To Get Injunctive Relief, Be Able to Prove Specific Irreparable Harm

Posted on June 22, 2010 by David Monachino

In New York, injunctive relief will not be awarded unless the plaintiff sets forth specific non-monetary harm to Plaintiff in a trade secret case.

In Systems Management Planning, Inc., v. Gordon, 23 Misc.3d 1104(A), 2009 WL 901514 (N.Y.Sup.) (Sup. Ct., Monroe Co, April 3, 2009), the court, in determining a preliminary injunction, assumed that the trade secret status of the information and the fact of its misappropriation has indeed occurred and therefore focused on the issue of irreparable harm and the “related” doctrine of inevitable disclosure. 

Plaintiff asserted that, in all cases, irreparable harm is presumed when trade secrets have been misappropriated. The Gordon court first noted that “no appellate case in New York has laid down such a hard and fast rule” and the subsequently declined to adopt such a rule citing the recent Second Circuit decision in Faiveley Transport Malmo AB v. Wabtec Corp., --- F.3d at ---, 2009 WL 636020 (2d Cir. Mar. 9, 2009) (such a presumption “might be warranted in cases where there is a danger that, unless enjoined, a misappropriator of trade secrets will disseminate those secrets to a wider audience or otherwise irreparably impair the value of those secrets.”)

The Gordon court, applying the principles of Faiveley Transport, concluded that plaintiff in that case had not adduced clear evidence of irreparable harm. Instead, the court found the plaintiff’s moving affidavit wholly lacking, because it merely stated in conclusory fashion that the defendants had used the confidential and proprietary information that they stole to unfairly divert business and solicit certain specified customers. The court held that these “conclusory assertions wholly fail to show how this worldwide $20 million business cannot readily ascertain its damages if successful in proving that the claimed diversion of six customers resulted from defendant's misuse of wrongfully appropriated trade secret information, instead of what defendants insist was legitimate competition occurring in the absence of a confidentiality agreement or restrictive covenant.”

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Purported Trade Secrets In A Company's "Supply Chain And Other Business Information" Held Not To Have Been Misappropriated

Posted on June 18, 2010 by Paul Freehling

In a case brought by a seller of camouflage clothing against a competitor, the U.S. District Court for the District of Montana held recently that just because “something is confidential does not mean it is a trade secret,” and the court granted the defendants’ summary judgment motion. Montana Camo, Inc. v. Cabela’s, Inc., Civ. Ac. No. CV-08-71-BLG-RFC, 2010 U.S. Dist. LEXIS 57895 (D. Mont., June 11, 2010). 

Montana Camo sued Cabela’s, alleging that Cabela’s violated Montana’s Uniform Trade Secrets Act by misappropriating Montana Camo’s confidential sources of supply, marketing information, patterns, and technical information used in making its products. With respect to the names of Montana Camo’s suppliers, however, the court held that most of the relevant information was readily ascertainable, that Cabela’s had not even used certain of the suppliers, and that Cabela’s began purchasing from one of the suppliers before Montana Camo was formed. Since the customer and dealer identification was available on Montana Camo’s website, it was not secret. The technical information to which Montana Camo claimed proprietary rights was determined to be generally known or otherwise not misappropriated. Finally, the court said that even if the supposedly confidential cost, pricing and marketing information referred to by Montana Camo could ever constitute something other than “nebulous concepts” insufficient to be considered a trade secret, Montana Camo had not detailed it adequately to defeat the summary judgment motion.

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Establishing Trade Secret Security Measures in NY

Posted on June 15, 2010 by David Monachino

 A recent decision by the Commercial Division in New York County requires specific pleading security measures to establish trade secret protection under New York law.  Clean Earth Holding, Inc. v. Kopenhaver, et al., Ind. No. 604077/2007, Sup. Ct., NY Co., Commercial Part (Ramos) (April 26, 2010) (Unpublished)

Clean Earth is in the business of treating, recycling, reusing, transporting, and disposing of contaminated soil, dredge sediments, and other non-hazardous and hazardous materials. Clean Earth's success was alleged to have been due to its unique position in the marketplace, pricing strategies, exclusive arrangements with third-party disposal facilities, and its client base that it had developed over the years.

Clean Earth alleged that defendant Richard Rivkin had breached his fiduciary duty by soliciting certain Clean Earth clients after his employment with Clean Earth was terminated. Clean Earth predicated this cause of action on the theory that its "Client List" was a trade secret and that Rivkin breached his fiduciary duties by providing the Client List to a competitor.

Justice Ramos noted the six factors that are considered in trade secret claims are:

 (1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.'"

 

 Justice Ramos then indicated that trade secret protection does not apply to names, addresses, and telephone numbers of clients or potential clients, if the information is readily available from public sources, such as a local telephone directory.

In dismissing the fiduciary duty claim on summary judgment, Justice Ramos first ruled that certain representations in a client certification that the Client List "is protected within our company in a number of ways, and access to the information is restricted internally" failed to demonstrate with sufficient detail the measures that were taken to guard the information's secrecy. Justice Ramos then held that "Clean Earth fails to raise a triable issue that the Client List was not readily ascertainable to those in the industry or that it was compiled through great effort and expense. Therefore, it fails to demonstrate that the Client List qualifies as a trade secret."

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