RULE 507. TRADE SECRETS
A person has a privilege, which may be claimed by him or his agent or employee, to refuse to disclose and to prevent other persons from disclosing a trade secret owned by him, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice. If disclosure is directed, the court shall take such protective measures as the interest of the holder of the privilege and of the parties and the interests of justice require.
Rule 507 is an adoption of its counterpart in the Uniform Rules of Evidence (1974). It provides a limited privilege to protect from disclosure that group of confidential facts necessary to the internal operation of a business entity.
The instances in which the invocation of this privilege is justified are few, given the comprehensive application of public registration, patent and copyright laws and given the nature of the lawsuits in which the privilege is likely to be asserted. There is no need to invoke the privilege in those cases in which public registration laws provide adequate protection of ideas or products; the privilege should not be allowed in those cases in which knowledge of business practices is essential to the determination of relevant issues being tried, for example, in cases involving unfair trade practices.
Therefore, the rule provides that the privilege may be claimed, but only "if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice." In so framing this rule of privilege, the admonition of Dean Wigmore is heeded:
"* * * the occasional necessity of recognizing it (a trade secrets privilege) should not blind us to the danger of such a measure, or entice us into an unqualified sanction for such a demand." 8 Wigmore on Evidence 2212(3) at 155 (McNaughton rev. 1961).
Once the decision to require disclosure is made by the trial judge, the ultimate sentence of this rule gives the judge freedom to direct disclosure in a manner that recognizes the interest of the holder of the privilege and balances this interest against the interests of the parties and of justice.The rule does not prescribe any certain method to be utilized; the matter is one within the trial judge's discretion. It would seem that the variety of interests might often be served through the use of in camera disclosures in the presence of only those to whom the information is necessary to the conducting of the trial.
SOURCES: Minutes of Joint Procedure Committee: January 29, 1976, page 7. Rule 507, Uniform Rules of Evidence (1974).
CONSIDERED: 19-16.1-10, 23-25-06, NDCC.
CONSIDERED: Rule 26(c) (7), NDRCivP.