Can a Business Plan be a Trade Secret?

On September 5, 2012, in Trade Secrets, by Brian A. Hall

UnIP (UnIntellectual Property): Trade Secret for “Business Plan”?

I begin by noting the question mark above. This is not a decision where a court held that a business plan did not qualify as a trade secret. Instead, the Court refused to grant summary judgment on the issue because of questions of material fact. However, I am including it on this blog because the question of whether a business plan can be a trade secret is an interesting, and complicated, one.

First, some background on the case from the United States District Court for the District of Connecticut. Plaintiff is in the business of manufacturing, marketing, selling and delivering caskets and other funeral-related items to funeral homes. Defendants were former employees who left to start a new casket business. Plaintiff filed a lawsuit for, among other causes of action, misappropriation of trade secrets under the Connecticut Uniform Trade Secrets Act (CUTSA). Plaintiff identified its customer lists as a trade secrets as well as its “business plan.” More specifically, Plaintiff’s lawsuit against the Defendants was “because they had worked for Milso for many years, were intimately aware of additional Milso trade secrets that constituted Milso’s confidential ‘business plan’: the nature of its business, information about its distribution network, discounts and pricing given to customers, price points and margins on Milso’s products, inventory buying patterns, and confidential information concerning Milso’s suppliers.” Defendants argued that they had no access to the alleged business plan, it was not confidential, and that they had not misappropriated it.

The Court held that there were genuine issues of material fact that precluded granting summary judgment in favor of the Defendants. In doing so, the Court found that the “business plan” was of the type contemplated by CUTSA’s non-exhaustive list of kinds of information to be protected. It went on to state that: “The plaintiff has provided evidence that its customer lists were carefully vetted and maintained lists of private contact information, cell phone numbers and e-mails that would not be retrievable by public means, or would require significant resources to duplicate, and evidence as to the economic value of its “business plan.”” It further recognized, contrary to Defendants arguments, that a trade secret is not necessarily deprived of trade secret status because it is comprised of materials that are “common [and] commercially available.” Finally, it recognized genuine issues of material fact as it related to reasonable measures taken to preserve the secrecy of the alleged trade secrets.

So, now what? This case struck me because of the non-specific identification of the “business plan” trade secret. Typically, trade secrets must be identified with reasonable particularity. If the customer list was the trade secret, why not say so rather than bundle it into “business plan”? In addition, as defined, what part of the “business plan”, or what specific information, is included that the Court says is of the kind protected by CUTSA? Or, is there truly a document entitled “business plan”? I surmise that the more concrete the business plan (i.e. captured as a document), the more likely it may be subject to protection as a trade secret. However, if it is a fluffy idea to run a business in the casket industry, I believe the Court could be well-served to seal the proverbial casket on such a claim as it would tend to provide any business with a cause of action (at least through summary judgment) against any competitor who had some kind of previous connection.

Ultimately, can we answer the question of whether a business plan can be a trade secret? Yes, only with an answer of it depends. However, the Court here could not, but they sure did leave the casket (literally) open on the issue.

Milso Indus. Corp. v. Nazzaro, 3:08CV1026 AWT, 2012 WL 3778978 (D. Conn. Aug. 30, 2012).


 

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