By Jeffrey Baer, Senior Associate
Clients often don’t realize until it’s too late that their proprietary information could have been considered a “trade secret;” a higher standard of protection. That’s not unusual. After all, the legal profession itself sometimes has difficulty discerning between proprietary, or confidential, information and trade secrets.
But some courts have suggested there is a difference, applying a more stringent test for “trade secrets.” Primarily that:
- A trade secret is valuable, confidential, or proprietary, information (i.e., a program, formula, process, etc.) that a client owns and protects.
- The information also must have economic value for others (i.e., competitors) but not be obtainable through available public sources.
- And, clients must try to keep the information secret. Often, the more difficult something is to obtain, the more it is viewed as “secret” by courts.
Does the trade secret debate apply to PIP fraud? In a word, “yes.”
The U.S. Uniform Trade Secret Act should protect carriers and vendors from being forced to divulge their secrets, but not all courts view it that way.
A medical provider seeking to establish its charges are in line with local custom may demand that insurance companies share information of amounts billed by other medical providers and how much they were paid. Some courts consider this a reasonable request, however, insurers do not necessarily possess this information themselves. Instead, they rely on contracted third party vendors for the information. Defense counsel routinely argue this information is not in their possession and, thus, is not theirs to give. They also argue this information is the trade secret of the third party vendor. Despite these arguments, some courts require vendors to share the proprietary software they use for their business operations.
The information ordered by the court puts insurance carriers in an awkward position as courts are compelling them to reveal confidential and proprietary information of a third party.
What’s needed is a strong appellate ruling that codifies proprietary material and trade secrets and is applied by all courts. However, until that happens, a company’s “trade secrets” may not be…well…truly secret.
Leave a Reply