Wednesday, October 16, 2013

Tax Court Rules Orbitz Documents are Trade Secrets

Excerpts of the Tax Court's Determination follow:

There are certain procedures a court must follow before granting a request to shield information from public access under either Indiana Code § 5-14-3-5.5 or Administrative Rule 9. Most notable among these are the court’s duty 1) to conduct a public hearing on the request and 2) to subsequently issue an order that specifically outlines why the need for privacy outweighs the strong public policy that would otherwise allow access to such records.  See IND. CODE § 5-14-3-5.5(c),(d) (2013); Admin. R. 9(H)(1)-(3) (footnote
added). When, however, the documents sought to be protected fall within the mandatory exceptions set forth in APRA or Administrative Rule 9, a court can seal those records without holding such a hearing and balancing the competing interests. See Bobrow, 810 N.E.2d at 734; Admin. R. 9(G)(1), (H), (I). Consequently, the Court’s primary task is to determine whether Orbitz’s contracts are, or contain, “trade secrets.”

 First, the contracts at issue contain, and therefore are, “information.” As previously explained, the contracts specifically detail what Orbitz has negotiated with the hotels regarding room rates (i.e., the net rates). See supra, note 1.

 Second, Orbitz derives independent economic value from this pricing information. Indeed, given the highly competitive nature of the online travel industry, if Orbitz’s competitors had access to that pricing information, they could possibly gain a competitive advantage by negotiating better rates with hotels.

 Third, the pricing information contained in the contracts is not readily ascertainable through proper means by others who can obtain economic value from the information’s disclosure or use. While it cannot be denied that certain information relating to Orbitz’s contracts is already in the public domain (e.g., what hotels Orbitz negotiates with), neither Orbitz’s competitors nor the general public (i.e., Orbitz customers) could readily ascertain the information regarding hotel room “net rates” that is contained in the contracts.

 Finally, Orbitz has taken reasonable efforts to maintain the secrecy of the information contained within the contracts. Each contract contains its own confidentiality clause that precludes the hotels from disclosing to any third party any information relating to the contracts as well as any information provided by one party to the other in performing the contract. (See Pet’r Des’g Evid. Supp. Mot. Summ. J., Ex. 10, Attachs. D-F, Aug. 2, 2013.)

 Because the Court has determined that Orbitz’s contracts have the four characteristics of trade secrets, they fall within the mandatory exceptions to the general rule of public access set forth in APRA and Administrative Rule 9. Accordingly, the Court need not determine whether Orbitz’s need for privacy outweighs the policy of providing public access. See supra, p. 6 (footnote added).

http://www.in.gov/judiciary/opinions/pdf/10161301mbw.pdf