For six years, a legal battle to unmask an anonymous informant has pitted an Arlington, Va.-based defense contractor, Solers Inc., against the Software & Information Industry Association, a Washington-based trade group trying to shield the John Doe’s identity.

The informant, through the trade group’s Web site, accused Solers in 2005 of using unlicensed computer software. Solers, an information technology services provider, conducted an internal investigation and notified the trade group that it used only properly licensed software. The company sued the informant for defamation in District of Columbia Superior Court in May of that year.

One day after filing the lawsuit, Solers subpoenaed the trade group for the informant’s name, his original report and any other correspondence. The subpoena sparked a still-pending dispute over whether the informant, who is aware of the case through the trade group but has never participated in litigation, deserves protection under the First Amendment.

The case is before the D.C. Court of Appeals for the second time in six years. A three-judge panel, which heard oral arguments on Nov. 17, will decide whether a trial judge misinterpreted the appeals court’s first ruling in 2009 by ordering the trade group to comply with the subpoena.

Although the informant’s allegations may have stayed secret if Solers hadn’t filed the lawsuit — the trade group did not take action beyond notifying Solers — Solers President and CEO David Kellogg said he believed they had to take a stand. Solers is being represented by Ballard Spahr partner Daniel Tobin.

“If we didn’t file suit, we didn’t know where it was going to go,” Kellogg said. “Since we felt pretty sure we were falsely accused, we didn’t see the downside to making it public.”

The trade group, supported by amicus briefs from The Washington Post and the Business Software Alliance, counters that Solers failed to show that it suffered any harm, aside from the several thousand dollars it spent investigating the allegations. The group claims that the lawsuit boils down to an effort by Solers to suppress protected speech without cause.

The group is being represented by Holland & Knight partner Charles Tobin (who is not related to opposing counsel). He referred questions to the group’s chief litigation counsel, Scott Bain, who declined to comment, pointing to the arguments made in their briefs. “Since Solers never has been able to meet its burden of proffering ‘evidence’ of damages to its reputation, the Superior Court’s order requiring SIIA to produce documents, and strip Doe of his anonymity, is clearly erroneous and contrary to law,” the group stated in its brief.

FIVE-STEP TEST

During the first round of litigation leading up to Solers I, then-Superior Court Judge Anna Blackburne-Rigsby granted the trade group’s motion to quash the subpoena in August 2006. Blackburne-Rigsby found that Solers had failed to show that it had suffered any harm.

The case was transferred later that year to Judge Jennifer Anderson, who dismissed the lawsuit, finding that Solers failed to state a claim of defamation.

In Solers I, the appeals court reversed Anderson, finding that Solers had made sufficient claims that the informant engaged in defamatory speech. The court didn’t take sides on the subpoena dispute. Instead, the judges set new precedent in establishing a five-step test for the trial court to apply on remand.

The trial court, according to the appellate opinion, would need to look at the following factors in deciding whether to strip a defendant of anonymity: first, that the plaintiff made sufficient claims of defamation; second, that efforts were made to notify the anonymous defendant; third, that the defendant had time to file a motion to quash the subpoena; fourth, that the plaintiff showed evidence of a material issue of fact on each element of the defamation claim; and finally, that the plaintiff needed the information at issue to proceed.

On appeal, the trade group is arguing that Solers failed to pass the fourth step. The group argues that because Solers failed to show it suffered any harm to its reputation or otherwise, the company didn’t present evidence on a key element of its claim.

Solers counters that its finances and reputation have suffered. The company spent more than $7,000 responding to the allegations, Daniel Tobin told the judges. Whether it was $7,000 or $7 million, he added, any evidence of financial harm should be enough. Furthermore, he said, trade group officials said in affidavits that they never fully discredited the informant’s report. “Solers’ reputation has been besmirched,” Daniel Tobin told the court.

Charles Tobin, during his oral arguments, dismissed the notion that $7,000 — or any money spent on an internal investigation — represented damages. To present evidence of harm from defamation, he said, Solers needed to show that it lost profits because of the informant, which it hadn’t so far. “To give a new cause of action to corporate America in that fashion would chill all whistleblower speech,” he told the court.

Appeals Court associate judges John Fisher and Inez Reid and Senior Judge Michael Farrell heard the case.

Contact Zoe Tillman at ztillman@alm.com.