Professors Invent Threat of “Trade Secret Trolls”

I’ve written several times in the past about the proposed legislation to create a federal cause of action for trade-secrets misappropriation (see herehere, and here). I also wrote a response to a letter signed by a number of professors who opposed this legislation. Now, Professors David S. Levine and Sharon K. Sandeen have written a law review article titled “Here Come the Trade Secret Trolls.” This article misses the mark by a mile.

Here is the article’s core argument:

The [proposed federal] Acts are most likely to spawn a new intellectual property predator: the heretofore unknown “trade secret troll,” an alleged trade secret owning entity that uses broad trade secret law to exact rents via dubious threats of litigation directed at unsuspecting defendants.

The use of the term “troll” is meant to evoke patent trolls, who have been the subject of much scorn. But the so-called “trade secret troll” is far different than a patent troll. The latter actually own patent rights, which they wield to seek licensing fees. The article’s mythical trade-secret troll is simply someone willing to bring a frivolous lawsuit to extort an undeserved settlement. I suspect the authors chose this term to piggyback on the negative attention heaped on patent trolls, thereby arming the legislation’s opponents with a pejorative term that may scare legislators or their constituents.

Putting titles aside, the article can’t reconcile its core argument with the fact that, as the authors acknowledge, “trade secrecy has been generally free of similar trolling behavior.” In other words, there is no epidemic of frivolous trade-secret lawsuits under the current state-law framework. (Certainly, there are weak misappropriation cases, just like with any cause of action. But I haven’t seen any evidence to suggest that such cases are disproportionately filed.)

The authors try to make the point that the proposed federal acts would transform trade-secrets law such that threatening and filing frivolous lawsuits would become commonplace. Yet the article does not really explain why this is so. It gets closest when discussing the proposed ex parte seizure provisions. But as I mentioned in my response to the professors’ letter, this risk is highly overblown. Convincing a federal judge to enter ex parte relief is no simple matter. And the defendant will have the right to challenge any seizure order very soon after its entry. Federal judges will not be amused if they have been manipulated into entering unnecessary ex parte orders.

The article fears that “trolls” will be able to threaten an ex parte seizure, which will be sufficient to scare a defendant into paying up before the suit is filed. Yet any innocent defendant will know that the likelihood of such an order being entered is slim. Further, simply sending the letter would undermine an attempt to get an ex parte seizure order. If the plaintiff was able to send a demand letter, thereby putting the defendant on notice of the possible claim, then a judge would be highly skeptical of a claimed need for an ex parte order.

The article also argues that unsettled interpretative questions relating to the acts will fuel frivolous lawsuits. But the article forgets that creating a federal cause of action will quickly lead to a much more robust body of published caselaw interpreting the statute. While there are very few published trial-court-level decisions in state courts, U.S. district court orders are widely available.

Frankly, state courts are much more susceptible to frivolous trade-secrets suits than federal courts. Take Florida, for example. Here, state court judges have to deal with remarkably bloated dockets. In fact, I’ve had multiple cases where it took months to get an emergency injunction hearing. State-court judges generally don’t have law clerks. And in Florida, judges often rotate between civil, criminal, family, and dependency divisions. This latter point is critical: judges often don’t spend enough time in the civil division to develop a familiarity with trade-secrets law. All of these issues lead to uncertainty, which would seemingly aid the unscrupulous litigant looking to extort a settlement. Yet, as the authors themselves acknowledge, we simply have not seen this so-called trolling.

There’s no question that frivolous lawsuits would be filed under the proposed federal legislation, just as like every other cause of action. But there is absolutely no credible reason to believe that such suits can’t be remedied with the typical mechanisms deigned to ferret out meritless claims, like Rule 11 motions.

As I’ve argued in the past, the proposed legislation has tangible benefits that aid trade-secrets owners in protecting their critical proprietary information. The arguments lobbed up in opposition—including the manufactured risk of “trolling”—don’t hold up to careful scrutiny.

AZ Supreme Court: Trade Secrets Act Does Not Preempt Claims for Misappropriation of Confidential Info

I’ve previously written about the Uniform Trade Secrets Act’s (UTSA) preemption provision, which preempts tort and other claims providing civil remedies for trade-secret misappropriation. Yesterday, the Arizona Supreme Court held that the Arizona Trade Secrets Act (ATSA), which is based on the UTSA, does not preempt common-law claims for misappropriation of information that is not a trade secret.

In this case, the former president of a public relations firm was sued by that firm when she left to start a competing PR firm. The plaintiff PR firm brought a claim for unfair competition, which was based on the use of confidential information the defendant learned while working for the plaintiff. The trial court dismissed the claim, finding that the ATSA preempts claims arising from the misuse of confidential information, even where the information does not rise to the level of a trade secret.

The Arizona Supreme Court disagreed, relying primarily on the plain language of the ATSA. The court did acknowledge the fact that other states have held that these types of claims are preempted. In states where misappropriation claims based on non-trade-secret confidential information are viable, it is often advisable to bring both a trade-secrets misappropriation claim and an alternative (or independent) claim for misappropriation or conversion of confidential information.

This case contains one other point of note. The defendant argued that allowing claims for misappropriation of confidential information would result in an “absurd” result. She noted that a plaintiff could obtain more in punitive damages on the misappropriation claim than it could on an ATSA claim, which allows for exemplary damages of twice actual damages where the misappropriation is willful and malicious.

In response, the court offered very helpful language to a plaintiff seeking to prove exemplary damages under the ATSA:

That AUTSA authorizes a trial court, rather than a jury, to award exemplary damages of no more than twice the amount of actual damages . . . is not necessarily anomalous. In cases of willful and malicious misappropriation, punitive damages might be easier to obtain under AUTSA than under our common law, which requires clear and convincing evidence of a defendant’s “evil mind” for a punitive damages.

Since many misappropriation of trade secrets are based on willful conduct, this case may be worth citing when seeking exemplary damages.

 

Law Professors Oppose Federal Trade Secrets Acts, Ignore Their Benefits

I’ve written about the Defend Trade Secrets Act and the Trade Secrets Protection Act previously. I’ve expressed enthusiastic support for these laws, which have bipartisan and widespread corporate backing. Today, 31 law professors issued a letter opposing these proposed statutes. Their harsh critique ignores clear benefits and overstates the statutes’ risks.

These professors’ thesis is explained at the end of the letter: “[T]he Acts are dangerous because the many downsides explained above have no—not one—corresponding upside.”

This statement and attitude ruins the letter’s credibility. These statutes have real, concrete benefits. They provide for federal jurisdiction, allowing for federal magistrates—experts in e-discovery—to oversee the complicated e-discovery issues often attendant to trade-secrets-misappropriation cases. They would allow for a uniform national trade-secret-misappropriation standard, thereby providing companies with greater certainty regarding enforcement. And the provision creating the most controversy, the ex parte seizure provision, will reduce the real risk of deliberate evidence destruction.

If these professors are not able to acknowledge that these proposed statutes offer benefits to companies facing the threat of misappropriation, I find it hard to take their critique seriously. But let’s look at their five reasons to reject these statutes:

1. Effective and uniform state law already exists. True, most states have adopted the Uniform Trade Secrets Act, with slight variations. But the state-by-state patchwork of statutory interpretation is not uniform. For example, different states apply different standards to determine whether a customer list is a trade secret. And state courts are often overburdened. I have personally experienced difficulty getting expedited hearing dates for emergency temporary injunction motions in state courts. Federal courts are better equipped to hear these types of motions expeditiously.

2. The Acts will damage trade secret law and jurisprudence by weakening uniformity while simultaneously creating parallel, redundant and/or damaging law. Despite this heading, the professors do not explain how applying a uniform federal standard will weaken uniformity. Instead, the professors argue that the Acts do not preempt state law, but only apply to trade secrets used in interstate or foreign commerce. Apparently, they believe that giving companies a choice between filing a misappropriation action in federal or state court is a bad thing. If companies want to litigate in state court, based on state law, these Acts permit them to do so. But these statutes would provide a second option. Given the tremendous corporate support for these statutes, companies themselves seem to want this new option.

The professors also criticize the interstate commerce provision, calling it “unclear and unsettled.” But like all statutes, this provision will become settled once tested in the courts. And the concept of interstate commerce is certainly not a new one, since federal courts routinely apply this standard to many federal statutes.

The professors also criticize the ex parte seizure provisions. Of all their critiques, this one has the most merit. I responded to this issue here. Keep in mind that evidence destruction is a real threat. I believe that it occurs routinely, particularly in misappropriation cases. In the end, I have faith that the federal judiciary will limit these orders to those cases where they are justified.

3. The Acts are imbalanced and could be used for anti-competitive purposes. The professors next argue that the Acts do not explicitly limit the length of injunctive relief. But the proper length of an injunction can vary widely based on the circumstances of a case. The judge hearing the supporting evidence is in a much better position than Congress to determine its length.

The professors are also concerned that parties will misuse the ex parte seizure provisions for anticompetitive purposes. This ignores the fact that (1) the moving party will have to convince a federal judge that the ex parte seizure order is necessary, and (2) the defendant will have the opportunity to challenge the order very soon after its entry. Again, I believe that the benefits of this provision outweigh its risks, given the built-in protections.

4. The Acts increase the risk of accidental disclosure of trade secrets.  Here, the professors argue that because of possible jurisdictional challenges based on the interstate commerce provision, plaintiffs will face motions to dismiss for lack of subject-matter jurisdiction that will “require the plaintiff to identify and disclose its trade secrets early in the litigation.” It’s hard to reconcile the professors’ concern for anticompetitive uses of the Act (number 3 above) with their concern that plaintiffs will have to identify the trade secrets at issue. Regardless, in reality, defendants already seek more detailed information about the trade secrets at issue at the case’s outset as a matter of routine, either through a motion to dismiss/for more definite statement, or through discovery requests. This new statute will have a marginal effect, if any at all, on the timing for identifying the trade secrets at issue.

5. The Acts have potential ancillary negative impacts on access to information, collaboration among businesses and mobility of labor. The letter discusses how companies are able to label information as a trade secret to prevent public and regulatory access to important information. (Again, this is inconsistent with point 4, where the professors wanted to enable companies to delay disclosure of the trade secrets at issue.) But the professors don’t explain how the Acts would increase this practice, other than to mention the ex parte seizure provision. Yet any company (and its attorneys) that obtains an ex parte seizure order in bad faith will have to face the ire of a federal judge who they manipulated into entering the order. I think the risk is overblown.

Look, neither of the Acts are perfect. But the threat of misappropriation is real. Companies need stronger weapons in their arsenal to protect their proprietary information. These Acts accomplish that, with limited real—as opposed to academic—downside.

 

Trade Secrets and Public Records

Companies performing municipal or government work face unique challenges when they need to share their confidential or proprietary information with public agencies. These companies must be wary of state public records laws and the Freedom of Information Act. A recent case, All Aboard Florida — Operations, LLC v. State of Florida, et al., filed in Leon County, Florida, illustrates this.

All Aboard Florida is attempting to develop passenger rail service between Miami and Orlando. It is doing so in partnership with various governmental entities. Recently, Orlando developer Matthew Falconer served various Florida agencies with requests under Florida’s Public Records Act for various documents relating to All Aboard Florida’s efforts.

According to the complaint, these agencies told All Aboard Florida that they intended to provide Falconer with All Aboard Florida’s Florida Ridership and Revenue Study. In response, All Aboard Florida filed this complaint for declaratory and injunctive relief, seeking protection under Florida’s Trade Secrets Act. According to All Aboard Florida, this study is a trade secret:

The Ridership Study analyzes expected market share for AAF’s service, including the effects of various pricing and travel time scenarios on AAF ridership. As such, the Ridership Study is an extremely sensitive and commercially valuable document, the disclosure of which to the public could place AAF at an unfair competitive disadvantage vis-à-vis airlines and other transportation alternatives.

Under Florida’s Public Records Act, trade secrets are exempt from disclosure.

When All Aboard Florida provided this study to the government, it marked each page as proprietary and confidential. For companies facing this situation who have no choice but to provide proprietary information to a government agency, I would recommend going one step further: Label each page of any proprietary document as “Trade Secret Information Protected From Disclosure By Section 815.045, Florida Statutes” (or the relevant statute in the state at issue).

The goal is to make it as simple as possible for the government employees responding to a public-records request to recognize that the document at issue should not be disclosed.

 

Is Facebook Buying a Massive Trade-Secrets-Theft Liability?

Big trade-secret news last week. Oculus VR, Inc., the virtual-reality company Facebook is acquiring for $2 billion. was sued by Zenimax Media Inc. for trade-secrets misappropriation. Zenimax owns popular video-game titles such as Doom and Wolfenstein. A copy of the complaint is linked below.

Facebook’s acquisition of Oculus received widespread media coverage. This lawsuit, which will likely seek billions in damages, should draw extensive media interest.

According to the complaint, when Oculus’s founder (Palmer Luckey, named as a defendant) was developing Oculus’s VR headset called “Rift,” Zenimax provided Luckey with Zenimax’s proprietary information. This information allowed Oculus to transform Rift from a primitive, non-functional prototype into a viable platform justifying Facebook’s billions. After that, the Zenimax employees involved left to work for Oculus.

There are always two sides to every story, and so far we’ve only heard from Zenimax. But the complaint paints a pretty egregious picture of trade-secret theft. One example: After leaving Zenimax, where he had signed an agreement providing that any intellectual property he created for Zenimax belonged to Zenimax, to join Oculus, John Carmack tweeted: “When you are in a hurry, and you know you wrote the exact needed code (well!) at a previous job, reimplementation grates.”

While Zenimax appears to have a strong case, I see some potential issues. Most importantly, Zenimax did not have Oculus sign a nondisclosure agreement until after Zenimax had provided Oculus with at least some of its proprietary information. Oculus will likely argue that Zenimax did not reasonably protect this information, since it shared it with a third-party without requiring a confidentiality agreement.

This leads to the biggest takeaway thus far for companies looking to protect their proprietary information: Never share this information with anyone, for any purpose, unless that person/entity executes a nondisclosure agreement.

It’s also interesting that a company as sophisticated as Zenimax would allow its employees to provide significant proprietary information to a third party without first working out, and documenting, how it would be compensated. Later on, the two companies tried to negotiate a compensation agreement, to no avail.

Finally, any company that doubts the risks employees present to its proprietary information should look at the responses to the Carmack tweet I discussed above, which has 95 “favorites.” Sample response: “that’s what USB sticks are for…”

I will monitor this case and write about its developments.

Zenimax Complaint

 

In Defense of the Defend Trade Secrets Act

In my last post, I discussed the recently proposed, bipartisan Defend Trade Secrets Act that would create a federal cause of action for trade-secret misappropriation. I wrote favorably about the statute’s mechanism allowing a judge to enter an ex parte order to preserve evidence. Since then, I’ve discussed this provision with several people who have concerns about it. This post responds to these criticisms.

To start, I want to explain why this provision is so important. Trade-secret theft is overwhelmingly accomplished by electronic means, such as through email, downloading to portable media, or via remote access to IT systems. Companies suspecting trade-secret theft can often determine where and how the information was stolen. For example, forensic techniques can identify that certain documents were saved to a flash drive on a specific date.

The Defend Trade Secrets Act permits the company, armed with this information, to seek an order requiring seizure or preservation of the media/computer/etc to which the information was downloaded. As a result, critical evidence that could otherwise easily be destroyed would be preserved. Without a statutory provision specifically authorizing this remedy, most litigants find it very difficult to convince a judge to enter this type of order.

I’ve heard concerns about the risk that judges will improvidently grant ex parte seizure orders brought in bad faith by unscrupulous litigants, potentially causing significant unjustified damage to defendants. This risk, while real, is present any time a judge hears an ex parte motion for temporary restraining order. The overwhelming majority of judges are reluctant to enter an ex parte injunction unless absolutely necessary. And this statute contains requirements that make it materially more difficult to get a seizure order as compared to a TRO.

In particular, the Defend Trade Secrets Act borrows from the Trademark Act’s procedure for seizing goods containing counterfeit trademarks. These requirements go beyond the typical TRO prerequisites. For example, the movant must show evidence that the item to be seized will be in a certain location. The court must also take measures to protect the defendant from publicity regarding the seizure. Further, the order directing seizure remains sealed until the defendant has an opportunity to contest it at a hearing that must occur within 15 days of entering the ex parte order. And as a final example, the statute provides for damages, including punitive damages, if the defendant is damaged by the wrongful entry of a seizure order.

These protections go a long way to minimize the likelihood that orders are improperly entered. In the end, the benefit of avoiding destruction of evidence—which happens all too frequently—outweighs the risk of unwarranted orders, particularly given the statute’s protections.

Novel Legal Strategy Deflates Employer’s Trade-Secrets Case

Recently, in Putters v. Rmax Operating, LLC, 2014 WL 1466902 (N.D. Ga. April 15, 2014) (opinion linked below), the court dismissed a counterclaim for trade-secrets misappropriation, brought in response to a declaratory judgment action filed by the defendant’s former employee. When I first read this opinion, I thought that the defendant did not move fast enough, thereby allowing the plaintiff to select the forum. When I dug further, however, I found out I was wrong.

In this case, the defendant is a Texas company that manufacturers insulation materials. The plaintiff worked for the defendant for 26 years in Georgia as a sales manager, and had access to the defendant’s confidential information. After the plaintiff left the defendant to work for a competitor, the defendant discovered that the plaintiff “had downloaded documents containing proprietary and confidential information to an external hard drive.”

While not clear from this opinion, the complaint gives the back story. A copy is linked below. The defendant originally filed suit in Texas state court and obtained an ex parte temporary restraining order prohibiting the plaintiff from working for his new employer.

After that, the plaintiff made an interesting legal maneuver. He filed this lawsuit in Georgia state court, seeking a declaration that he is permitted to continue working for his new employer, and an injunction prohibiting the defendant from prosecuting the Texas action, since Texas courts did not have personal jurisdiction over him.

This maneuver worked. The case (after being removed to federal court) is proceeding in Georgia federal court, where the court dismissed the defendant’s counterclaim and denied the defendant’s request for a TRO.

Normally, when a defendant believes that there is no personal jurisdiction over him, he will simply litigate that issue in front of the court where the plaintiff filed the lawsuit. Here, the employee took an entirely different course and successfully redirected the litigation to a different forum. And he was able to get the case in front of a judge with much more favorable views of his case.

Takeaway: Companies should be wary of personal-jurisdiction issues when filing trade-secrets lawsuits. The last thing you want is to be bogged down in a personal jurisdiction fight before the court will even hear a temporary injunction motion. Or, even worse, you could end up like the employer in this case, who spent time and money getting a TRO, only to be whisked away to a Georgia court with a very different view of the employer’s arguments.

Also, had this company simply had its employees sign restrictive covenants (including a venue and jurisdiction clause), they would be in a far better legal position.

Order

Complaint

Sporting Goods Spy Game

So this is a new one. According to a lawsuit filed by national sporting-goods retailer Dick’s Sporting Goods, Inc.. Mitch Modell, the high-profile CEO of rival company Modell’s Sporting Goods, posed as a Dick’s executive when visiting a Dick’s store. Modell’s is a leading sporting-goods retailer in the Northeast, from which I bought plenty of sports equipment when growing up in New York.

By allegedly pretending to be a Dick’s Vice President, Modell gained access to private areas of the Dick’s store. Supposedly, Modell wanted information about Dick’s e-commerce initiatives, including Dick’s “ship from store” program that uses local stores to fulfill online orders.

This is remarkable. Modell is a visible figure, particularly in the sporting-goods industry. For example, he starred in an episode of Undercover Boss. That he would (allegedly) attempt such a scheme is crazy, and is a vivid illustration of the corporate-espionage risk that companies face.

This case shows that companies need to have a clear policy restricting access to nonpublic areas, and all employees need to be trained about the policy. For example, all nonpublic areas should be locked, with video surveillance where possible. All visitors given access to these areas should sign a log. And a company could issue all employees photo IDs, and require that employees call headquarters to confirm any unannounced employee/corporate visit before allowing access to nonpublic areas.

I’m very curious to hear Modell’s defense.

Trade Secrets and the First Amendment

Before this week, I had never thought much about trade-secrets issues intersecting with the First Amendment. But then I read the complaint in a lawsuit filed by hedge fund Greenlight Capital Inc. against the owner of a website called seekingalpha.com, which published a post disclosing Greenlight’s then-confidential investment strategy. The suit seeks to compel the website owner to disclose the writer’s identity so that Greenlight can sue for trade-secret misappropriation. A copy of the complaint is linked below.

Greenlight Capital, led by David Einhorn, is a hedge fund whose “activity in the investment markets is well known and closely watched by other traders and investment advisors.” In the complaint, Greenlight describes how it develops its investment strategies “at considerable expense,” and how it must keep this information confidential, since disclosure of its investment strategies could move the market.

In November 2013, Greenlight was building an equity position in Micron Technologies. This information was not public knowledge. On November 14, 2013, a writer on the seekingalpha.com website, writing under a pseudonym, disclosed Greenlight’s intentions regarding Micron. As a result, Micron’s share prices rose immediately. Greenlight now needs the writer’s identity, so that it can sue him or her for misappropriating trade secrets.

In a New York Times article discussing this lawsuit, high-profile First Amendment lawyer Floyd Abrams offered thoughts on how the suit implicated constitutional issues:

Floyd Abrams, a First Amendment lawyer with Cahill Gordon & Reindel, said there might be reasons for a judge to compel an anonymous blogger to be identified in a libel case. But he said there weren’t many good reasons for doing so in what would appear to be a largely commercial dispute. “There is a serious First Amendment issue here,” Mr. Abrams said. “He will have a pretty tough job persuading a judge.”

While Floyd Abrams has forgotten more about the First Amendment than I’ve ever known, his position strikes me as off point. Laws prohibiting trade-secret misappropriation by definition restrict speech. Essentially, the Uniform Trade Secrets Act* recognizes that, for example, if you obtain a trade secret you know was acquired by improper means, you are not permitted to disclose that information. Allowing someone to hide behind an online pseudonym could render these laws ineffective.

There are other interesting issues in this case. For example, Greenlight says it takes the following measures to protect this confidential information:

Greenlight’s employees are required pursuant to both firm policy and their employment agreements to keep information regarding Greenlight’s non-public investment strategies confidential. In addition, Greenlight’s prime brokers and custodians are required by confidentiality agreements and other duties to Greenlight to keep non-public information concerning Greenlight’s securities positions confidential.

Later, it notes that at the time seekingalpha.com published the post, “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’s employees, counsel, prime and executing brokers and other agents.”

It’s not possible to tell from the complaint whether all of Greenlight’s employees, brokers, and agents are required to sign a confidentiality agreement. If not, Greenlight has a major gap in its confidentiality protections that could undermine its misappropriation claims — the defendant could argue that Greenlight did not reasonably protect its proprietary information. As I’ve discussed often before, it is critical to make sure that all employees, vendors, etc. with access to confidential or proprietary information sign agreements that, at a minimum, require them to keep this information confidential.

*Greenlight filed the case in New York, which is one of the few states that has not adopted some form of the UTSA.

Greenlight Complaint

Sixth Circuit Rejects Dubious Trade Secret Claim

If you are thinking about bringing a trade-secret-misappropriation suit, do not take a ready-fire-aim approach. Before filing the lawsuit, you need to be able to articulate the precise trade secret at issue and how it was misappropriated. A recent case decided by the Sixth Circuit, Dice Corp. v. Bold Tech., 2014 WL 260094 (6th Cir. Jan. 24, 2014) gives an example of a trade-secrets claim that probably never should have been filed. A link to the opinion is below.

This case involved a dispute between two competitors who provide services and software to alarm companies. An alarm company using the plaintiff’s software decided to change to the defendant’s. In this circumstance, there needs to be a transition period, during which the alarm company is still using the plaintiff’s software, while running the defendant’s software in parallel on other servers. This ensures that the new software is properly monitoring the alarm signals before it goes live.

The plaintiff, perhaps angry over the loss of a client, accused the defendant of accessing and using its proprietary information during the transition process. It brought claims under the Michigan Uniform Trade Secrets Act, among others.

The trade-secrets claim was based on supposed misappropriation of (1) a file containing a master list of alarm codes, and (2) “receiver drivers” software that takes incoming signals and converts the data to the plaintiff’s standard. The Sixth Circuit rejected both. As to the list of codes, the court said:

The plaintiff fails to explain how this information, even if uniquely coded, is a trade secret. The [file] is a compilation of labeling codes created by manufacturers, not the plaintiff. The codes were collected by the plaintiff’s customers, not the Plaintiff. The plaintiff has not put forward an explanation of how the value of its unique labeling is derived from it not being readily ascertainable by proper means.

Regarding the software, the Sixth Circuit noted that “neither in the operative complaint nor in the plaintiff’s response to the defendant’s motion for summary judgment can we find a trade secret claim based on receiver drivers or software that performs that function.” Even if the plaintiff had properly pleaded a claim on this basis, the court still would reject it since “other than a generalized explanation of what the receiver drivers do, the plaintiff has failed to explain whether the receiver drivers derive economic value from their secrecy.”

Takeaway: This seems like the latest in a long line of trade-secrets cases that never should have been brought in the first place. Filing a lawsuit and litigating it through appeal is not cheap. Before doing so, make sure you can (1) explain what trade secret(s) were actually misappropriated, and (2) plead and prove the misappropraition (or at least feel comfortable that discovery is likely to lead to the evidence necessary to prove your claim). If you have difficulty doing either, think very carefully whether the suit should be filed. As the (overused) saying goes, sometimes discretion is the better part of valor.

Dice Corp. v. Bold Tech.

%d bloggers like this: