                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


DTM RESEARCH, L.L.C.,                 
               Plaintiff-Appellee,
                and
UNITED STATES OF AMERICA,
               Intervenor-Appellee,             No. 00-1450

                 v.
AT&T CORPORATION,
            Defendant-Appellant.
                                      
           Appeal from the United States District Court
            for the District of Maryland, at Greenbelt.
                 Peter J. Messitte, District Judge.
                        (CA-96-1852-PJM)

                      Argued: January 24, 2001

                      Decided: March 27, 2001

       Before NIEMEYER and KING, Circuit Judges, and
      David A. FABER, United States District Judge for the
     Southern District of West Virginia, sitting by designation.



Affirmed and remanded for further proceedings by published opinion.
Judge Niemeyer wrote the opinion, in which Judge King and Judge
Faber joined.


                            COUNSEL

ARGUED: William Norman Withrow, Jr., TROUTMAN SAND-
ERS, L.L.P., Atlanta, Georgia, for Appellant. Alisa Beth Klein,
2                  DTM RESEARCH v. AT&T CORP.
Appellate Staff, Civil Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C., for Appellee United States. Ralph
S. Tyler, HOGAN & HARTSON, L.L.P., Baltimore, Maryland, for
Appellee DTM. ON BRIEF: C. LeeAnn McCurry, TROUTMAN
SANDERS, L.L.P., Atlanta, Georgia; David B. Hamilton, Kelly J.
Davidson, OBER, KALER, GRIMES & SHRIVER, Baltimore, Mary-
land; Laura A. Kaster, AT&T CORPORATION, Liberty Corner, New
Jersey; Kathryn E. Thiel, AT&T CORPORATION, Oakton, Virginia,
for Appellant. David W. Ogden, Acting Assistant Attorney General,
Lynne A. Battaglia, United States Attorney, Mark B. Stern, Appellate
Staff, Civil Division, UNITED STATES DEPARTMENT OF JUS-
TICE, Washington, D.C., for Appellee United States. Douglas R.M.
Nazarian, HOGAN & HARTSON, L.L.P., Baltimore, Maryland, for
Appellee DTM.


                              OPINION

NIEMEYER, Circuit Judge:

   DTM Research, L.L.C. ("DTM"), a Maryland limited liability com-
pany, commenced this diversity action against AT&T Corporation
("AT&T"), seeking a declaratory judgment, injunctive relief, and $24
million in damages. The complaint alleges that AT&T misappropri-
ated DTM’s trade secrets during the course of contract negotiations
between the two companies involving AT&T’s possible employment
of DTM’s expertise in data mining. During the course of discovery,
AT&T issued subpoenas to agencies of the United States and persons
who have dealt with the agencies to discover evidence in support of
AT&T’s hypothesis that DTM’s claimed trade secrets related to tech-
nology that DTM misappropriated from the United States. When the
district court granted the United States’ motion to quash the subpoe-
nas, based on the United States’ assertion of a "state secrets" privi-
lege, AT&T moved for summary judgment on the ground that the
district court’s protective order precluded it from defending the case
effectively. The district court denied AT&T’s motion, but agreed to
certify two issues to this court under 28 U.S.C. § 1292(b). Although
the questions cannot be definitively answered in the absence of fact-
finding, we affirm the district court’s conclusions at this stage of the
proceedings.
                  DTM RESEARCH v. AT&T CORP.                       3
                                  I

   In connection with AT&T’s interest in efficiently marketing its
telecommunications products and services to the rapidly growing
work-at-home market by better exploiting its own extensive data-
bases, it entered into negotiations with DTM in early 1995. DTM
claimed special knowledge and expertise in analyzing large amounts
of data and offered its "Orca Blue" process, which it described as a
"new and unprecedented group of methods, techniques and processes
for mining and analyzing immense quantities of call detail data, to
identify, for marketing purposes, various segments of the population
from telephone-call records." Because DTM claimed that its knowl-
edge and information were trade secrets, it demanded that AT&T per-
sonnel who would be evaluating "Orca Blue" enter into
confidentiality agreements.

   AT&T personnel signed the confidentiality agreements and then
worked with DTM personnel to set up a demonstration of DTM’s data
mining techniques in a limited market in San Diego. Following the
demonstration, AT&T acknowledged that the results were promising.
The parties could not, however, agree on a contract because AT&T
believed that the $24 million asking price was too high and that it
would be better served if it used its own in-house capability to com-
plete the task of data mining. AT&T also believed that issues of cus-
tomer confidentiality counseled against awarding the contract to DTM
because the operation of "Orca Blue" might require sharing confiden-
tial consumer information with DTM.

   Following AT&T’s rejection of DTM’s proposals, DTM filed this
action, alleging that AT&T terminated negotiations only after obtain-
ing its trade secrets in "Orca Blue" and that AT&T then incorporated
the secret information into its already existing technology, thereby
allowing it to enhance its in-house capabilities at the expense of
DTM. AT&T’s defense is, in part, based on its "belief" that aspects
of "Orca Blue" had been misappropriated by DTM from the United
States in the course of work that DTM and other companies had ear-
lier performed for the United States. AT&T also believes that the
alleged "trade secrets" involve technology commonly used throughout
the industry.
4                  DTM RESEARCH v. AT&T CORP.
   To discover evidence relating to its defenses, AT&T issued sub-
poenas to various agencies of the United States, as well as to various
commercial entities that allegedly had worked in developing technol-
ogy for the United States to obtain evidence to prove that whatever
trade secret existed in "Orca Blue" did not belong to DTM but rather
to the United States. The United States intervened and, invoking the
"state secrets" privilege, moved to quash AT&T’s subpoenas. The
United States took no position on whether the technology at issue is
similar to any technology that it owns but claimed that any inquiry
into technology of the type described in AT&T’s subpoenas would
threaten national security. The district court granted the government’s
motion and severely circumscribed AT&T’s discovery in this area.
AT&T then filed a motion for summary judgment, arguing that the
district court’s order quashing its subpoenas prevented AT&T from
freely and fairly defending the claims brought against it and that
therefore the district court should enter judgment in favor of AT&T.

  After denying AT&T’s motion, the district court nevertheless
granted AT&T’s request to certify two issues to this court under 28
U.S.C. § 1292(b). The district court posed the following questions:

    1. Did the Court, in its Opinion and Order of December
       10, 1999 correctly hold that fee simple ownership is not
       an element of any of the claims set forth in Plaintiff
       DTM’s Complaint against Defendant AT&T for viola-
       tion of the Maryland Trade Secrets Act (Count I), viola-
       tion of a confidentiality agreement between the parties
       (Count II), quantum meruit (Count III), and unjust
       enrichment (Count IV)?

    2. Do the Court’s Orders of December 10, 1999 and
       November 25, 1998 which preclude inquiry into the
       alleged theft of DTM of trade secrets from the U.S.
       government (based on the Government’s assertion of
       the state secrets privilege) deny AT&T a fair trial and
       therefore require termination of all or any part of this
       litigation?

By order dated April 19, 2000, we granted permission to appeal.
                    DTM RESEARCH v. AT&T CORP.                           5
                                    II

  On the first question posed, the district court, applying Maryland
law, which the parties agree applies, ruled:

     The court is persuaded by DTM’s argument that ownership
     — in the sense of fee simple absolute title — is not neces-
     sary and that mere possession is sufficient to sustain a cause
     of action under the [Maryland Uniform Trade Secrets] Act.
     As DTM points out, neither the Act nor the case law itself
     explicitly require[s] the plaintiff in a trade secrets case to be
     the outright owner of the trade secret at issue. But DTM is
     also correct from a historical standpoint.

                                  ***

     Maryland’s law of conversion fully reflects this heritage. In
     order to recover for conversion, one must either have been
     in actual possession or have had the right to immediate pos-
     session in the converted asset.

                                  ***

     The Court concludes that possession, not ownership or right
     to title, is all that is required to sustain a cause of action
     under the Uniform Trade Secrets Act. Accordingly, the
     Court finds that AT&T’s ownership defense would not con-
     stitute a valid dispositive defense and that preclusion of dis-
     covery into the issue of DTM’s ownership of the Orca Blue
     technology can have no prejudicial impact on the ability of
     AT&T to continue in this litigation.

(Citation, footnote, and internal quotation marks omitted).

   Contending that the district court erred in this ruling, AT&T argues
that well established principles of trade secrets law oblige a plaintiff,
as part of its prima facie case, to establish that it owns the trade secret
that is the subject of the dispute, see Surgidev Corp. v. Eye Tech. Inc.,
648 F. Supp. 661, 679-80 (D. Minn. 1986) (first element in a trade
6                   DTM RESEARCH v. AT&T CORP.
secret claim is that the "plaintiff is the owner of a trade secret"), or
that the plaintiff has come to possess the trade secret, either by way
of assignment, license, or some other means of conveyance from the
trade-secrets owner or discoverer such that the owner no longer has
a right to use the trade secret, see Licorish v. Exxon Corp., No. 84-
5603, 1985 U.S. Dist. LEXIS 20184, *3 (E.D. Pa. Apr. 30, 1985).
Accordingly, AT&T argues that proof that DTM’s possession of the
trade secrets in "Orca Blue" is wrongful would provide it a complete
defense against DTM’s suit, regardless of the manner by which
AT&T obtained the trade secret.

   DTM accepts the proposition that as part of its prima facie case,
it must show either that it developed the trade secret at issue or other-
wise is in lawful possession of it. It asserts that it is prepared to
present evidence at trial on the means by which it developed "Orca
Blue" to satisfy this obligation. DTM, however, disagrees with
AT&T’s contention that if AT&T proved that DTM misappropriated
"Orca Blue" technology from a third party, AT&T would be exoner-
ated of its own misappropriation of that technology from DTM. DTM
relies on the Maryland law of theft which provides that "[i]t is not a
defense to theft that the property was taken, obtained, or withheld
from a person who had obtained possession of the property by illegal
means." Md. Code Ann., Art. 27, § 343(b).

   To the extent that a trade secret misappropriation case draws on
principles of personal property law, we agree with the district court
that a traditional property-law analysis may be helpful in determining
a plaintiff’s standing to assert a misappropriation claim. See, e.g.,
Varo, Inc. v. Corbin Mfg. Co., 551 F.R.D. 376, 378 (E.D. Pa. 1970);
4 Milgrim on Trade Secrets § 15.01[1][a][iv] (2000) (noting that
"where an individual develops allegedly trade secret matter and uti-
lizes it within an individual proprietorship and later incorporates the
business, the successor corporation must allege and prove assignment
to it of the alleged trade secret" to have standing to sue); see also
Restatement (Second) of Torts § 895(1) (1977) (stating that a defen-
dant generally cannot assert the rights of a third party who enjoys
superior rights in the damaged land or chattel to the plaintiff as a
defense for his own liability to the plaintiff, even when the plaintiff
himself is a converter and in wrongful possession).
                    DTM RESEARCH v. AT&T CORP.                         7
   But the question of whether "fee simple ownership" is an element
of a claim for misappropriation of a trade secret may not be particu-
larly relevant in this context. While trade secrets are considered prop-
erty for various analyses, see e.g., Bond v. Polycycle, Inc., 732 A.2d
970, 977 (Md. App. 1999) (concluding that trade secrets are "assets"
and "property" of a corporation and noting that an employee’s taking
of computer files containing trade secrets "constituted a theft" (cita-
tions and internal quotation marks omitted)), the inherent nature of a
trade secret limits the usefulness of an analogy to property in deter-
mining the elements of a trade-secret misappropriation claim. The
conceptual difficulty arises from any assumption that knowledge can
be owned as property. The "proprietary aspect" of a trade secret
flows, not from the knowledge itself, but from its secrecy. It is the
secret aspect of the knowledge that provides value to the person hav-
ing the knowledge. The Maryland Uniform Trade Secrets Act, Md.
Code Ann., Com. L. Art. § 11-1201 et seq., thus defines a trade secret
as information that has value because it is not "generally known" nor
"readily ascertainable." Id. § 11-1201(e). While the information form-
ing the basis of a trade secret can be transferred, as with personal
property, its continuing secrecy provides the value, and any general
disclosure destroys the value. As a consequence, one "owns" a trade
secret when one knows of it, as long as it remains a secret. See id.
§ 11-1201(c). Thus, one who possesses non-disclosed knowledge may
demand remedies as provided by the Act against those who "misap-
propriate" the knowledge. A misappropriation occurs when one
acquires the secret information "by improper means" or discloses the
secret information acquired by "improper means."

   Thus, the concept of a "fee simple" interest in a trade secret, or any
proprietary interest, is not entirely useful in defining the elements of
a misappropriation claim. In supervising the further prosecution of
this case, the district court should instead articulate the elements of
the claim based on the language of the Uniform Trade Secrets Act and
have the factfinder measure the proof of the parties against those ele-
ments.

   Accordingly, if DTM demonstrates that it possesses secret informa-
tion satisfying the definition of § 11-1201(e) and that AT&T misap-
propriated that information, as defined in § 11-1201(c), by improper
means, as defined in § 11-1201(b), then DTM may be entitled to the
8                   DTM RESEARCH v. AT&T CORP.
remedies authorized by §§ 11-1202 through 11-1205. AT&T may
defend the action by demonstrating, among other things, that DTM
failed to satisfy its burden of proving the existence of a trade secret
as defined in § 11-1201(e). Relevant to such a defense would be
AT&T’s assertion that persons other than DTM possessed the same
information, including AT&T itself. This fact alone, however, would
not destroy DTM’s claim to a trade secret. Thus, if only DTM and
AT&T have the information and if both have undertaken to maintain
its secrecy, the information might well still have value and therefore
satisfy the definition of a trade secret. See E.I. Dupont de Nemours
& Co. v. United States, 288 F.2d 904, 911 (Ct. Cl. 1961). But of
course, because either party could voluntarily disclose the information
generally, such a trade secret’s value might be ephemeral. Similarly,
if the United States possesses the information (a matter the United
States neither confirms nor denies) but maintains it as a secret, DTM
may be able to claim that a trade secret exists.

   More relevant, perhaps, is the question whether AT&T "misappro-
priated" the secret information in the sense defined by the Act. See
Md. Code Ann., Com. L. Art. § 11-1201(c). Proving this element
would require DTM to show that AT&T used improper means to
acquire from DTM the information currently in AT&T’s possession.
See id. § 11-1201(c); see also id. § 11-1201(b) (defining "improper
means"). While DTM could attempt to prove that AT&T violated the
confidentiality agreements by misusing disclosures made during
negotiations, AT&T might attempt to prove that it always possessed
the information, as did others in the industry, and that the information
was therefore neither secret nor misappropriated.

   Accordingly, we answer the district court’s first question in the
affirmative, concluding that fee simple ownership in its traditional
sense is not an element of a trade secrets misappropriation claim in
Maryland.

                                   III

   On the second question of whether the district court’s recognition
of the "state secrets" privilege requires termination of this litigation,
we agree with the district court’s analysis and its conclusions.
                   DTM RESEARCH v. AT&T CORP.                         9
   Responding to AT&T’s claim that it needed discovery from the
United States about the United States’ alleged technology in order to
establish a defense that the technology is "generally known in the
industry," the district court pointed out that the evidence would be
irrelevant because the information would still be a secret and there-
fore not probative of what is "generally known in the industry." The
court appropriately observed that "[a] secret may still be a secret,
though shared by others," and continued, "While AT&T remains free
to establish that other companies in non-secret ways may have devel-
oped technology similar or identical to Orca Blue, it does not need to
delve into the possible existence of the [United States’ technology] to
do so." The court concluded on this subject:

    The court is satisfied that this case can go forward through
    remaining discovery and trial without risking disclosure of
    any materials which have been ruled out-of-bounds. This is
    not a case in which "the very subject matter of [the] litiga-
    tion is itself a state secret," and thus neither party should
    have any "incentive to probe dangerously close to the state
    secrets themselves." DTM ought not lose its day in court
    simply because its case may involve a level of complexity
    necessitating additional preparation and motions in limine
    before the matter gets to the jury.

(Alteration in original, footnote omitted) (quoting Fitzgerald v. Pent-
house Int’l, Ltd., 776 F.2d 1236, 1238 n.3 (4th Cir. 1985)).

   In its brief on appeal, AT&T maintains that the district court’s rul-
ing "completely prevents AT&T from developing its defenses based
on DTM’s lack of ownership, rightful possession, right to exploit, and
lack of secrecy pertaining to the alleged trade secrets in light of the
Government’s development of the technology." It asserts that if the
government has evidence that is relevant to these defenses, as it
believes, then "dismissal [is] mandated."

   The evidence protected from discovery in this case is potentially
relevant to some aspects of AT&T’s defense, but it is not central to
the question of whether AT&T is liable for trade secret misappropria-
tion, and thus AT&T overstates its importance. DTM has undertaken
to prove at trial "that [it] developed the technology that constituted
10                  DTM RESEARCH v. AT&T CORP.
trade secrets that did all kinds of things that AT&T couldn’t do, [that
the technology] had enormous value to AT&T and value which they
appreciated, and [that] AT&T stole [it]." That DTM has a valuable
secret can be proved or disproved even if, as AT&T alleges, the gov-
ernment also has the same secret. More importantly, as the district
court noted, the court has not precluded AT&T from discovering from
others in the industry whether they use the same technology claimed
by DTM as a trade secret, nor has the court precluded AT&T from
presenting evidence that it created its own technology prior to or inde-
pendently of its contacts with DTM. Moreover, that AT&T did not
misappropriate the secrets also can be proved or disproved without
any evidence from the United States. The district court’s prohibition
of discovery into whether DTM’s trade secret information was devel-
oped when DTM employees did work for the government may affect
AT&T’s efforts to impeach the employees or attack aspects of DTM’s
damage claim. But even allowing for this possibility, we cannot con-
clude at this stage as a matter of law that a fair trial cannot be had.

   In Farnsworth Cannon, Inc. v. Grimes, 635 F.2d 268 (4th Cir.
1980) (en banc), we held that when a plaintiff’s attempt "to establish
a prima facie case would so threaten disclosure of state secrets . . .[,]
the preservation of [the] state secrets" requires dismissal of the plain-
tiff’s case. Id. at 281; see also In re Under Seal, 945 F.2d 1285, 1287-
88 (4th Cir. 1991); Fitzgerald, 776 F.2d at 1243-44. While we held
in both Fitzgerald and In re Under Seal that dismissal of the plain-
tiff’s case was mandated following the government’s invocation of its
states secrets privilege, we did not establish a categorical rule mandat-
ing dismissal whenever the state secrets privilege is validly invoked.
As we noted in Fitzgerald, any such categorical rule would be unfair,
and for that reason, we expressed our opinion that, in the proper case,
a court, using "creativity and care," could devise "procedures which
[would] protect the privilege and yet allow the merits of the contro-
versy to be decided in some form." 776 F.2d at 1238 n.3. Therefore,
unless "the very question upon which the case turns is itself a state
secret," or the circumstances make clear that "sensitive military
secrets will be so central to the subject matter of the litigation that any
attempt to proceed will threaten disclosure of the privileged matters,"
id. at 1241-42, the plaintiff’s case should be allowed to proceed, even
if some otherwise relevant evidence might not be presented. We
                    DTM RESEARCH v. AT&T CORP.                         11
believe that these principles are applicable here, at least based on the
current state of the record.

   Of course, whatever we decide now must be tempered by the rec-
ognition that this appeal is an interlocutory one and that the nature of
the evidence ultimately presented will determine the ultimate applica-
tion of these principles. But as the record now appears, the district
court’s recognition of the state secrets privilege, asserted by the
United States, does not foreclose the possibility of a fair trial. Indeed,
the district court firmly believes that "this case can go forward
through remaining discovery and trial without risking disclosure of
any materials which have been ruled out-of-bounds." We conclude
that the court should proceed in this fashion.

                                       AFFIRMED AND REMANDED

                                     FOR FURTHER PROCEEDINGS
