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Trade Secret Misappropriation Claim Dismissed Where Plaintiff Failed to Prove Damage

An element of a claim of trade secret misappropriation is that the theft has caused damage, a lesson reinforced by the defendant’s successful motion for summary judgment in 3PD, Inc. v. U.S. Transport Corp., Case No.: GJH-13-2438 (D. Md. July 9, 2015). Even if trade secrets were wrongly taken by the defendant, the plaintiff failed to demonstrate actual damages under the Maryland Uniform Trade Secret Act (“MUTSA”). The plaintiff, 3PD, Inc., is a logistical support company with a nationwide customer data base comprised largely of major consumer product retailers. Rose was a manager in charge of supervising and organizing all of 3PD’s centralized customer dispatching and routing for Lowe’s Home Centers. Rose gave 3PD 12 days’ notice of his resignation to take a position with the defendant, one of 3PD’s competitors. During that time, Rose forwarded “to his personal e-mail account confidential 3PD information that 3PD contends was trade secret.”…

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Internal Website Can Be a Trade Secret

Allegations that a customer database and an inter-office call center website were trade secrets survived a Rule 12(b)(6) motion to dismiss in Capital Meats, Inc. v. The Meat Shoppe, LLC, Civil No. JFM-15-212 (D. Md. July 9, 2015). The court ruled that the plaintiff had stated a plausible claim under the Maryland Uniform Trade Secrets Act (“MUTSA”), thus providing a useful illustration of how even information widely shared within a company can be protected as a trade secret. The plaintiff, Capital Meats, Inc. (“CMI”), maintains a customer data base and call center website, both of which are used to track inventory, sales, customer payment processing, and outstanding balances owed by the retailers purchasing CMI’s frozen meat. CMI’s auditor resigned and, with as dozens of retail dealers, formed The Meat Shoppe, a door-to-door seller of frozen meat. CMI’s complaint alleged that the defendants “directly obtained the information contained in the Database…

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Pleading Trade Secret Misappropriation Requires Detail, Even If Not All Support Needed for the Plaintiff to Ultimately Prevail

In Vesta Corp. v. Amdocs Mgmt., No. 3:14-cv-1142-HZ (D. Or. Jan. 13, 2015), the plaintiff survived a Rule 12(b)(6) motion to dismiss a claim of alleged trade secret misappropriation.  The plaintiff alleged that the defendant stole its confidential information during a joint development effort, and used that information to develop a competing product. Both the plaintiff and defendant provided services to mobile phone network operators (MNOs). Metro PCS, a large MNO, was the target customer for collaboration efforts between the two parties. The plaintiff specialized in electronic payment solutions and fraud prevention technology that assist the MNO in receiving payments from the end-user of the mobile device. The defendant offered mobile telephone billing software and services as a billing platform that maintains account status and account information for the MNO and its customers. MNOs “generally require both payment solutions and billings platforms to serve their customers.” With this premise in…

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Trade Secret Protection Requires Steps to Protect Trade Secrets

A defendant who misappropriated a plaintiff’s designs could not be liable for trade secret misappropriation no matter how nefarious the defendant’s conduct, where the plaintiff had not taken reasonable steps to protect prototypes embodying the designs. Accordingly, in Direct Technologies, LLC v. Electronic Arts, Inc., No. SACV 10-1336 AG (PJWx) (C.D. Cal. Aug. 4, 2014), the court granted summary judgment for the defendant on the plaintiff’s claim for trade secret misappropriation under California’s Uniform Trade Secrets Act (“CUTSA”). This case presented simple facts. Electronic Arts hired Lithomania to make a USB drive based on a SimCity character. Lithomania subcontracted design work for the USB drive to Direct Technologies. Then, after Direct Technologies provided prototypes embodying a design, Lithomania hired a different company to produce USB drives based on Direct Technologies’ design. Electronic Arts argued in its summary judgment motion that Direct Technologies had not taken reasonable steps to protect the…

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Reasonable Steps Protect Software Trade Secrets

A software owner must take steps to preserve trade secrets in software, but those steps need only be reasonable, rather than including every conceivable action.  That is the lesson from PQ Labs, Inc. v. Qi, No. 12-0450 CW (N.D. Cal., Jan 29, 2014), denying the defendants summary judgment on the plaintiff’s claim brought under the California Uniform Trade Secrets Act (CUTSA), Cal. Civ. Code §§ 3426 – 3426.11. Under CUTSA, “a plaintiff must show that (1) it owned a trade secret; (2) the defendant acquired, disclosed, or used that trade secret through improper means, and (3) the defendant’s actions damaged the plaintiff.”  Here, the court rejected the defense that the plaintiff allegedly had “failed to present sufficient evidence to support an inference that it took reasonable steps to maintain the secrecy of its alleged trade secrets.” The plaintiff’s CEO had averred that one of the defendants had been explicitly told…

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