Waste of Legal Resources?

On April 24, 2013, in Trade Secrets, by Brian A. Hall

What was once declared UnIP, ultimately held to be a protectable trade secret.

The Court of Appeals of Texas has reversed a trial court’s denial of Plaintiff Waste Management’s seeking of declaratory and injunctive relief under the Texas Public Information Act (TPIA) to prevent the disclosure of information contained in waste tickets.  A citizen made an open records request to the County for certain waste tickets related to the operation of the County Landfill, which is operated by Waste Management.  Waste Management claimed that the the customer names, pricing, and volume of waste contained on a waste ticket was a trade secret, and thus excepted from disclosure under the TPIA.

Texas courts weigh six nonexclusive factors: (1) the extent to which the information is known outside the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.  Applying these factors, the Court first recognized that providing the information to the Country does not render the first factor in favor of a finding of no trade secret because “Providing trade secret information to a governmental body as required by it does not waive a company’s trade secret protection.”  Second, with less than 20% of the company being able to see the pricing and volume related to the customer’s waste, widespread knowledge did not favor a finding against trade secret protection.  Third, employees were trained, signed confidentiality agreements, and safeguards were in place to protect the waste ticket information as trade secrets.  Fourth, competitors would use the information to undercut Waste Management’s pricing and thus force them to lose customers.  Fifth, given that pricing negotiations can last for years, this factor favored a finding for trade secret protection.  Sixth, a senior manager of Waste Management’s testimony that “a party could not determine the volume and pricing information by sitting outside the landfill and observing trucks entering and leaving it” was enough to favor trade secret protection.

Ultimately, the Court reversed the trial court and found that the information on the waste tickets was indeed a trade secret.

While the Plaintiff was assuredly not happy with having to win on appeal, and thus pay for an appeal, it is likely happy with the final result.  The Attorney General, for the Defendant, on the other hand, may feel that this was literally a waste.

Waste Mgmt. of Texas, Inc. v. Abbott, 11-11-00112-CV, 2013 WL 1632069 (Tex. App. Apr. 11, 2013).

 

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