The Civil Courts: When Your ‘Confidential Business Information’ Isn’t So Secret

Kentucky Civil Court Case Offers Lessons on Confidential Business Information Made Public

Today, we take a stab at answering the question: When will a civil proceeding be hidden from the public to protect confidential business information?

The short answer is, ‘Whenever the judge says so.’

Discovery in litigation concerning proprietary business information, trade secrets, and the like is often conducted behind closed doors and under seal, provided that one of the parties asks for a court order and the judge agrees.

Such ‘protective orders,’ which ensure that confidential business information is protected, have become part of the ordinary course of business litigation. In some jurisdictions, if both sides agree, every document produced in discovery and every deposition can be marked ‘confidential’ and be shielded from public view. In many cases, the subject matter of the litigation is only tangentially related to the level of confidentiality sought by the litigants.

Exhibit A: Purdue Pharma’s High-Profile Civil Court Case

In certain high-profile cases, however, protecting confidential business information cannot be assumed, even if both sides would prefer it or if both sides acquiesce. Consider what happened to pharmaceutical company Purdue Pharma defending fraud and conspiracy claims relating to its drug OxyContin.

In 2007, Purdue Pharma was sued in Pike County, Kentucky, a community with more than a passing familiarity with OxyContin abuse. As per usual, the parties exchanged information in pre-trial discovery that would be presented in trial. That discovery included a deposition of a former company president. After discovery, Purdue Pharma settled the case for $24 million. Discovery had been taken confidentially, with both sides’ agreement. However, following the settlement, a news organization intervened in the case and made a motion to have the parties’ discovery materials unsealed. The judge granted the motion.

The news organization made two arguments: First, it argued that it had a First Amendment right to see the parties’ discovery materials. Second, it argued that it had a common law right to access. The Kentucky court rejected the first basis but agreed with the news organization on the second, concluding that “the Court sees no higher value than the public (via the media) having access to these discovery materials, so that the public can see those facts for themselves.”

Purdue Pharma appealed the judge’s ruling.

On December 14, 2018, the Kentucky Court of Appeals affirmed the lower court’s ruling in favor of public disclosure. That Court first clarified that its ruling was based on Kentucky common law, not common law generically. The Court then began its analysis of Kentucky common law with Kentucky’s deep anti-monarchical roots, noting that Kentuckians’ “pioneer spirit was evident in their jurisprudence.”

Out of these roots comes a “presumption of broad public access” to the courts and court records. This presumption is based not on English common law or even American common law but on the common law of Kentucky, as developed in that state over its existence. That law, explained the Kentucky  Court of Appeals, created a “freer, more open, democracy-based American approach to court-records access [that is] well reflected in Kentucky’s jurisprudence.” From these premises, the conclusion was obvious: the lower court ruling was unanimously affirmed.

On August 21, 2019, the Kentucky Supreme Court denied review of the Court of Appeals’ decision, allowing it to stand.

The documents revealed included internal emails, interoffice memos, clinical trial summaries, meeting minutes, interviews, and numerous trails of exchanges between Purdue Pharma sales and marketing executives and potential stakeholders. During the trial, the public discovered not only the undeniable connection between Purdue Pharma’s aggressive marketing tactics and the opioid crisis, but also quite a lot about what went on behind closed doors in the pharmaceutical company.

On October 21, 2020, the Department of Justice announced a global resolution of its criminal and civil investigations into Purdue Pharma LP, which ultimately led to three criminal charges and  billions in fines.

Reality Check: 2 Key Lessons on Protecting Confidential Business Information

What lessons can be taken away from these rulings?

The first is that the courts belong to the public. If there’s a high-profile case, it may not matter that you could convince the other side to enter a protective order that the judge barely looked at before entering. If your dispute raises matters of public interest and the media comes sniffing around, there’s a real risk that information that has been sealed by agreement of the parties can become unsealed and made public.

The second lesson is that preserving confidential business information is a litigation interest like any other. Confidentiality should be considered explicitly at the outset of litigation, a confidentiality strategy should be devised, and a strategic plan should be implemented. You should not wait for a motion to unseal filed by the media to figure out whether confidentiality helps or hurts your client.

Part of your strategy should be discussing what is and isn’t confidential and material to the litigation. In the federal courts, Civil Procedure Rule 5.2 sets out some basic guidelines:

• Social security numbers must be redacted in any public filing.
• Individuals’ birth years, the full names of any minors, and financial account numbers must be redacted as well. In this age of digital scams, phishing, and identity fraud, these precautions make good sense.
• Rule 5.2(d) allows courts to permit filings under seal.
• Rule 5.2(f) allows parties to file unredacted versions of documents under seal if a redacted version has been filed publicly.
• Rule 5.2(e) states that courts can require additional redactions or limits on remote electronic access to court filings “for good cause.”

Many courts have implemented their own rules regarding filing under seal and redactions; Rule 5.2 is just the starting point. This rule, and its state court analogues, provide the framework within which parties can decide what to reveal and what they wish to keep hidden from public view.

If you fear publicity more than the other side, or vice versa, don’t get caught by surprise. Avoid making decisions on the fly during discovery. And, if you absolutely, positively want to avoid publicity, either resolve your dispute short of litigation or get your dispute out of the courts and into private arbitration.

We think you’ll also like:

1. Start Smart: Legal Lessons in IP for Founders and Inventors
2. Leveraging and Protecting Trade Secrets in the 21st Century
3. Steps for Protecting Business Sale Confidentiality

[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can view at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

1. Introduction to US Privacy and Data Security Regulations and Requirements
2. Leveraging and Protecting Trade Secrets in the 21st Century
3. Introduction to Commercial Litigation Finance

This is an updated version of an article published on June 7, 2016 and updated on December 27, 2023.]

©2025. DailyDAC^TM, LLC d/b/a/ Financial Poise^TM. This article is subject to the disclaimers found here.