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Rule barring publication of trade secrets struck down

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Rule barring publication of trade secrets struck down09/09/96 OREGON--The Oregon Supreme Court in late August reversed a lower court order…

Rule barring publication of trade secrets struck down

09/09/96

OREGON–The Oregon Supreme Court in late August reversed a lower court order barring a sporting goods industry newsletter from publishing a sportswear company’s product plan without prior court approval. It held that a state statute barring publication of alleged trade secrets is unconstitutional.

The court characterized the order as a “classic” impermissible prior restraint on publication.

Adidas America, Inc. filed a trade secret misappropriation suit against Sports Management News, Inc., publisher of Sporting Goods Intelligence, after the newsletter reported that Adidas planned to alter the design of its running shoes. Adidas alleged that the newsletter printed information from a confidential booklet containing the company’s footwear development plans, in violation of the Oregon Uniform Trade Secrets Act, which restricts the right to speak, write or print on the subject of an alleged trade secret.

Washington County Circuit Judge Gayle Nachtigal issued an ex parte order in May prohibiting the newsletter from further disclosure of Adidas’s product plans without prior court approval. The judge ruled that information from the document could not be published even if the newsletter learned of the information “in connection with its traditional newsgathering activities.”

The Supreme Court reversed Judge Nachtigal’s order, holding that the nondisclosure provision of the trade secrets statute violated the state constitution because it “expressly restricts the right to speak, write, or print freely.” The high court also noted that there was no evidence that the newsletter obtained the information unlawfully.

The newsletter’s one paragraph report read: “ADIDAS Barefoot Technology plans to introduce a visible chassis for Spring `97 along with a full chassis running shoe. Also on the drawing board is a reduction of foam to foam-less midsole and a three-dimensional frame to attach to the PODS outriggers.” (Oregon, ex rel Sports Management News, Inc. v. Nachtigal; Media Counsel: Lee Levine, Washington, D.C.; Robert E.L. Bonaparte, Portland)