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Tennessee Business Court Decides “who goes first” in Discovery in Trade Secrets Case

In a Tennessee Uniform Trade Secrets Act (“TUTSA”) case, the Tennessee Business Court set some discovery guidelines for business competitors in litigation over alleged misappropriation of trade secrets. Cryosurgery, Inc. v. Rains, Case No. 15-871-BC, 5/25/16. After thorough consideration of the record and parties’ arguments, in ruling on competing motions to compel discovery, the Court ordered that the Plaintiff “must first identify particularity and pinpoint the trade secrets it asserts that the Defendants have misappropriated before the Defendants are required to respond to Plaintiff’s discovery.”

The Court gave two (2) reasons for the rule: 1) cost reduction, and 2) substantive law. Until the content and nature of the claimed secret is declared, the opposing party is likely not able to intelligently analyze the elements of the causes of action. Requiring the plaintiff to describe the claimed secrets before discovery commences precludes the plaintiff from using the discovery process to obtain defendant’s trade secrets.

The Court noted the legislature’s mandate in TUTSA to preserve the secrecy of the alleged trade secrets via protective orders, in-camera hearings, sealing records, and ordering non-disclosure of alleged trade secrets without prior court approval. The Court relied on Rule 26 of the Tennessee Rules of Civil Procedure, as well as the California statutory procedure, considered persuasive by the Tennessee Business Court.

William R. O'Bryan, Jr.

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