UnIP (UnIntellectual Property): Trade Secret for Computer Chart File

This case is out of my state in the United States District Court for the Eastern District of Michigan. Plaintiff Dice Corporation sued Defendant Bold Technology alleging that it accessed Plaintiff’s servers and stole its software. Among other causes of action, it claimed violations of Michigan’s Uniform Trade Secrets Act. In doing so, Plaintiff alleged that the misappropriation occurred when Defendant “initiated file transfers of proprietary signal processing intelligence software,” the ALSCHART file. The Court reminded us all that qualify as a trade secret, “the information must, of necessity, be a Secret: specifically, there must be evidence presented that sufficient measures have been taken to guard the secrecy of the information and preserve its confidentiality.”

Analyzing the ALSCHART chart file specifically, the Court found that the information was not kept secret from customers, Plaintiff’s own user manual listed the chart file as one that customers could query, and Plaintiff’s director of software development acknowledged that customers had access to the chart file. Moreover, the data in the chart file was not even the Plaintiff’s, but instead that of Plaintiff’s former customer, who now happened to be a customer of Defendant. As such, the Court held that the computer chart file accesses was not a trade secret.

I smell jealousy and more to this lawsuit than meets the eye. Nonetheless, Defendants prevailed, and prevailed convincingly. Typically, when I advise clients regarding trade secrets or litigate trade secret cases, the dispute focuses not on whether the alleged trade secret was in fact kept a secret. Rather, it focuses on whether it derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means. Moreover, the remaining elements of the claim for trade secret misappropriation (acquisition and use) are typically contested, like they were in the above case as well. Ultimately, I am always left a bit unsatisfied after reading trade secret cases. On the one hand, the Plaintiff failed to establish its claim and thus lost the lawsuit. On the other hand, can you truly fault a Plaintiff where someone accessed there seems to be something wrong with allowing property (although not necessarily a trade secret as shown here) to go from one party to another, with the help of a former employee? I know, the law is the law.

Dice Corp. v. Bold Technologies, 11-13578, 2012 WL 5292920 (E.D. Mich. Oct. 25, 2012).


 

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