, e.g., James R. McKown, Taking Property: Constitutional Ramifications of Litigation Involving Trade Secrets, 13 REV. LITIG. 253, 254-55 (1994) ("If a court ruling results in the public disclosure, and therefore the destruction, of a trade secret, a compensable taking of property may have occurred."); Note, Trade Secrets in Discovery: From First Amendment Disclosure to Fifth Amendment Protection, 104 HARV. L. REV. 1330 (1991). The Texas Supreme Court, however, has not interpreted Ruckelshaus as favorably to trade secrets owners as the owners might like. In Garcia v. Peeples, the Court rejected a claim that ordering shared discovery, some of which contained trade secrets, amounted to an unconstitutional deprivation of property. 734 S.W.2d 343, 348 n.4 (Tex. 1987). In this products liability case, the Court stated in a footnote that sharing discovery with other plaintiffs asserting similar claims against the same manufacturer would not give the competitors of the trade secrets owner a "free ride." Id. Nevertheless, the Court advised the trial judge that he could require those who wished to share the discovery "to certify that they will not release it to competitors or others who would exploit it for their own economic gain." Id. at 348. More than ten years later, in Keppple , the Court seized upon the footnote in Peeples and without elaboration held that, although trade secrets are property under Texas law, they are not property for purposes of the Takings Clause. 917 S.W.2d at 454 (citing Garcia v. Peeples, 734 S.W.2d 343, 348 n.4 (Tex. 1987)). Despite Texas' seeming disapproval of the takings analysis, a takings claim should at least be successful in federal court. And regardless of whether a future takings claim would be successful in Texas courts, litigants undoubtedly are still entitled to preserve their trade secret property rights throughout the course of litigation. Indeed, a business entity seeking to prevent the misuse of its trade secrets through the often last-ditch method of litigation may have as its only hope of protecting the intangible property "the court's willingness to exert its full authority to prevent further dissemination of the information." Authur R. Miller, Confidentiality, Protective Orders, and Public Access to the Courts, 105 HARV. L. REV. 427, 470 (1991). Constitutional guarantees, especially the Texas Open Courts provision, at least should strengthen the Texas judiciary's resolve to close courtrooms during portions of a trade secret trial. B. Federal Precedent

Two federal decisions merit special attention by trade secret owners faced with the need to close the courtroom during a trade secret trial. Both In re Iowa Freedom of Info. Council and Publicker Indus., Inc. v.

Cohen attempt to flesh out standards to guide lower courts, though both cases recognized the need to decide such requests based upon case-specific facts. The facts in Iowa Freedom of Info. Council begin with an attorney named Riley, who represented Michael Kehm in a wrongful death lawsuit against Procter & Gamble. 724 F.2d 658, 660 (8th Cir. 1983). During discovery, Riley signed a non-disclosure agreement covering the confidential information P&G produced in the case. The district court entered a protective order based on the parties' agreement. Despite the non-disclosure agreement and protective order, Riley sold several confidential documents to lawyers prosecuting similar cases against P&G. Id. P&G filed a contempt action against Riley. During the contempt hearing, P&G requested the judge to close the courtroom to the public because part of the testimony would reveal trade secrets. A media attorney protested and asked the district court to make an initial determination of the existence of trade secrets. The judge denied the media's request, closed the courtroom and ordered that the transcript be sealed. Id. Representatives of the Iowa press later filed a petition for mandamus seeking to compel the district court to unseal the hearing transcript. The Eighth Circuit Court of Appeals denied the petition, finding that the district court had not abused its discretion, but also indicating how courts should rule on motions to close the courtroom in the future. The petitioners first argued that the district court erred by refusing to consider the media's objections prior to closing the courtroom. Id. at 660-61. While the Eighth Circuit agreed that the judge was "too precipitate" in closing the hearing without permitting the press to air its grievances, the court held that the error was harmless on the facts of this case. Id. at 661. According to the court, "trade secrets were in fact involved, and . . . substantial damage to P&G's property rights in these secrets would have occurred had the hearing not been closed." Id. Moreover, the court found that "no reasonable alternative existed to closure, sufficient to protect these property rights." Id. The Eighth Circuit also rejected the petitioner's second argument: that the district court erred in closing the courtroom without first determining whether trade secrets were actually involved. The court reasoned that the normal requirement of prior findings justifying closure cannot be applied literally in the trade secrets context:

Trade secrets are a peculiar kind of property. Their only value consists in their being kept private. If they are disclosed or revealed, they are destroyed. Therefore, it makes no sense to say that a determination whether trade secrets are involved should be made in open court, with the hearing to be later closed

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only if the determination is that they are involved. For in order to make this very determination, the Court must consider the information that one of the parties claims constitutes a trade secret, and the damage to that party that may occur if the claimed secrets are revealed. We do not see, as a practical matter, how this kind of decision can be made without at least some limited initial in camera consideration.

In re Iowa Freedom of Info. Council, 724 F.2d 660, 662 (8th Cir. 1983). Under Iowa Freedom of Info. Council, once a court determines that trade secrets are involved, two findings are paramount to justify closing the courtroom. First is that the trade secret owner's property rights would be damaged if the courtroom remains open. Id. at 661. Second is that there is no reasonable alternative to closure sufficient to protect those property rights. Id. The Third Circuit's opinion in Publicker Indus., Inc. v. Cohen envisions similar findings prior to closing the courtroom to the public. 733 F.2d 1059 (3d Cir. 1984). That case involved a proxy fight among corporate shareholders, and one issue before the district court was whether to close the courtroom during a preliminary injunction hearing. The motion for preliminary injunction required the court to determine, among other things, whether certain confidential business information had to be disclosed to corporate shareholders. Id. at 1062-63. The judge closed the entire preliminary injunction hearing because he found that allowing the press to attend the hearing would usurp his judicial function, which was to decide whether or not the information should be revealed to the shareholders. Id. at 1063. The press appealed, claiming that the district court's closing the hearing "deprived them of their common law and First Amendment rights of access to a civil trial without due process of law." Id. at 1064. On review, the Third Circuit held that public access to civil court proceedings could be limited when an important countervailing interest is shown. Specifically, the record must demonstrate "an overriding interest based on findings that closure is essential to preserve higher values and is narrowly tailored to serve that interest." Id. at 1073 (quoting United States v. Criden, 648 F.2d 814, 824 (3d Cir. 1981)). A litigant's interest in safeguarding trade secrets, according to the Third Circuit, is sufficient to satisfy the first part of the test. Id. at 1073. On the facts before it, the Third Circuit held that the district judge acted properly in excluding the public from the part of the hearing that concerned whether certain "sensitive" information should be kept confidential. Id. at 1072. But the court found that the

judge erred in excluding the public from the remainder of the hearing because no findings were made to support complete closure. The closure order, in other words, was not narrowly tailored to advance the interests articulated. See id. at 1074. Although the court in Publicker Industries found that the judge improperly excluded the public from the entire injunction hearing, the case squarely supports restrictions on public access to the trade secret portions of civil trials. C. Applying Federal Precedent at the State Level While federal court precedent may be sufficient to close federal courts during trade secret cases, the principles enunciated in these cases also provide strong support for the Texas state court litigant seeking to close the courtroom. The standards for closing a courtroom set forth in Iowa Freedom of Info. Council and Publicker Indus. hinge on, first, the existence of an important property interest in information and, second, an order narrowly tailored to protect that interest. These two elements should sound familiar to anyone who has had occasion to deal with a request to seal court records under Texas Rule of Civil Procedure 76a. Before court records can be sealed in Texas there must be a showing of a specific, serious and substantial interest that clearly outweighs the presumption of openness and any probable adverse effect on the public health or safety, e.g., an important property right. TEX. R. CIV. P. 76a(1). There also must be a showing that no less restrictive means than sealing will adequately protect that interest, i.e., narrow tailoring. Id. The showing required by Rule 76a as a prerequisite to sealing court records, therefore, readily lends itself to requests to close the courtroom. Applying Rule 76a by analogy in this circumstance makes sense. Assuming that the Rule 76a showing must be made before a trial transcript can be sealed, it would be a strange law that required a different showing to restrict contemporaneous, public access to the very trial for which the transcript is the verbatim record. 7 In other words, there seems to be little logic in having one standard for sealing records and an entirely different standard for closing a courtroom. The same words need to be protected from public dissemination, whether they are printed on paper or spoken aloud in court. The Honorable David W. Evans of the 193rd Judicial District Court for Dallas County visited this issue in Alcatel USA, Inc., et al. v. Samsung

7 While there appears to be no Texas case on point, a trial or hearing transcript is probably a court record for purposes of Rule 76a, because a transcript is likely to fall within the amb it of "all documents of any nature filed in connection with any matter before any civil court." See TEX. R. CIV. P. 76a(2)(a) (defining court records for purposes of Rule 76a)

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Electronics Co., Ltd., et al., Cause No. 96-08262-L, and granted the plaintiffs' request to close the courtroom during portions of a trade secret misappropriation trial. Among the numerous orders Judge Evans entered during the pre-trial hearings in that case was an order closely parallel to Rule 76a. The order provided, in relevant part, that:

prior to sealing an exhibit or transcript, or exclusion of anyone from the courtroom during any proceeding, the party moving to seal must establish a specific, serious and substantial interest in the exhibit, transcript or presentation that outweighs the presumption of openness that generally attaches to court records and court proceedings by either (1) demonstrating the probable existence of a trade secret in, or embodied in whole or in part in, the exhibit, transcript or presentation which has not been publicly disclosed or by (2) demonstrating other privileged interest in, or embodied in whole or in part in, the exhibit, transcript or presentation which has not been publicly disclosed which must be protected by closure in order to preserve the value of such privilege.

Alcatel USA, Inc., et al. v. Samsung Electronics Co., Ltd., et al., Cause No. 96-08262-L (193rd Jud. Dist. Ct., Dallas County, Texas) Order on Procedure for Temporary Sealing of Portions of Trial Related to Trade Secrets at ¶ 3 (Oct. 28, 1999), attached as Appendix C. After the entry of that order, The Dallas Morning News intervened in the case. Both The News and the defendants in the underlying misappropriation lawsuit filed mandamus petitions in the Dallas Court of Appeals challenging, inter alia, the various restrictions placed by Judge Evans on public access to the trade secrets portions of the trial. In unpublished decisions, the Dallas Court of Appeals denied the petitions, finding that Judge Evans had not abused his discretion. In re Dallas Morning News, Inc., No. 05-99-01959-CV, 1999 WL 1081071 (Tex. App. – Dallas Dec. 2, 1999, no pet.) (not designated for publication); In re Samsung Telecommunications of America, Inc., Nos. 05-99-01949-CV and 05-99-01969-CV, 1999 WL 1081387 (Tex. App. – Dallas Dec. 2, 1999, pet. denied) (not designated for publication). The defendants in the underlying lawsuit then sought mandamus relief in the Texas Supreme Court, but the relief was denied. While the denials of the mandamus petitions have no precedential value, that a Texas court has, in fact, restricted public access to a trial in the interest of preserving trade secrets

should be welcome news for trade secrets owners in Texas. Judge Evans's decision to close the courtroom with reference to Rule 76a, while certainly a legal bellwether, should not be viewed as a departure from Texas law. Texas Rule of Evidence 507 requires that when trade secrets are to be disclosed, the trial judge "shall take such protective measure as the interests of the holder of the privilege and of the parties and the furtherance of justice may require." TEX. R. EVID. 507 (emphasis added). Examples of protective measures contemplated by Rule 507 are sealing testimony, taking trade secret testimony in camera, and placing those present during the taking of such testimony under oath not to disclose the trade secrets. TEXAS RULES OF EVIDENCE HANDBOOK at 442 (3d ed. 1998). Closing the courtroom during trade secret testimony, therefore, is a necessary adjunct of the trade secret privilege in Texas. V. CONCLUSION

Trade secrets owners should be aware that one by-product of litigation involving trade secrets is the possible destruction of valuable, intangible property rights. Several protections exist, including protective orders and sealing orders. While there seems to be no Texas law on point, Litigants should also certainly consider requesting that the courtroom be closed to the public when necessary to protect their trade secrets. Federal courts have closed judicial proceedings in the interest of preserving trade secrets, and, despite the lack of reported precedent in the State, Texas courts are fairly equipped to handle closure requests by reference to federal precedent, Texas Rule of Evidence 507 and Texas Rule of Civil Procedure 76a.

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APPENDIX A

Tips for Drafting State and Federal Protective Orders

1. Size up the courts and what they expect. Be sure to read the local rules and the judge-specific rules. 2. Address issues that may come up at trial in the beginning when the litigation is less contentious. 3. Draft the protective order to operate as a Rule 11 agreement in the event the Court does not sign it. 4. Some defendants will may oppose sealing or closing the courtroom, attempting to use the open nature of the courts and the expense to close them to its tactical or substantive advantage. So draft the protective order to include a provision that neither side will oppose sealing or closing the courtroom.

Example: "The Parties agree that they will not object to attempts by any Designating Party to take reasonable precautions to protect Confidential and Attorneys' Eyes Only Information from public disclosure that might result from court proceedings."

5. Draft the protective order to comply with Texas Rule of Civil Procedure 76a or the Federal standard for sealing documents.

Example: "This Protective Order governs the exchange of documents and other discovery materials between the Partie s and any non-parties and is specifically tailored to comply with the procedure for filing documents under seal with the Court pursuant to Tex. R. Civ. P. 76(a)."

6. Include a provision that requires any party wishing to include confidential information in a court filing to

give the designating party sufficient notice to invoke the procedures under Rule 76a.

Example: "Before any Confidential or Attorneys' Eyes Only Information is included or revealed in any pleading, motion, or exhibit to be filed with the Court or used in open Court, the Party seeking such use (the "Filing Party") shall give the Designating Party ten days notice prior to such filing in order to afford the Designating Party an opportunity to invoke the procedures under Tex. R. Civ. P. 76a."

7. Include a "snap back" provision for accidental disclosure of confidential or attorney's eyes only information not designated as such.

Example: "Inadvertent failure to identify documents or things as Confidential or Attorney's Eyes Only Information pursuant to this Order shall not constitute a waiver of any otherwise valid claim for protection, provided that the provisions of this paragraph are satisfied. If the Designating Party discovers information should have been but was not designated Confidential or Attorney's Eyes Only, the Designating Party must immediately notify all other Parties. In such event, within fifteen (15) days of notifying all other Parties, the Designating Counsel must provide copies of the Confidential or Attorney's Eyes Only Information designated in accordance with this Order. After receipt of such re-designated information, this Confidential or Attorneys' Eyes Only Information shall be treated as required by this Order."

8. Limit the use of confidential information during testimony. Example: "Except as otherwise approved by the Designating Party or by an order of the Court, Confidential or Attorney's Eyes Only Information may be used by a Receiving Party in taking testimony only if the witness is: (a) an existing employee of the Designating Party; or (b) an expert or other person duly qualified under this Order."

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APPENDIX B

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APPENDIX C

NO. 96-08262-L ALCATEL USA, INC., et al. § § IN THE DISTRICT COURT OF Plaintiffs and § Counterdefendants, § § DALLAS COUNTY, TEXAS v. § § JAMES L. BUNCH, et al. § 193RD JUDICIAL DISTRICT § Defendants and § Counterplaintiffs. §

ORDER ON PROCEDURE FOR TEMPORARY SEALING OF PORTIONS OF TRIAL RELATED TO TRADE SECRETS

1.

Alcatel's Amended Motion for Temporary Sealing of Portions of Trial Related to Trade Secrets, Pursuant to

Tex. R. Civ. P. 76a(5) came on for hearing in October 1999. In its Motion, Alcatel requested the Court to seal those

portions of the Court's records and the trial proceedings where trade secrets of any party are discussed in the Court

records or trial testimony. The Court notes that the issues presented by Alcatel' s motion have been raised in several

hearings before this Court in recent weeks, including hearings held on September 22 and 30, 1999, and October 4, 5,

18, and 19, 1999, as well as in briefs filed by the parties on both sides of this litigation. Accordingly, the Court is

well versed in the parties' respective positions regarding information claimed to constitute trade secrets.

2.

Based on the pleadings, the evidence and the arguments of counsel, as well as this Court's familiarity with

the issues in dispute and the measures previously taken to control access to information claimed to be confidential

and trade secret information by the parties in this lawsuit, the Court finds and orders as follows:

3.

The Court finds that prior to sealing an exhibit or transcript, or exclusion of anyone from the courtroom

during any proceeding, the party moving to seal must establish a specific, serious and substantial interest in the

exhibit, transcript or presentation that outweighs the presumption of openness that generally attaches to court records

and court proceedings by either (1) demonstrating the probable existence of a trade secret in, or embodied in whole

or in part in, the exhibit, transcript or presentation which has not been publicly disclosed or by (2) demonstrating

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other privileged interest in, or embodied in whole or in part in, the exhibit , transcript or presentation which has not

been publicly disclosed which must be protected by closure in order to preserve the value of such privilege.

4.

The Court further finds that any party must present its case for showing entry of an order sealing an exhibit

or transcript or exclusion of anyone tram the courtroom by presentation to the special master appointed by the Court

with respect to this issue, except for good cause (which will be liberally construed in the interest of justice). A party

must use this procedure to make a showing as to whether a document should be sealed for any of its own documents

it plans on using at trial and for any documents for which an opposing party has given fair notice (in a reasonably

specific and timely way) of its intent to use such documents at trial; for documents that an opposing party has

provided adequate notice, any relevance objection for purposes of this order must be asserted in the motion to seal

and the special master shall make a finding whether such document is relevant to a matter needed to be proved at

trial. (For purposes of this paragraph, including a document as a core trial exhibit under the existing scheduling order

does not constitute sufficient notice, but including the document on the lists of approximately 200 core trial exhibits

exchanged the week of October 25, 1999, or preadmission of a document does constitute such notice). For any

document for which relevance has not been shown and for any exhibit that has been excluded as the subject of an

order in limine or other ruling, the procedures set out in this paragraph need not be used pretrial, rather the sealing of

issues contemplated by this order may be raised at or near the time the document is offered for use at trial.

The parties shall serve counsel for Intervenor MCIW with any narrowed core exhibit lists, any changes to the

core exhibit lists and any notice of use or intent to use noncore exhibits when served on opposing counsel. Service

on counsel for Intervenor MCIW shall be by email to sroberts@bracepatt.com and jf1egle@bracepatt.com.

IT IS FURTHER ORDERED that no party may introduce into evidence or seek introduction into evidence

any of the following exhibits without first providing Intervenor MCIW twenty-four hours notice by email (at the

above email addresses), except for good cause shown and leave of Court and immediate notice to counsel for MCIW

by telephone: PX 269, PX 385, PX 1740, PX 2786, PX 2792, PX 2891, PX 3308, PX 3406, PX 6556, PX 6571, PX

6572, PX 7588, PX 7874, DX 21, DX 72, DX 81, DX 82, DX 200, DX 241, DX 251, DX 262, DX 276, Dx 307, DX

327, DX 369, DX 517, DX 526, DX 581, DX 582, DX 830, DX 834, DX 968, DX 978, DX 1910, DX 4011, DX

4021, DX 4133, DX 4168, DX 4170, and DX 4171. Any party may move to modify the foregoing list upon motion

and notice to all parties and Intervenor MCIW. The notice provisions in this paragraph are satisfied with respect to

documents on a narrowed core exhibit list by serving Intervenor MCIW with the narrowed core exhibit list by email.

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Signed on this 28 day of October, 1999