AutoZone and SCO's Stipulation Regarding Confidentiality

Wednesday, November 03 2004 @ 11:00 PM EST

Contributed by: PJ

There is a new filing in the SCO v. Autozone case, a Stipulation and Protective Order Regarding Confidentiality setting forth how the parties are to handle confidential matters in discovery. Some of you have asked questions about how this works, and I've been trying to find the time to write about it, and now, happily, I don't have to, because I think you will see this document shows in detail how the process works, and the reasons why the parties to an action, or even a third party, might want certain things designated as confidential, to prevent the world at large from having access to the information and to prevent its misuse. The whole idea of thrashing confidentiality out in advance and setting up a system is so that both sides know how to proceed and the judge doesn't have to be bothered with endless requests to rule on how to handle such matters.

The courts are realistic about human nature -- you wouldn't even need courts or lawyers if everyone was loving and thoughtful and lived by the Golden Rule all the time, after all, would you? -- so there have to be lines drawn in the sand to cover things like how to protect a company from disclosure of its trade secrets due to thoughtlessness or actual malice.

A consultant, for example, or a former employee may need to be examined in discovery. Maybe he knows a tiny piece of the whole picture, but not the whole picture. What can the parties show him in the way of documents? What kinds of questions can be asked? Who can be in the room to hear the answers in the deposition? What about the transcript? It matters because the court assumes that some dope somewhere will blab all he or she knows to his mate, his best friends, his blog, and hence the world, no matter what the court tells them to do or not to do. Even the parties, if they feel publicity will help them, may reveal more than they should or use the information inappropriately to gain a competitive edge. If the parties liked each other, chances are there'd be no lawsuit, so how do you share necessary information in discovery and still protect yourself from the other side misusing that information? After all, it shouldn't happen that a party is sued, forced to endure discovery, found innocent of all wrongdoing, and yet finds its business ruined due to losing trade secrets.

The remedy is not to expose anyone to more than they need to be exposed to in the first place and to designate as confidential whatever one party feels needs to be kept that way by everyone, subject to challenge for inappropriate designation. The lawyers get to see it all, but they are limited as to who they can show confidential matters to, as you can see in paragraphs 5 and 6. For example, the lawyers can't use the materials in an unrelated lawsuit, just because it'd be swell and win their case over there. You can understand such a rule. Otherwise, everybody would sue innocent parties all the time, just to use the information obtained in discovery in the marketplace or in other litigation. Of course, some may try that anyhow, but this type of stipulation is designed to prevent any such strategy from being successful. If you are ever a party in a case, you may find yourself intensely grateful that courts have such a process. This stipulation is drawing those kinds of lines in the sand for AutoZone and SCO. I note it was AutoZone that drew up the Stipulation.

The Federal Rules of Civil Procedure define the kinds of things that are protectable as confidential information in Rule 26(c)(7), as you can see in paragraph 1(a) in the Definitions section of the stipulation. The Federal Rules of Civil Procedure are here and you'll find 26(c)(7) here. In other words, there are some limits on what a party can designate as confidential, but it would certainly cover "a trade secret or other confidential research, development, or commercial information", as the rule puts it. This particular stipulation amplifies the list, in paragraph 4, with things like "highly confidential business or marketing plans, strategies, or methods, including business planning or financial documents having current or future applicability, sensitive non-public information that: (i) as of the date of production, has been subject to strict internal controls limiting its dissemination within the producing party; and (ii) if improperly disclosed, is likely to cause the producing party substantial commercial harm." Either party can disclose its own confidential matters, of course, but not those of the other party.

You'll notice that the last item states that the stipulation continues even after the case is concluded. That is because not all information wants to be free. In legal matters, if information will do real harm, the law says it *doesn't* want to be free, even if we're all dying of curiosity, and it's really, really interesting, and the parties are public figures involved in a case of widespread interest. Even then, the law says that some information wants to be kept confidential.