Superior Court Decision Provides Roadmap for Protecting Trade Secret Information Provided to State Agencies

Companies in regulated industries are often required to submit information to state agencies, and sometimes those submissions will include commercially sensitive information considered to be proprietary and trade secret.  Legitimate concerns exist about maintaining the trade secret status of information after it is in the hands of a state agency, particularly considering public records laws providing liberal public access to state records.  A recent California Superior Court decision in a case involving information submitted to the California Department of Motor Vehicles (“DMV”) by Waymo LLC highlights these concerns but demonstrates that it is possible to prevent the inadvertent disclosure of trade secret information.

In early 2021, Waymo applied for a Permit to Deploy Autonomous Vehicles on Public Streets.  As part of this application, Waymo was required to produce sensitive trade secret information related to various autonomous vehicle operations processes and design capabilities. Waymo marked the application as containing "Confidential Business Information" and subsequently provided further sensitive trade secret information in response to the DMV's follow-up questions (marking these responses as "confidential"). Waymo asserted that the submitted trade secret information implicates the unique methods by which Waymo’s autonomous vehicles carry out fundamental aspects of dynamic driving tasks, and how those vehicles interact with its support personnel.

In October 2021, the DMV notified Waymo that it had received a third-party request under the California Public Records Act (the “CPRA”) for the release of records relating to Waymo’s application. At the DMV's request, Waymo provided redacted versions of the requested materials, protecting proprietary and trade secret information but disclosing other information. On January 3, 2022, the DMV notified Waymo that the third-party requester had challenged some of the redactions. After some additional back and forth, the DMV advised Waymo that it would have to produce all requested documents, unredacted, unless Waymo obtained a court order preventing it from doing so.  Waymo promptly moved for a preliminary injunction to prevent the disclosure of the trade secret information, which was granted by the Superior Court for the County of Sacramento on February 22, 2022.

The Superior Court noted that the CPRA provides that "access to information concerning the conduct of the people's business is a fundamental and necessary right of every person in this state" and that under the CPRA, public records are to be open to inspection and "any reasonably segregable portion of a record shall be available for inspection by any person requesting the record after deletion of the portions that are exempted by law."  However, the CPRA also provides specific categories of records exempt from disclosure. Subdivision (k) provides that documents are exempt from disclosure if they are "[r]ecords, the disclosure of which is exempted or prohibited pursuant to federal or state law, including, but not limited to, provisions of the Evidence Code relating to privilege." California Evidence Code section 1060 provides that "the owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice."

The Superior Court held that Waymo had provided detailed declarations as to why the redactions at issue were necessary to protect its confidential trade secret information, and that there was no evidence that the information sought by the document request contained evidence of fraud or that its nondisclosure would otherwise work injustice which would eliminate the trade secret privilege.  Additionally, there was no evidence that the third-party requester would be harmed by the entry of a preliminary injunction temporarily halting the disclosure of the trade secret information.  Accordingly, the Court granted Waymo’s motion for a preliminary injunction, preventing for now the further dissemination of the redacted information and maintaining that information’s trade secret status.

It is possible, of course, that after further proceedings a court may ultimately determine that the disputed Waymo information does not qualify for trade secret protection and must be disclosed to the public under the CPRA.  However, Waymo’s successful “reverse-CPRA” petition for preliminary injunctive relief demonstrates that companies can prevent the premature disclosure of sensitive information submitted to state agencies before there is a full opportunity to litigate whether that information is, in fact, entitled to trade secret status and to the protection of the trade secret privilege exception to the CPRA.

Authored by: Dana Finberg