INVENTION SUBMISSION CORPORATION v. TAYLOR MACK ENTERPRISES, INC.

• Court: District Court, W.D. Pennsylvania
• Decided: March 10, 2021
• Docket: 2:21-cv-00015
• Status: Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

INVENTION SUBMISSION ) CORPORATION, d/b/a INVENTHELP ) and ROBERT J. SUSA, an individual, ) ) Plaintiffs, ) ) v. ) Civil Action No. 21-15 ) TAYLOR MACK ENTERPRISES, ) INC. and ZULAN BERRY, an individual, ) ) Defendants. )

MEMORANDUM OPINION I. BACKGROUND Presently before the Court is Plaintiffs’ Motion for Leave of Court to File Under Seal Complaint, Exhibit B to the Complaint, and Brief in Support of Motion for Preliminary Injunction (Doc. No. 1). Plaintiffs filed this Motion contemporaneously with the filing of redacted versions of their Complaint1 (Doc. No. 2), Motion for Preliminary Injunction (Doc. No. 4), and Brief in Support of Motion for Preliminary Injunction. (Doc. No. 5). Pursuant to the Court’s February 5, 2021 Order, Plaintiffs filed a Supplemental Brief in Further Support of their Motion for Leave of Court to File Under Seal (Doc. No. 19) and Defendants filed a Response thereto. (Doc. No. 21). Furthermore, Plaintiffs supplied the Court with unredacted copies of each of the filings at issue (Doc. Nos. 2, 5), and the Court has conducted an in camera inspection of those unredacted

1 The Complaint asserts claims for misappropriation of trade secrets under the Defend Trade Secrets Act and Pennsylvania Uniform Trade Secrets Act, breach of contract, and unfair competition. documents. Plaintiffs’ Motion is now ripe for decision. For reasons explained below, the Motion will be granted in part and denied in part.

As alleged in the redacted Complaint, Plaintiffs invited Defendant Berry and other select sales professionals to a private meeting in November 2019 at which time Plaintiff Susa revealed a new line of services Plaintiffs intended to offer through a new invention services platform, along with detailed and specific plans relating to marketing and business strategies. (Doc. No. 2, ¶¶ 9, 31, 32). At that meeting, Plaintiff Susa provided Defendant Berry (and the other attendees) with copies of Exhibit B to the Complaint (which is a printed-out PowerPoint presentation) and other unspecified written materials regarding Plaintiffs’ proprietary new business model. (Id., ¶¶ 34, 35). Plaintiffs further allege that Defendants breached the parties’ Regional Sales Director (“RSD”) Agreement, (see Docket No. 2-1), and misappropriated the proprietary pricing,

marketing, and business strategies contained in Exhibit B and presented at the meeting by using that information to create their own competing enterprise. Plaintiffs’ instant Motion seeks to seal from public access Exhibit B, (Docket No, 2-2), and certain specified averments contained in the Complaint and Brief in Support of their Motion for Preliminary Injunction because they contend those judicial records contain trade secrets and other proprietary and confidential information regarding the “sale and marketing of innovative new

product and service offerings. . . .” (Doc. Nos. 1, ¶ 12; 19 at 5). Plaintiffs further contend that this “confidential marketing and business plan information” reflects the types of records that courts routinely seal, and that public disclosure of this information would harm their competitive standing in the marketplace, handicap their ability to compete by divulging confidential details as to pricing and marketing strategy, provide competitors an advantage when seeking to sell their products and services, and cause them defined and serious injury if released to the public. (Doc. Nos. 1, ¶¶ 3- 5, 10-11; 19 at 5-6). While Defendants do not contest the sealing of Exhibit B and related averments, they do not concede that these filings contain protected trade secrets. (See generally Doc. No. 21).

II. APPLICABLE STANDARDS AND GENERAL FINDINGS The public has a right to access certain judicial records and proceedings pursuant to common law and the First Amendment to the United States Constitution. See In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 924 F.3d 662, 672 (3d Cir. 2019). The public’s common law right to access judicial records (i.e., documents filed with the court and documents that are

incorporated in the court’s adjudicatory proceedings) is presumed. Id. at 670 (citing Goldstein v. Forbes (In re Cendant Corp.), 260 F.3d 183, 192-93 (3d Cir. 2001)). This common law right of access “promotes public confidence in the judicial system”; “diminishes possibilities for injustice, incompetence, perjury, and fraud”; and “provide[s] the public with a more complete understanding of the judicial system and a better perception of its fairness.” Id. at 677 (quoting Littlejohn v. Bic Corp., 851 F.2d 673, 678 (3d Cir. 1988)).

However, this “common law right of access is ‘not absolute.’” Avandia, 924 F.3d at 672 (quoting Bank of Am. Nat’l Trust & Sav. Ass’n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 344 (3d Cir. 1986)). While the kinds of information courts protect from disclosure is narrow, courts do protect from disclosure “[d]ocuments containing trade secrets or other confidential business information.” Leucadia, Inc. v. Applied Extrusion Techs., Inc., 998 F.2d 157, 166 (3d Cir. 1993). “[A]n interest in safeguarding a trade secret may overcome a presumption of openness.” Avandia, 924 F.3d at 673 (quoting Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1073 (3d Cir. 1984)); see also Cutsforth, Inc. v. Lemm Liquidating Co., LLC, Civ. No. 17-1025, 2020 WL 772442 at *2-3 (W.D. Pa. Feb. 18, 2020) (sealing from public access trade secrets and other confidential information that “derives independent economic value from not being generally known by others who can obtain economic value from its disclosure”). Indeed, “courts may permissibly seal judicial records ‘where they are sources of business information that might harm a litigant’s competitive standing.’” Avandia, 924 F.3d at 679 (quoting Republic of Philippines v.

Westinghouse Elec. Corp., 949 F.2d 653, 662 (3d Cir. 1991)). The party seeking to seal any part of a judicial record bears the burden of showing that “the material is the kind of information that courts will protect” and that “disclosure will work a clearly defined and serious injury to the party seeking closure.” Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 560 (W.D. Pa. 2014) (citations omitted). The party seeking closure must show “that the interest in secrecy outweighs the presumption.” Id. (quoting Bank of Am., 800 F.2d at 344). In doing so, the party must establish that “the material [sought to be sealed] is the

kind of information that courts will protect and that disclosure will work a clearly defined and serious injury to the party seeking closure.” Id. (quoting Miller v. Indiana Hosp., 16 F.3d 549, 551 (3d Cir. 1994)). Moreover, the injury must be shown with specificity. Id. (citing Publicker, 733 F.2d at 1071). “Broad allegations of harm, bereft of specific examples or articulated reasoning, are insufficient.” Id. (quoting In re Cendant Corp., 260 F.3d at 194). When deciding to seal judicial records,2 the district court must articulate “compelling,

countervailing interests to be protected” through specific findings on the record concerning the

2 An analysis for preserving the confidentiality of discovery materials through a protective order under Federal Rule of Civil Procedure 26 is conducted using the Pansy factors. See Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994); Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995); see also Avandia, 924 F.3d at 671. Some of the Pansy factors may provide guidance for a common law right of access analysis, but the Pansy factors do not displace the common law standard. Avandia, 924 F.3d at 676. The Pansy factors are as follows: “1. whether disclosure will violate any privacy interests; 2. whether the information is being sought for a legitimate purpose or for an improper purpose; 3. whether disclosure of the information will cause a party embarrassment; 4. whether confidentiality is being sought over information important to public health and safety; 5. whether the sharing of information among litigants will promote fairness and efficiency; 6. whether a party benefitting from the order of confidentiality is a public entity or official; and 7. whether the case involves issues important to the public.” Id. at effects of disclosure. Avandia, 924 F.3d at 672, 678. In doing so, a document-by-document review must be conducted to determine if “the strong presumption of openness can be overcome by the secrecy interests of private litigants.” Id. at 673 (quoting Leucadia, 998 F.2d at 167). The district court must also “provide an opportunity for interested third parties to be heard.” Id. at 672-73, 678

(citation omitted). Avandia further instructs this Court to consider whether the First Amendment right of public access attaches even if any materials at issue are permissibly sealed pursuant to the common law right of access. Id. at 673, 680. Here, the Court first examines Exhibit B and notes that this document contains proprietary information3 concerning Plaintiffs’ new invention development service (including sample renderings), along with marketing and business strategies and related pricing and compensation structures. Based upon the limited record before the Court at this preliminary stage of the

litigation, and based upon the individualized analysis of each proposed redaction or seal request as specified infra, the Court finds that Exhibit B and certain averments contained in the Complaint and Brief contain the type of information that derives independent economic value from not being generally known by others who can obtain economic value from its disclosure. The Court further finds that if these particular pieces of information were to be released to the public it would materially harm Plaintiffs’ competitive standing in the invention services industry and would give their competitors an advantage when seeking to sell their products and services. Plaintiffs’ Motion

671. However, some of the Pansy factors, including factors two and three, are inconsistent with the standard of the common law right of access. Id. at 676-77. 3 At this preliminary juncture and with the limited record before it, the Court has not yet discerned whether these materials constitute trade secrets within the meaning of the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., or the Pennsylvania Uniform Trade Secrets Act, 12 Pa. C.S.A. § 5301 et seq. Such determination is not necessary because the Court may seal proprietary or otherwise confidential material regardless of whether such material constitutes a trade secret. See Avandia, 924 F.3d at 679 (observing that “courts may permissibly seal judicial records where they are sources of business information that might harm a litigant’s competitive standing”) (internal quotation marks and citation omitted). and contemporaneously filed Complaint also supports a finding that Exhibit B had been subject to efforts that are reasonable under the circumstances to maintain its secrecy because Plaintiffs shared it with Defendants and others who were signatories to an RSD Agreement containing confidentiality and non-disclosure provisions. The Court finds that Plaintiffs have a “compelling,

countervailing interest [in the information contained in Exhibit B] to be protected.” Avandia, 924 F.3d at 672. Accordingly, the Court finds that Plaintiffs’ request to seal Exhibit B and to redact certain averments in the Complaint and Brief meets the applicable common law standard for doing so. The Court must now determine whether this information should also remain sealed under the First Amendment right of access. When the First Amendment right attaches, “[a]ny restriction on the right of public access is evaluated under strict scrutiny” and a party may only rebut the

presumption in favor of access by “demonstrate[ing] an overriding interest [in excluding the public] based on findings that closure is essential to preserve higher values and is narrowly tailored to serve that interest.” Avandia, 924 F.3d at 673 (citation omitted). The party seeking to seal the information, Plaintiffs here, “bears the burden of showing that the material is the kind of information that courts will protect and that there is good cause for the order to issue.” Publicker, 733 F.2d at 1071.

Again, the record before the Court reflects that Exhibit B and certain averments related thereto contain confidential and proprietary business information that is of the kind that courts will protect. See Publicker, 733 F.2d at 1073; Cutsforth, 2020 WL 772442 at *2. Moreover, the Court also finds good cause for sealing Exhibit B and redacting certain related averments in the Complaint and Brief because of Plaintiffs’ overriding interest in excluding such materials from disclosure because the potential harm public access to those materials would bear upon Plaintiffs’ competitive standing in the invention services industry. Finally, the Court finds that sealing Exhibit B and redacting specific averments in the Complaint and Brief that would cause such harm if disclosed to the public is narrowly tailored to serve that interest. III. SPECIFIC FINDINGS

An item by item review must be conducted to determine if “the strong presumption of openness can be overcome by the secrecy interests of private litigants.” Avandia, 924 F.3d at 673 (quoting Leucadia, 998 F.2d at 167). Accordingly, the Court makes an individualized analysis of each proposed redaction or seal request as follows:

Request Description Confidential Plaintiffs’ Rationale for Court’s Findings No. Materials Redacting or Sealing No. 1 Exhibit B to the PowerPoint presentation Susa invested substantial time, Exhibit B contains the type of Complaint that Susa created energy, and resources in developing information that derives relative to the sale and a services model not previously independent economic value marketing of innovative seen in the competitive invention from not being generally known new product offerings services industry. Certain services by others who can obtain and groupings for a new revealed by Susa had never been economic value from its invention services offered in the invention services disclosure. If these pieces of platform. industry; the PowerPoint information were to be released presentation reveals confidential details as to pricing, marketing to the public, it would strategy, and the services materially harm Plaintiffs’ themselves. Moreover, the competitive standing in the PowerPoint details how various invention services industry and elements of the business model would give their competitors an coordinate to provide an innovative, advantage when seeking to sell new approach for inventor clients. their products and services. Disclosing this information would Exhibit B had been subject to materially harm Susa’s ability to efforts that are reasonable under attract customers and would also the circumstances to maintain give potential competitors an its secrecy because Plaintiffs advantage when attempting to sell shared it with Defendants and to Susa’s customers. others who were signatories to

an RSD Agreement containing Disclosing the PowerPoint would confidentiality and non- result in Susa’s confidential business disclosure provisions. Plaintiffs strategy and model being revealed to have a compelling, the general public. countervailing interest in the information contained in Exhibit B to be protected from public disclosure. No. 2 The chart in Chart that compares the Susa invested substantial time, The contents of this chart Plaintiffs’ Brief product and service energy, and resources in developing contain the type of information in Support of offerings of a services model not previously that derives independent their Motion for Defendants’ new seen in the competitive invention economic value from not being Preliminary business with those services industry. The chart details generally known by others who Injunction outlined in the the services package, which reflects can obtain economic value from PowerPoint prepared new, innovative ideas that Susa its disclosure. If these pieces of by Susa. developed, is refining, and which he information were to be released is not currently offering to the public. Disclosing this information to the public, it would would materially harm Susa’s materially harm Plaintiffs’ ability to attract new customers and competitive standing in the would also give potential invention services industry and competitors an advantage when would give their competitors an attempting to sell to Susa’s advantage when seeking to sell customers. their products and services. The contents of this chart, which is Because the services offered by derived from the contents of Defendants are a near-perfect copy Exhibit B, had been subject to of the services offered under Susa’s efforts that are reasonable under new model, disclosing the services the circumstances to maintain developed by Susa as compared to its secrecy because Plaintiffs those peddled by Defendants would shared it with Defendants and have a detrimental effect on Susa’s others who were signatories to ability to benefit from the business concepts developed by his efforts an RSD Agreement containing and at his expense. confidentiality and non- disclosure provisions. Plaintiffs have a compelling, countervailing interest in the information contained in the chart to be protected from public disclosure. However, the redacted text in the Brief immediately preceding this chart does not contain such information; rather, that text merely asserts a conclusory argument regarding the contents of the chart referenced above. No. 3 Paragraph No. Allegations that describe Susa invested substantial time, With the exception of and provide a link to energy, and resources in developing a the specific reference 10 of the Defendants’ competitive services model not previously seen in to Defendants’ website Complaint business model, which the competitive invention services address referenced at copies language, concepts, industry. Publicizing the link to the Paragraph 43 and product offerings, and bootlegged services package, which elsewhere in the ideas developed by reflects new, innovative ideas that – Complaint and its InventHelp and, individually and as a package – are related business separately, new services not currently available to the public moniker as expressed and concepts revealed by through Susa promotes the broader in quotation marks Susa in confidence at a dissemination of the purloined trade within Paragraph 10 of November 2019 meeting. secrets. the Complaint, the contents of Paragraph 10 does not reveal proprietary or otherwise confidential information appropriate for redaction. No. 4 Paragraph Allegations that describe Susa invested substantial time, The text of Paragraph 33 Nos. 33, 35, in detail the November energy, and resources in developing merely references the existence and 42-56 of the 2019 meeting at which a services model not previously of Exhibit B and characterizes Complaint Susa disclosed his new seen in the competitive invention its contents as being proprietary invention services services industry. Publicizing the and secret, but the text does not model and the business particulars of the bootlegged reveal proprietary or otherwise plan revealed by Susa, services package, which reflects confidential information as well as the new, innovative ideas that – appropriate for redaction. PowerPoint itself, as individually and as a package – are compared to the website not being offered to the public – The redacted portion of the text for Defendants’ new promotes the broader dissemination of Paragraph 35 merely business, which of the purloined trade secrets. characterizes Plaintiffs’ essentially copies the proprietary offerings as information provided Further, articulating the subject confidential, but the text does during the November matter of the November 2019 not reveal proprietary or 2019 meeting verbatim. meeting would result in the public otherwise confidential exposure of protected information information appropriate for relayed in confidence to a small, redaction. exclusive group of professionals. Understanding that the Complaint’s The text of Paragraph 42 makes description of Plaintiffs’ services conclusory allegations of necessarily includes information misappropriation of the revealed at the November 2019 contents of Exhibit B and meeting (inclusive of references to related materials but does not the PowerPoint exhibit that reveal proprietary or otherwise Plaintiffs assert should remain confidential information sealed), along with multiple appropriate for redaction. references and links to Defendants’ website promoting the purloined Paragraph 43 of the Complaint trade secrets, dissemination of the contains a reference to a subject paragraphs would expose mechanism whereby the public the subject matter of Susa’s could obtain Plaintiffs’ November 2019 meeting and the proprietary and confidential PowerPoint to the view of market information such as that competitors. contained in Exhibit B. As such, and for the reasons expressed regarding Item No. 1 above, the Court finds that Paragraph 43 may remain redacted to protect its contents from public disclosure.

Paragraph Nos. 44, 53, 55, and 56 aver that the materials Defendants purportedly misappropriated are proprietary and confidential, but these averments do not reveal the underlying information and thus do not reveal proprietary or otherwise confidential information appropriate for redaction.

Paragraph Nos. 45-52, and 54 contain specific references to Plaintiffs’ proprietary and confidential information as put forth in Exhibit B. As such, and for the reasons expressed regarding Item No. 1 above, the Court finds that Paragraph Nos. 45-52, and 54 may remain redacted to protect their contents from public disclosure.

IV. CONCLUSION In sum, the Court finds that Plaintiffs have shown good cause as to why certain of their proposed redactions should remain under seal. Accordingly, Plaintiffs will be ordered to re-file their Complaint and Brief in Support of their Motion for Preliminary Injunction with the following redactions as specifically reflected in the chart above: as to paragraph 10 of the Complaint, only Defendants’ business moniker as expressed in quotation marks in said paragraph shall be redacted; paragraphs 43, 45-52 and 54 of the Complaint shall be redacted in their entirety, Exhibit B to the Complaint shall be filed under seal; and the chart in Plaintiffs’ Brief shall be redacted.4 No other items in Plaintiffs’ filings shall be redacted or filed under seal at this juncture.

An appropriate order follows. W. Scott Hardy W. Scott Hardy United States District Judge

Date: March 10, 2021

cc/ecf: All counsel of record

4 As stated above, the currently redacted text in Plaintiffs’ Brief immediately preceding the chart is not subject to redaction.