Publicly accessible trade secrets not entitled to court sealing

The maker of the iPhone and iPad failed to convince a federal judge in California that court documents in its lawsuit against a maker of Mac computer clones should remain shielded from public view.

Apple Inc. successfully sued Psystar Corporation for copyright infringement in November 2009 and asked the court at that time to seal records related to the judgment. U.S. District Judge William Alsup granted Apple’s request, but the U.S. Court of Appeals in San Francisco (9th Cir.) ruled the judge did so improperly because he failed to articulate any reasons or findings underlying his decision to seal the documents.

When the public has a right of access to judicial documents, judges must, before restricting that access, put forth specific, on-the-record findings demonstrating that sealing is necessary to serve a compelling government interest and narrowly tailored to serve that interest. The appellate court remanded the case to Alsup to apply this standard in his evaluation of Apple’s sealing request.

In its renewed request to seal, the company claimed the documents at issue contained “compelling trade secrets” about its Mac OS X operating system and computer products, including its technological protection measure, which Apple uses to prevent unauthorized access to and copying of the software.

A trade secret is a formula, design or other proprietary information that is not generally known, is the subject of reasonable efforts to maintain its secrecy and confers some sort of economic benefit on its holder. Courts have allowed limited sealings in order to protect trade secrets or other sensitive business information where trade secrets are in fact involved and substantial damage to a party’s property rights in these secrets would occur if the material were not sealed.

Disclosure of its trade secret material could enable other individuals to engage in the type of infringement Psystar undertook, Apple argued. According to court documents filed in connection with the judgment against Psystar, the company sold a software product that allowed buyers to run the Mac operating system on non-Apple computers. The judgment enjoined Psystar's sales of the product.

Alsup rejected Apple’s argument, however, noting that much of the information the company sought to seal is already available to the public through an examination of the OS X operating system itself or the web site of a book about the software.

Apple conceded that much of the material it sought to shield was publicly available and did not allege that the material was unlawfully learned or misappropriated. Rather, “third parties may have accurately deduced and published some of the material,” according to a statement from the company’s vice president of core OS software that Alsup quoted in his order, released Tuesday.

Yet, because it was not the source of that publicly available information, nor did the company confirm its accuracy, Apple claimed its trade secret protection still existed. Alsup disagreed.

“There is no compelling reason to justify sealing the documents if the information is already available to the public . . . Apple cannot have this court seal information merely to avoid confirming that the publicly available sources got it right,” the judge said.