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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

Does My Movie Theater Have Trade Secret Protection?

Posted in Trade Secrets

It is generally accepted that that compilations of public information can constitute a trade secret provided that the compilation has unique value, but will that protection extend to watching Michael Jackson’s This Is It in an IMAX theater? A New York State court may soon be answering that question in Imax Corporation, v. Cinemark USA, Inc., NY Sup. Ct., NY Co., Ind. No. 09603441.

In its lawsuit, IMAX claims that for five decades it “has specialized in the design and manufacture of highly propriety, premium quality, large-format, immersive theatre systems.” Since 1997, Cinemark-one of the largest movie exhibitors in the world-has been a valued customer of IMAX. Separate and apart from the actual technological components of IMAX’s theatre systems, IMAX claims that since its inception in 1967 dedicated significant time and resources, including hundreds of millions of dollars, to the extensive research and development, marketing and promotion of a highly proprietary, immersive theatre experience that is unique to IMAX. Beginning in 1997, IMAX and Cinemark allegedly entered into a series of contracts that provided for the installation, maintenance and operation of IMAX theaters at Cinemark locations, and the marketing and commercial promotion of IMAX by Cinemark.

IMAX claims that it recently discovered that, contrary to representations Cinemark made to IMAX, the parties’ business relationship has been blatantly used by Cinemark to attempt to reproduce the entire, trademarked "IMAX Experience®" in the form of a product that Cinemark unveiled earlier this year and that Cinemark refers to as "Extreme Digital Cinema" and "Cinemark XD," or simply, "XD." Whereas for years IMAX theatres have been widely marketed and promoted as having "screen[s] that typically span from wall to wall and floor to ceiling… and loudspeaker technology that ensures every theatre seat is in a good listening position," Cinemark has marketed and promoted its XD as a cinema with "huge wall-to-wall screens, wrap around sound [to] ensure that every seat is an intense sensory experience." Adding fuel to the fire, IMAX claims that Cinemark has touted its XD as being "just like" and in some instances, "better than" IMAX.

Thus, IMAX seeks redress for Cinemark’s willful breach of contract, fraud, tortious interference with existing and prospective economic relations, breach of the implied warranty of good faith and fair dealing, unjust enrichment and deliberate acts of bad faith, as well as misappropriation of trade secrets.

The ruling of this case could have interesting implications in light of the United State’s Supreme Courts recent grant of certiorari (argued on November 9th) on what has been called the "business method patent" case, Bilski v. Kappos, where the Court appears poised to rule that the business method claim at issue is not the valid subject of a patent. Whether the Court will provide further guidance as to what is and what is not a patentable "process" is uncertain. A ruling that sides with the Patent Office could bar patents on processes and methods of doing business, such as online shopping techniques, medical diagnostic tests and procedures for executing trades on Wall Street. But, such a ruling also may lend support for making your IMAX experience a trade secret.