With today’s college football National Championship game between Alabama and Notre Dame, a recent trade secret decision regarding the interplay between trade secrets and NFL scouting grades caught our eye.
National Football Scouting authors several hundred six-page biographical reports annually on outstanding college football players. The reports are sold for $75,000 each to 21 NFL teams to use during the player draft. Every prospect receives an overall numeric grade reflecting the scouts’ opinion of the likelihood that the player will succeed in the NFL. Rang, a part-time sports reporter, obtained and published National’s grades for 18 college players. When he was sued in a State of Washington federal court for trade secret misappropriation, he moved for summary judgment. He, argued that only facts can constitute trade secrets and that the numeric grades are subjective opinions, not facts. The court disagreed and said that the assignment of specific grades to particular prospects are facts with independent significance that could be trade secrets. National Football Scouting, Inc. v. Rang, Case No. 11-cv-5762-RBL (W.D. Wash., Dec. 13, 2012).
The Washington Uniform Trade Secrets Act defines a trade secret, in part, as “information . . . that (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means, by other persons who can obtain economic value from its disclosure or use, and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” A 1999 Washington Supreme Court held that the Restatement (Third) of Unfair Competition can provide guidance on trade secrets. Quoting the Restatement, the Washington federal court concluded that “[t]he status of information claimed as a trade secret must be ascertained through a comparative evaluation of the relevant factors, including the value, secrecy, and definiteness of the information as well as the nature of the defendant’s misconduct.”
That same Washington Supreme Court decision held that the question of whether specific information is protectable under trade secret law is to be determined by the trier of fact. Rang’s motion for summary judgment with respect to the misappropriation cause of action was denied. There were material disputed issues of fact, including the reasonableness of National’s efforts to preserve the secrecy of the numeric grades — the reports were shared only with the teams and a computer consultant all of whom signed confidentiality agreements — and the extent to which the grades had economic value by reason of not being generally known.
National’s reports purport to be copyrighted as unpublished works. A numeric expression of a professional opinion can be copyrighted — for example, appraisals and predictions, but Rang’s summary judgment motion relating to the infringement claim was granted based on the “fair use” doctrine. The only parts of National’s comprehensive work-product that Rang published were a few of the grades. Moreover, he transformed those grades by adding material in the public domain concerning the players as well as his own impressions.
The federal court decision pushes the envelope to the extent that it is read as granting trade secret protection to (and potentially upholding the validity of copyrighting) a numeric grade. Please see Eric Goldman’s blog regarding the copyright aspects of the court’s decision. Yet, many cases hold that misappropriation of a compilation of numbers, such as a price list or a telephone directory, could be actionable. Moreover, the method or process for assigning value to property might be a trade secret (or copyrightable). So, perhaps it is not surprising that a court would protect an expert’s predictions as to the potential commercial success that ideas or persons may achieve.