Limits on Sealing in Trade Secret Cases

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From Judge Beth Phillips’ opinion in Kyndryl, Inc. v. Cannady (W.D. Mo.):

In this suit, Plaintiff asserts Defendant misappropriated trade secrets, breached a contract, and converted Plaintiff’s property.  The Court granted Plaintiff’s Motion for a Temporary Restraining Order, (“TRO”), which bars Defendant from disclosing certain information he obtained from Plaintiff, and the TRO remains in effect.

When it filed the suit, Plaintiff also filed a Motion to Seal Documents…. [While the motion has been pending,] Plaintiff had begun unilaterally filing [all] documents under seal….

Material filed with the Court is presumptively public, although that presumption can be overcome based on a specific need to protect specific information…. The Court agrees that any actual trade secrets should be kept from public view—but this is not what Plaintiff requests. Indeed, it does not contend any trade secrets have been filed. Instead, Plaintiff argues practically all documents in this case should be sealed because (1) they describe the nature of the trade secrets at issue, (2) they discuss (as required to establish the basis for Plaintiff’s lawsuit) that Defendant misappropriated the trade secrets and has threatened to disclose them, and (3) Plaintiff will suffer reputational harm if it is revealed that its trade secrets were misappropriated.

The Court does not agree that Plaintiff’s interests overcome the common law right to access. Descriptions of trade secrets are not themselves trade secrets; the fact that trade secrets exist also are not trade secrets. To hold otherwise, or to permit sealing of these facts, would justify sealing practically everything in any case where misappropriation of trade secrets is alleged. Moreover, the nature of the trade secrets at issue here is such that it will be no surprise to anyone that they exist. But to reiterate—while the Court would approve the sealing or redaction of trade secrets, that is not what Plaintiff requests.

Second, a party’s desire to avoid embarrassment of this sort is not a sufficient reason to seal an entire case to prevent the public from knowing a party has a dispute with another. Plaintiff’s rationale could be applied to practically any case; usually, at least one party in the case would prefer that the allegations against or about it not be aired publicly. However, relying on this broad and common preference gives no consideration to the public interests served by the common-law right to access. Sealing documents simply because one party would prefer the public not know about the nature and existence of the suit would eviscerate the presumption of public access and the interests served by that access. Sealing is the exception, not the rule.

Finally, the information in question is directly related to the basis for the lawsuit and Plaintiff’s requests for relief. These documents include (1) the Complaint, (2) the Motion for Temporary Restraining Order, (3) the Temporary Restraining Order, (4) various motions seeking Orders from the Court (and responses thereto), and (4) Defendant’s Counterclaims. These documents are not tangential to the litigation and were not gratuitously filed; they are essential to the case. Their role in the litigation is so fundamental and germane to the Court’s business that the public’s interests are at their zenith. Accordingly, the Court denies Plaintiff’s request to seal the documents at issue.

Plaintiff has not proposed a lesser alternative; that is, it has not identified specific documents containing trade secrets or (except with respect to Defendant’s counterclaim) proposed potential redactions. To the extent that it has discussed specific documents, it demonstrates its preference that the entire document be sealed but has not provided a specific legal reason for doing so. The Court has nonetheless conducted an individualized evaluation of each document that has been filed under seal; having done so, it concludes most of them should be unsealed.

Based on its review, and in an abundance of caution, the Court concludes that Documents 1-1, 2-2, and 18-1 should remain sealed. The Court further concludes Defendant’s counterclaim should not be sealed or redacted. Finally, the remaining documents that have been filed under seal should be unsealed because there is no justification for leaving them sealed in derogation of the common law right to access the Court’s records….

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