Indiana Trade Secret Law: Court Declines to Enter Protective Order Stipulated by Parties

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Fort Wayne, Indiana – In the matter of CCT Enterprises, LLC v. Kriss USA, Inc., trade secret lawyers for the parties agreed to a protective order and submitted it to the court pursuant to Federal Rule of Civil Procedure 26(c). United States Magistrate Judge Susan Collins of the Northern District of Indiana denied the parties’ request for a protective order, holding that the proposed order was overly broad and, thus, invalid.

Magistrate Judge Collins first noted that Rule 26(c) allows the court to enter a protective order for good cause shown. For material to be protected, it “must give the holder an economic advantage and threaten a competitive injury…business information whose release harms the holder only because the information is embarrassing or reveals weaknesses does not qualify for trade secret protection.”

In the parties’ proposed order, no categories of material were provided to restrict what discovery materials would be treated as confidential. Instead, it allowed either party “in good faith” to deem any discovery materials to be confidential. Magistrate Judge Collins held that this was overbroad and that a protective order must extend only to “properly demarcated categor[ies] of legitimately confidential information.” Moreover, a mere assertion of harm to a litigant’s competitive position would not suffice but rather “the motion must explain how.” Consequently, the court held that because a showing of good cause had not been made, the proposed protective order could not issue.

The court also noted that the proposed order provided that it would continue to be binding after the conclusion of the litigation, thus implying that the court would retain jurisdiction after the lawsuit had been resolved. The court refused to enter an order that would have such an effect. Instead, it suggested that the parties should agree contractually among themselves for the return of sensitive documents.

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