America’s reverence for anonymous speech is as old as the republic itself, tracing its roots to Thomas Payne’s pamphlet “Common Sense” and the Federalist Papers. But the right to speak namelessly has limits, and hedge fund billionaire David Einhorn recently demanded that a court unmask a blogger who anonymously disclosed confidential investment information.
Early last month, Greenlight Capital, Inc., Einhorn’s hedge fund, filed suit in New York state court against Seeking Alpha, Inc., a popular stock market blogging website. In the suit, Greenlight asked the court to order Seeking Alpha to identify a blogger who anonymously exposed Greenlight’s stake in Micron Technology before Greenlight revealed it.
According to the “Petition for Pre-Action Disclosure,” Greenlight began acquiring a stake in Micron on July 2, 2013. On the morning of November 14, 2013, a blogger who went by the handle “Valuable Insights” posted to Seeking Alpha: “Expect one mega hedge fund rock star to show up as [Micron] holder today, not Ackman, Icahn or Loeb.” “Valuable Insights” kept hinting at the “rock star’s” identity until someone guessed Einhorn, and then the blogger confirmed, “you heard it here first.”
Greenlight claimed that on that November morning, “the only persons who lawfully possessed information regarding Greenlight’s position in Micron were persons with a contractual, fiduciary, or other duty to maintain the confidentiality of Greenlight’s position.” Greenlight argued that “Valuable Insights” therefore: (1) wrongfully disclosed and misappropriated Greenlight’s valuable trade secrets, (2) breached confidentiality obligations owed to Greenlight, and/or (3) aided and abetted the breach of such confidentiality obligations.
Greenlight claimed that it continued to build its position in Micron from November 14 until November 19, and then announced its position in Micron on November 21. Greenlight claimed that it was damaged by the “Valuable Insights” post because “the trading price for Micron’s shares rose immediately after Valuable Insight’s posting.”
To trade secrets owners, it may seem self-evident that the confidentiality concerns at issue here should trump the First Amendment right of anonymous speech. Laws prohibiting trade secret misappropriation restrict free speech by their very nature. The simple fact that a blogger uses a pseudonym to distribute such trade secrets should not change the operation of those laws.
But courts have emphasized the importance of anonymous online speech in a variety of contexts where it might have seemed equally self-evident to some that the speaker should be identified.
The Delaware Supreme Court in Doe v. Cahill in 2005, in a first for a state’s highest court, addressed the issue of anonymous online speech. In that case, the defendants had posted allegedly defamatory statements on a newspaper blog. A city councilman and his wife sued four John Doe defendants, asserting defamation and invasion of privacy claims, and tried to compel the disclosure of the defendants’ identities. The court expressed deep misgivings that permitting the identification would “chill potential posters from exercising their First Amendment right to speak anonymously. The possibility of losing anonymity in a future lawsuit could intimidate anonymous posters into self-censoring their comments or simply not commenting at all.” The court reversed the lower court’s order to unmask the defendants’ identities.
More recently, a federal judge refused to unveil the identity of a blogger accused of disclosing trade secrets—even though the blogger had admitted to doing so. In Art of Living Foundation v. Does 1-10, Judge Lucy Koh of the Northern District of California found that a blogger known only as “Skywalker” had “raised a reasonable inference that unveiling his identity will both subject him to harm and chill others from engaging in protected speech.” Koh, quoting the Supreme Court in McIntyre v. Ohio Elections Commission, fretted that unmasking “Skywalker” would ultimately diminish free speech: “As the Supreme Court has explained, ‘an advocate may believe her ideas will be more persuasive if her readers are unaware of her identity. Anonymity thereby provides a way for a writer who may be personally unpopular to ensure that readers will not prejudge her message simply because they do not like its proponent.’”
And there may be even more to the Greenlight case than meets the eye. A review by Trade Secrets Watch of Micron’s stock price between November 11, 2013 and November 21, 2013 reveals that the price rose fairly consistently from November 11 through November 15, and then dropped until November 20. On November 21, the stock price rose. This pattern is almost identical to the performance of the S&P 500 during that same time period. Contrary to Greenlight’s contentions, the November 14 blog post appears to have had no effect on Micron’s stock price. For that reason, Judge Carol R. Edmead might have been inclined to take a particularly close look at Einhorn’s true motives here. Was it to intimidate bloggers into not publishing leaks?
We may never know. On March 24, without explanation, Greenlight filed a “Notice of Discontinuance,” effectively ending the case.