First Amendment Defenses in Trade Secrecy Cases

Abstract

Only rarely do defendants in trade secrecy cases raise First Amendment defenses to misappropriation claims. In a few cases, however, such defenses have not only been raised, but have been successful. These successes have been controversial. Some commentators and at least one court have opined that First Amendment defenses should never succeed in trade secret cases because trade secrets are property and property rights trump the First Amendment. Yet, other commentators and at least one court have argued that enjoining the use or disclosure of trade secrets is a prior restraint on speech that is presumptively unconstitutional. This article explores a middle ground. It explains why First Amendment defenses are so uncommon in trade secrecy cases, among them that trade secrecy law has some limiting doctrines (or "weaknesses") that mediate tensions that might otherwise occur between trade secrecy law and the First Amendment as applied to the use or disclosure of information. The article discusses at length the DVD CCA v. Bunner case in which an online activist was sued for trade secret misappropriation for posting DeCSS on the Internet because that code embodied information that DVD CCA asserted had been misappropriated by reverse engineering in breach of a shrinkwrap license. It refutes the California Supreme Court's analysis of First Amendment defenses as well as showing the inconsistency of this decision with other trade secrecy-First Amendment rulings. It argues that in ordinary trade secrecy cases, where disputes typically concern private uses and disclosures of information by firms that have wrongfully obtained it, no presumption of unconstitutionality is appropriate. However, when a third party, such as a journalist, obtains information that he or she knows has been obtained in breach of confidence and seeks to publicly disclose it because of its newsworthiness, First Amendment interests are implicated, and courts should take First Amendment defenses seriously. The article concludes with a discussion of First Amendment due process issues, such as the need for de novo review of constitutionally relevant facts.