Principles for Resolving Conflicts between Trade Secrets and the First Amendment

Abstract

Preliminary and permanent injunctions are routinely granted in trade secret cases without offending the First Amendment, and this is as it should be. In ordinary trade secret cases, injunctions merely require parties to abide by express or implicit agreements they have made, respect the confidences under which they acquired secrets, and refrain from wrongful conduct vis-a-vis the secrets. Occasionally, those who want to disclose trade secrets invoke the First Amendment as a defense to claims of trade secrecy misappropriation. Courts and commentators have taken varying positions on issues pertinent to these defenses, including whether trade secrecy law are categorically immune (or nearly so) from First Amendment scrutiny and whether preliminary injunctions forbidding disclosure of informational secrets should be considered prior restraints on speech. This article offers a set of principles for mediating the tensions that occasionally arise between trade secrets and the First Amendment. Part I seeks to explain why conflicts between trade secrecy law and the First Amendment have thus far been relatively rare. It discusses limiting principles of trade secrecy law that mediate most free-speech-related tensions likely to arise when someone wants to disclose information that another claims as a trade secret. Part II suggests that more conflicts between trade secret and First Amendment interests may occur, in part because of the increased use of mass-market licenses to keep information secret that would otherwise be lawful to acquire and disclose. It considers proposals to strengthen trade secret rights in response to threats to trade secrets posed by the global communications medium of the Internet. The stronger trade secret rights become, the more likely they are to come into conflict with First Amendment interests. Part III criticizes the California Supreme Court's decision in DVD CCA v. Bunner for, among other things, its implicit adoption of the categorical immunity theory and its reliance on DVD CCA's assertion of property rights in its secrets in rejecting Bunner's First Amendment defense. Part IV concludes that even though preliminary injunctions in informational trade secret cases are prior restraints, they are generally justified in ordinary cases. Yet the heavy presumption against prior restraints should apply to cases in which third parties who obtained the secret without wrongdoing seeks to disclose it publicly. Part IV considers a number of other First Amendment due process issues, such as whether the burden of proof in third-party disclosure cases should be higher than in the normal trade secret cases and whether appellate review of constitutionally relevant facts should be de novo when First Amendment defenses have been raised. Part IV proposes several principles to assist courts in grappling with First Amendment defenses in trade secrecy cases.