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eDiscovery and Seizure Orders under the Defend Trade Secrets Act

ediscovery and seizure orders

The Defend Trade Secrets Act of 2016 (“DTSA”) involves unique electronic discovery issues that affect parties on both sides of DTSA matters. The eDiscovery issues arise from the DTSA’s ex parte seizure provision, a powerful remedy previously unavailable to plaintiffs in their efforts to address trade secret misappropriation. This post provides a brief overview of DTSA seizure orders and also highlights key eDiscovery considerations—including the roles of technical experts and special masters—in connection with those orders.

Overview of DTSA Seizure Orders

The DTSA enables plaintiffs to obtain a seizure order ex parte that seizes defendants’ “property” containing plaintiffs’ trade secret information. A properly issued seizure order will empower law enforcement officials to seize one or a combination of the following sources that are determined to include trade secrets belonging to plaintiffs: Phones, tablets, laptops, desktops, share points, servers, email accounts, messaging application accounts, cloud accounts, digital and paper filing cabinets, and materials from paper storage facilities. [1]

For a court to issue a seizure order, plaintiffs must satisfy eight separate requirements memorialized in 18 U.S.C. §1836(b)(2)(A)(ii). The underlying prerequisites include those that must be established for a Federal Rule of Civil Procedure (“FRCP”) 65 order to issue such as showing the existence of immediate and irreparable harm and the likelihood of success on the merits.

More significantly, however, plaintiffs must demonstrate that relief under FRCP 65 would be inadequate. Among other things, plaintiffs must show that defendants would evade compliance with a temporary restraining order or a preliminary injunction and that if provided notice, defendants would move, hide, or destroy plaintiffs’ trade secret information. Plaintiffs would also need to show (among other things) that the harm they would suffer if the court did not issue the seizure order would outweigh the harm to defendants if their property were seized.

Technical Experts and eDiscovery

If a seizure order is issued, law enforcement officials can effectuate the order’s directive by taking possession of papers and devices such as smartphones, tablets, laptops, desktops, and servers. Nevertheless, law enforcement involved in the seizure may not have the technical ability either to make forensic copies of the devices or to modify login credentials for email accounts, messaging application accounts, or cloud accounts.

To address this issue, the DTSA authorizes the appointment of a neutral technical expert to facilitate the seizure of assets encompassing plaintiffs’ trade secret information. [2] With a qualified technical expert in place, plaintiffs and the court can be reasonably certain that seized accounts will have login credentials properly modified and pertinent information from those accounts copied for subsequent analysis. Moreover, having a technical expert in place with forensics expertise will better ensure that information seized from computers, smartphones, and tablets is properly copied and placed in the custody of the court. [3] Appointing a technical expert to assist law enforcement with the seizure of defendants’ property should therefore be considered an indispensable requirement of a seizure order.

While forensics expertise is essential for an appointed technical expert, courts should also ensure the technical expert is an electronic discovery service provider. [4] This is because the technical expert will likely need to run search queries at the direction of the court or a court-appointed special master to identify and locate trade secret information among the seized property. Having an electronic discovery platform to host seized data, with personnel trained to run search queries, and the ability to produce information during discovery should be essential qualifications for the appointed technical expert.

Special Masters and eDiscovery

Upon taking custody of defendants’ seized property, a court could conceivably review that information itself to identify the existence of plaintiffs’ trade secrets. However, seizure orders have the potential to encompass hundreds of thousands of electronic documents. A court simply does not have the staff, time, or other resources needed to review massive troves of electronic data.

This is why special masters are such a key aspect of DTSA seizure order practice. The DTSA specifically contemplates the appointment of special masters both to identify trade secret information among the seized property and to facilitate the restoration of all other seized information to defendants. [5] Moreover, a special master can interact with and advise the court regarding any number of issues relating to the seized property. Indeed, the Federal Judicial Center has spotlighted how special masters can function as a bulwark for the court by providing “a second, independent review of the seized material.” [6]

To accomplish these objectives, special masters must have electronic discovery expertise. Such expertise includes proficiency with electronic discovery search methodologies and analytics tools, along with the sophistication to use them to identify trade secret information. Working with the court’s technical expert, the special master should be able to quickly and efficiently sort through the corpus of seized data, isolating plaintiffs’ trade secret information for erasure while separating out non-trade secret materials for return to the defendants.

Seized Property during the Discovery Process

A final eDiscovery consideration for DTSA seizure practice is whether seized information should be subject to discovery if a matter does not settle before the commencement of the discovery process. While defendants should be allowed to review seized information hosted by the court’s technical expert on an electronic discovery platform, courts should be wary of granting plaintiffs access to the seized property.

The seized information will likely be replete with defendants’ confidential and proprietary information. Providing plaintiffs—who are generally defendants’ business competitors—with even limited access to seized information reflecting, e.g., sales and marketing data, financial records, or strategic plans, could pose significant harm to defendants. In addition, the seized documents may include attorney-client privileged communications belonging to defendants, along with vast quantities of irrelevant information. They may also implicate the privacy rights of third parties.

eDiscovery Help with DTSA Seizure Orders

With these considerations in mind, companies looking for help with DTSA seizure orders should consider working with Driven, Inc. Driven’s forensic experts have both the training and expertise needed to handle the technical aspects associated with property seizures. In addition, Driven offers eDiscovery platforms and skilled personnel who can run search queries on seized data. Finally, Driven’s expert consultants are seasoned attorneys with trade secret litigation experience who have served as court-appointed special masters for DTSA matters.

[1] See Blue Star Land Services. v. Coleman, No. 17-cv-0931, 2017 WL 11309528 (W.D. Okla. Aug. 31, 2017) (authorizing the seizure of “smart phones, tablets, desktop computers, laptop computers, and disks, memory files, flash drives, hard drives, thumb drives, and the like,” along with login credentials for email accounts and personal cloud accounts like Dropbox).

[2] 18 U.S.C. §1836(b)(2)(E).

[3] See 18 U.S.C. §1836(b)(2)(D).

[4] See Axis Steel Detailing, Inc. v. Prilex Detailing LLC, No. 2:17–cv–00428–JNP, 2017 WL 8947964 (D. Utah June 28, 2017).

[5] 18 U.S.C. §1836(b)(2)(D)(iv).

[6] Timothy Lau,  Trade Secret Seizure Best Practices Under the Defend Trade Secrets Act of 2016, Federal Judicial Center (June 2017).

Philip Favro
Philip Favro
Philip Favro acts as a trusted advisor to organizations and law firms on issues surrounding discovery and information governance. Phil provides guidance on data preservation practices, litigation holds, data collection strategies, and ESI search methodologies. In addition, he offers direction to organizations on records retention policies and the need to manage dynamic sources of information found on smartphones, cloud applications, and social networks. Phil is available to serve as a special master on issues related to electronic discovery. Phil is a nationally recognized thought leader and legal scholar on issues relating to the discovery process. His articles have been published in leading industry publications and academic journals and he is frequently in demand as a speaker for eDiscovery education programs. Phil is a member of the Utah and California bars. He actively contributes to Working Group 1 of The Sedona Conference where he leads drafting teams and serves as the Steering Committee project manager. Prior to joining Driven, Phil practiced law in Northern California where he advised a variety of clients regarding business disputes and complex discovery issues. He also served as a Judge Pro Tempore for the Santa Clara County Superior Court based in Santa Clara, California.