Employee Roster Not a Trade Secret

On July 25, 2012, in Trade Secrets, by Brian A. Hall

UnIP (UnIntellectual Property): Trade Secret for Employee Roster

The Ninth Circuit Court of Appeals considered whether the damages awarded following a jury trial based upon trade secret misappropriation under the Arizona Trade Secrets Act were warranted. The Court first affirmed the that Plaintiff’s profit margin, as well as its general and administrative expense rates, constituted trade secrets. In doing so, it recognized that this particularly claimed trade secret was economically valuable to a competitor and was subject to sufficient efforts to protect its secrecy. There was no error in awarding damages under a reasonable royalty theory as it relates to the profit margin trade secret.

However, the Court then analyzed whether the royalty award could also include damages based upon misappropriation of an employee roster. The Court deemed the employee roster not to be a trade secret as a matter of law because the identities and positions of the employees on the roster were generally known. The Court also determined that the Plaintiff’s ranking by Carnegie Mellon’s Capable Maturity Model Integration Program, an industry-wide process improvement model, was not a trade secret because the ranking was available to the public via an Internet search. As such, the Court vacated and remanded such that the damages can only be based upon legally valid and protectable trade secrets.

It should come as no surprise that items that are not secret, and instead are available to the public, can not be a legally protectable trade secret. It does not matter which state law applies (especially since the majority of state laws are based upon the Uniform Trade Secrets Act), if an Internet search can reveal the claimed trade secret, do not try to protect it as your own. Fortunately for this Plaintiff, it did have a protectable trade secret. Maybe it took a shot at more and maybe it worked with the jury. However, appellate courts know the law, apply the law, and will not allow greed to displace what remains the essence of any trade secret misappropriation claim – secrecy.

Mgmt. & Eng’g Technologies Int’l, Inc. v. Info. Sys. Support, Inc., 10-17784, 2012 WL 2993376 (9th Cir. July 23, 2012).


 

One Response to Employee Roster Not a Trade Secret

  1. […] Arizona: The 9th Circuit, in Management and Engineering Technologies International, Inc. v. Information Systems Support, Inc., interpreting Arizona’s version of the Uniform Trade Secrets Act, held (based on the facts of the case) that a plaintiff’s roster of employees is not a trade secret. For a discussion of the case, see UnIntellectual Property. […]

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