Tuesday, January 29, 2013

Good Confidentiality Ruling Out of Oregon

            In the drug and device arena, we are well versed in confidentiality agreements.  In fact, we can’t recall a drug or device products case that hasn’t involved some form of confidentiality order.  And that’s not surprising.  Plaintiffs sue our clients making serious allegations about their products, their marketing and labeling, their manufacture and design, dealings with the FDA, communications with doctors, and on and on.   Those allegations – if sufficiently pleaded – are followed by scores of interrogatories and document requests seeking all manner of confidential, proprietary, and trade secret information.  Typically, in a products case the process goes something like this:  confidentiality agreement negotiated and entered by the court, documents produced and marked confidential in accordance with the terms of said order, then plaintiffs want to disclose those confidential documents to the press, and a fight ensues.  We’ve all been there.  We’ve all won some and lost some. 
            Our clients are also subject to government investigations regarding their products.  Again, because the investigations necessarily involve trade secret and proprietary information, confidentiality agreements are par for the course.  After entry of which, manufacturers produce confidential documents to state and federal government officials.  In this context, confidentiality can become a contested issue when third parties – namely the press and private plaintiffs’ counsel – request those documents from the government via a Freedom of Information Act, or state-equivalent, request.  That’s precisely the scenario that prompted the case of Pfizer Inc. v. Oregon Department of Justice, 254 Ore. App. 144 (2012).  And the issue that caught our attention.  When dealing with the government, our clients need to consider both the terms of the confidentiality order and the applicable state public record acts.  Government officials are governed by the latter, the provisions of which could conceivably undercut the terms of the confidentiality agreement.  This seemed to be what the trial court found in the Pfizer case – fortunately, the appellate court saw things differently.    
            We won’t cover all the details of the investigation, but they are in the opinion if you are interested.  In the course of the investigation, documents were turned over to the Oregon Department of Justice (DOJ) pursuant to a confidentiality order that prohibited DOJ from disclosing documents or materials that the manufacturer designated confidential based on a good faith belief that they contained “proprietary or trade secret information.”  Id. at 148.   The order also incorporated the Oregon Public Records Law (OPRL) which governs disclosure requests addressed to Oregon state officials, including the DOJ.  The OPRL, however, exempts trade secrets, among other things, from disclosure.  Id. at 146, 149.  So, when a private plaintiff’s attorney and two reporters requested all documents produced during the investigation, Pfizer filed suit to protect the confidential information.  Id. at 150-151.
            We’ll skip over the detailed discussion of the trial’s court reasoning – since it was largely discounted – and get straight to the appellate analysis.  First, the court summed up the terms of the confidentiality agreement.  DOJ is prohibited from disclosing documents marked confidential “to anyone in the absence of a subpoena or court order.”  Id. at 159.  However, the DOJ’s obligation is “further subject to the OPRL.”  Here’s that rub we were talking about.  Read together, the confidentiality agreement and the OPRL provide that “if the exhibits are not exempt from disclosure under the OPRL, DOJ is obligated to disclose them; however, if any exhibits are exempt under the OPRL, DOJ is obligated not to disclose them.”  Id.  Sort of sounds like OPRL trumps confidentiality agreement.  And, if that’s the case we and our clients better make sure we know how things like “trade secret” and “proprietary information” are defined by state public records acts and how they’ve been interpreted by the courts. 
            Given that conclusion, most of the opinion goes on to deal with the OPRL disclosure exemptions for “trade secrets,” “confidential submissions,” and “attorney work product.”  But not before the court addressed DOJ’s attempt to “re-write” the confidentiality agreement so that it would actually narrow the exemptions available under the OPRL.  DOJ argued that it was its “understanding” that under the confidentiality agreement, Pfizer would only designate as confidential, documents and information that were trade secrets.  Not so said the court: 
However, contrary to DOJ's understanding, the agreements provide that confidential documents are those that contained "proprietary or trade secret information." (Emphasis added.) That is, the agreements provide for protection of "proprietary" information beyond "trade secrets." Thus, DOJ's contention that the agreements obligate it to apply only the OPRL exemptions related to trade secrets is unavailing.

Id.  We certainly like that the court adhered to the true letter of the confidentiality order, especially since it embraced the broader scope intended by the parties – which in this case also meant the availability of more statutory exemptions.  So, another word to the wise – make sure your confidentiality agreement spells out what type of documents you want kept confidential.  Making the agreement precise helps defendants by eliminating the ambiguities plaintiffs can cling to.
            As it turns out, the difference between trade secret and proprietary information didn’t really amount to anything in this case.  The court’s analysis really came down to whether the requested documents were trade secrets under the OPRL.  And, for the most part the answer was yes.  In Oregon, “[t]o constitute a trade secret . . . information (including compilations) must both (1) gain value because it is not generally known and (2) be the subject of reasonable efforts to maintain that secrecy." Id. at 161 (citation omitted).  Further, the party asserting the trade secret must demonstrate “that disclosure will work a clearly defined and serious injury.”  Id. at 162.  How did Pfizer satisfy its obligation?  With the declaration of its director detailing the economic value of the information, the efforts to maintain confidentiality and the benefit the information would be to Pfizer’s competitors.  Id.  DOJ proffered no evidence to controvert the declaration.  Id. at 152.  And the court found the declaration was “legally sufficient to establish the availability of the trade secrets exemption.”  Id. at 163 (quotation marks omitted). 
            Unable to get around the declaration, DOJ tried two arguments that we’ve seen many times in products cases.  First, it argued that the information “is old and of no value to a competitor.”  Id. at 165.  Yep, plaintiffs like that one a lot.  By the time a mass tort or even a single drug or device case gets through document discovery, usually the product at issue has been on the market for years and the documents are in fact old.  But, without more, age alone is insufficient to defeat trade secret status.  Because “DOJ failed to offer any factual submission in support of those bare assertions,” that argument was rejected.
            DOJ’s second argument had slightly more merit – it’s no longer a trade secret if it has been made publicly available.  It was the scope of their argument that was seriously flawed.  DOJ argued that certain information, such as the complaint, the stipulated judgment, the federal plea agreement and press releases pertaining to these events, were publicly available.  Id. at 164.   DOJ went onto to contend that the documents at issue “contain examples of the conduct described in those publicly available documents. [ ] Therefore, the information in the exhibits has essentially been made public and is generally available.”  Id.  Fortunately, the court was unwilling to make the enormous leap required to agree with DOJ:
The success of [DOJ’s] syllogism depends on the correctness of DOJ's predicate premise that the exhibits are nothing more than examples of conduct described in the publicly available documents to which it refers. . . .  [W]e conclude that that premise is incorrect as to the great majority of the exhibits.
. . .
Even as redacted, those exhibits reveal more than generic examples of conduct. In other words, the specific, underlying details in those exhibits have not been revealed by the publicly available sources on which DOJ relies--and it is that underlying detail that Pfizer contends is a trade secret. Accordingly, . . . we reject DOJ's contention that the "information had already been made public or that similar information was readily available."

Id. at 164-65.
            We said the argument had some merit – and it did as to a handful of documents.  As to documents, the content of which was reproduced – sometimes verbatim – in the federal information or quoted in the New York Times, the court had to agree, they were no longer protected by the trade secret exemption (or any of the other OPRL exemptions for that matter).  Id.  So, in summary DOJ was permitted to provide to third parties only those documents which had been previously publicly disclosed.  Hard to find fault with this conclusion.
           

1 comment:

Ross Taylor said...

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