In part 1 of this post, we introduced a recent federal trade secret misappropriation ruling out of California. The court in Spolar v. Discovery Communications, LLC, denied a request for a temporary restraining order (TRO) that would have stopped the television broadcast of a new film that allegedly revealed trade secrets.
In addition to determining whether a TRO is appropriate, there was a constitutional issue of whether the court could stop free speech about a topic of public concern (historical information about President Lincoln). The doctrine of prior restraint asks whether the court can constitutionally muzzle speech before it’s expression.
The judge explained that the U.S. Supreme Court has said that a prior restraint on speech is only appropriate in “exceptional cases.” In addition, for the judge to order a prior restraint on speech about a matter of public concern, the capacity for harm must reach an even higher bar.
Courts apply a “heavy presumption against the constitutional validity” of a prior restraint, a standard that is difficult for plaintiffs to meet. Courts much prefer denying prior restraints, allowing the speech to go forward. The party requesting the TRO can seek money damages later if they end up suffering losses.
The Spolar court explained that the interaction of trade secret law and the prior restraint doctrine involving a matter of public concern is “murky.” Adding to the complexity of the TRO at issue is that prior restraints are “routinely relaxed in the field of intellectual property.” That the Defend Trade Secrets Act (DTSA) would authorize a TRO to protect trade secrets made the court’s decision even more complicated.
Why did the court deny the TRO request?
The court may issue a TRO if the plaintiff shows four things:
- They are likely to win their case on its merits.
- Without the TRO, they will sustain “irreparable harm.”
- Equity (fairness) favors the plaintiff’s position.
- The TRO would be in the public interest.
The first factor is the most important and is where the plaintiffs failed in their TRO request. The Spolar misappropriation case was grounded in the DTSA, which requires that the plaintiff own a trade secret, that the defendant misappropriated it and that the misappropriation harmed the plaintiff.
Existence of trade secrets at issue
Because the court found that the Spolar plaintiffs did not show that they were likely to succeed on the misappropriation claim, the TRO request also failed. Specifically, the judge explained that the plaintiff must identify the alleged trade secrets explicitly and describe them with “sufficient particularity” so the court can tell they exist.
“Matters of general knowledge in the trade” or within the “special knowledge” of people “skilled in the trade” are not trade secrets. Describing alleged trade secrets with broad language and “catchall” phrases is not precise enough to establish their existence. Here, plaintiffs’ description of their alleged trade secrets used generic language and broad, nonspecific categories.
Because the plaintiffs did not sufficiently establish that they owned trade secrets to be protected and because of the constitutional protections in the broadcast of the documentary that weighed against a prior restraint of speech, the court denied the TRO.