No Economic Value Leads to No Trade Secret

On September 18, 2013, in Trade Secrets, by Brian A. Hall
UnIntellectual Property (UnIP): Trade Secret for Client Workout Information
The Superior Court of Pennsylvania affirmed the trial court’s grant of summary judgment to defendant employees after plaintiff employer brought action against employees, one of whom was manager, alleging conversion, breach of duty of loyalty, and breach of fiduciary duty of loyalty, arising from employees starting their own business in same field as employer’s.  Although a trade secret misappropriation claim was not alleged, the claim for conversion in Pennsylvania required the establishment of a trade secret.  The Court held that the plaintiff failed to present evidence that its customer list was a trade secret, let alone that it was misappropriated by employees who were not subject to any restrictive covenant.
In addition, plaintiff had argued that its Power Train strength workout spreadsheets were trade secrets.  On appeal, it conceded they were not trade secrets.  The Court analyzed why as follows:

“The workout sheets show the type of training and exercises that the particular clients received. However, the record is clear that PTSI made no attempt to keep the Power Train strength program workout information a secret or from becoming publicly known. … Mr. Saunders conceded that he has received no certification in resistance training as the individual defendants. He also admitted that Haley and Piroli, as the certified personal trainers, would write up the workout sheet routines and take the clients through the workout sessions. In addition, Mr. Saunders admitted that the workout sheets were given out to clients and that the clients were free to give the sheets to anyone they chose.

Also, the workout sheets had no actual economic value to anyone. The clients’ workout sheets were of no use to PTSI once the clients decided to stop using the services of PTSI. The workout sheets themselves indicate that the clients’ exercises, weights and repetitions changed each session and, thus, soon became outdated. In fact, Montour High School student Dominic Martinelli testified that the personal training he did with ESI was, from the start, quite different from the training he did with PTSI. No evidence suggests that [Haley and Piroli] needed to rely on the workout sheets for any purpose.”
Thus, without a protectable trade secret identified, the employer was unable to establish any liability on the part of the employees.  Most interesting in the decision is how the Court recognizes that the information contained in the workout sheets would be of no economic value.  Could an argument be made that the particularized needs of the client, including what exercises it has done and at what weights, could allow a competing trainer to more quickly and effectively help, and thus sign up, that client?  Even if so, without treating the sheets as trade secrets with effectively secrecy requirements, and recognizing it is probably the client that owns such information, this case seems to have been doomed with regard to any claim for trade secret status.
PTSI, Inc. v. Haley, 2013 PA Super 130, 71 A.3d 304, 313 (Pa. Super. Ct. 2013).

 

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