Monday, June 1, 2009

Trade Secret protection in Divorce Cases via Stipulation and Order

Donald F. Conviser, of Warner Center Law Offices in Woodland Hills, a Certified Family Law Specialist in the San Fernando Valley serving clients for over 37 years in the Courts of Los Angeles and Ventura County, offering a free confidential consultation [call him at 818-880-8990 regarding your divorce or family law issues], writes today about thought processes that he has gone through when negotiating provisions to protect his clients against unauthorized disclosure of trade secrets in Divorce or Family Law discovery. This article is not intended to be used as or for "legal advice"; the readers of this blog are admonished to seek the counsel of a competent and seasoned Family Law Attorney to advise them regarding their specific needs and how to obtain appropriate protection against unauthorized disclosure or use of their trade secrets.

This is a follow-up to my last two blogs addressing trade secret and confidential information protection in family law cases, providing examples of protective terms that I have drafted.

In negotiating and preparing Stipulations and Orders to prevent disclosure of confidential commercial or financial information relating to the activities of my client and/or his/her business, I draft provisions to apply to ALL discovery and evidentiary documents and information, including attorney work-product, which is formally or informally sought from and/or formally or informally disclosed by my client and/or his/her business in connection with the family law case, and with the opposing party's and/or his/her attorney's and/or forensic accountant's investigation and analysis.

I identify "Confidential Information", and I draft a prohibition against unauthorized disclosure, requiring that the confidential information not be disseminated, disclosed or otherwise directly or indirectly communicated to anyone other than a "Qualified Person" (whom I define), and I require that the confidential information be held in confidence and not be disseminated, disclosed, published or otherwise communicated or used, directly or indirectly, by any qualified person to whom it is disclosed, except for and in the pending Family Law matter and except as necessary to enforce the terms of the Stipulated Protective Order that I draft.

I define "Confidential Information" as any document or information of and/or relating to the business, to include research, development, customer lists, customer identities, sources of equipment and materials, pricing of purchases and sales, commercial and financial information relating to the business, and any information relating to the business and/or financies of the business, whether in documentary, oral, or other form; my stipulation states that all such information and documentation is deemed confidential, proprietary and secret, and that my client shall not be required to demonstrate whether or not such information is in actuality confidential, proprietary or secret in order to invoke and enforce the provisions of the Stipulated Protective Order.

I define a "Qualified Person" to include 1) counsel for the parties, including all attorneys, paralegals, secretraries and clerical personnel employed by or working for such counsel (including contract labor), who are to use the information solely for the purpose of the litigation and for no other purpose; 2) Experts and consultants and all members of their staff, employed or retained by either party for the purpose of assisting in the preparation and trial or hearing of any aspect in the case; 3) my client; and 4) the Court personnel and Judical Officers. I require counsel, experts and the parties to use the documents and information solely for the purpose of the litigation and for no other purpose. I also specify particular people and businesses not to receive disclosure, generally to include the adverse party.

I draft provisions requiring deposition transcripts containing testimony and/or documents relating to my client's business to bear, on their covers, prominent and conspicuous legends directing that the contents of the transcript are confidential and are subject to a protecttive order issued by the (particular) court, further stating that unauthorized use of or disclosure of any part of the transcript is a violation of a court order, and I have a copy of the stipulation and order contained in the transcript as an exhibit. I draft provisions requiring that the transcript be transmitted to counsel in sealed envelopes, bearing the word "Confidential" on their exteriors. I provide that counsel may unseal the envelopes upon receipt, but I require that the transcript not be filed with the Court other than under seal, setting forth in declarations and points and authorities only the page and line numbers and starting and ending words of the text to be considered by the Court for the hearing/trial for which it is submitted. I draft language requiring that the deposition reporter shall be advised of the confidentiality of any testimony and exhibits at the time of the deposition, and that the deposition reporter shall be instructed at the deposition not to disclose any of the contents of the deposition transcript (including documents) to any person other than the deponent and counsel of record.

I draft provisions requiring that discovery responses containing confidential information begin on their first page with "CONTAINS CONFIDENTIAL INFORMATION", and requiring that the portions of such discovery responses marked "confidential" may only be filed with the Court via lodging under seal, along with reference to page and line numbers and starting and ending words similar to my deposition provisions noted above.

I draft provisions regarding the filing of documents consitituting, containing or referring to "Confidential Information" requiring them to be sealed, bearing endorsement of the title of the action, a general indication of the nature of the contents, and a statement indicating that the envelope containing the confidential documents is sealed pursuant to a Protective Order and contains information which is not to be opened or its contents displayed, revealed or made public except by order of court.

I draft provisions requiring that any copies made by Qualified Persons be treated as confidential information pursuant to the Stipulated Protective Order.

I draft provisions allowing confidential information to be withdrawn with the Court's approval after all orders made in connection with the relevant hearing/trial have become final.

I draft provisions excluding the public from hearings at which confidential information may be sought or disclosed.

I draft provisions requiring the return of all originals and copies of confidential documents after settlement or adjudication of all issues for which disclosure of the confidential documents was required.

I draft warranties that the adverse party, his/her counsel and experts specifically represent and warrant that they, their employees, agents & representatives, shall not disclose, disseminate, communicate, or use any "confidential information", other than for purposes of the pending trial or hearing.

I draft provisions requiring that the stipulated Protective Order is binding upon signing.

I draft enforcement provisions, including liquidated damages for each direct or indirect violation of the protective order, in addition to any other remedy and cause of action available at law or equity for violation of the stipulated Protective Order, to deter violation, and I include an attorney's fee provision as well.

If I can obtain agreement, the stipulated Protective Order is the preferable alternative to a Motion for Protective Order, which must be preceded with a Meet-and-Confer effort by the moving party, and the Court might not think of all the provisions that I would set forth in my stipulated Protective Order, so in my request for the order [and in my proposed order), I would need to specify all those provisions, to ensure the Court's consideration of those provisions.

In summary, this article addresses the complexity and many of the details of a stipulated Protective Order that I would draft to protect my client against unauthorized disclosure of trade secrets sought by the adverse party's discovery in a divorce or family law case.