In the fall of 2017, California resident Ralph Lewis hatched a scheme to form a company to compete directly against his former employer, Texas-based Power Research Inc. (PRI), using the company’s confidential customer and pricing information and the company’s proprietary …
A “trade secret” is broadly defined as any formula, pattern, device or compilation of information unknown to others that gives the owners an opportunity to obtain an advantage over competitors. Public policy supports protecting corporate trade secrets to encourage innovation …
In a previous blog, we discussed trade secrets and how such confidential information can often be ambiguous with regard to how it is classified. This specifically came up in a recent case in Bexar County where a jury found both company models and data could be classified as trade secrets. A jury decided Title Source had stolen proprietary data from startup HouseCanary as it allegedly readied to build its own software suite. This resulted in a $706 million verdict in favor of HouseCanary, which the trial increased to nearly $740 million after denying Title Source’s request to vacate the jury’s decision. Now, Texas justices, have been asked to consider the proper standards and procedures for sealing trade-secret information.
Trade secret protection is often a central concern in litigation. This is particularly true for non-parties asked to disclose information they consider confidential, critical business information. The scope of discovery is broad, with the rules of discovery generally allowing the discovery of any information reasonably calculated to lead to the discovery of relevant, admissible evidence. However, the rules of discovery also allow parties and non-parties to seek protection of privileged and other confidential information, such as trade secrets. This was the case for a non-party medical provider, AD Hospital East, LLC, in Austen Lackey v. Austin Dement and CRST Expedited, Inc., Case Number SA-17-cv-00514, in the U.S. District Court for the Western District of Texas, San Antonio Division.
Trade secrets present a unique problem for businesses. A company’s intellectual property is absolutely crucial to the operation and success of a business, but companies must decide whether to seek sunsetting protection by registering this property with the U.S. Patent and Trademark Office or U.S. Copyright Office. Alternatively, companies can classify the information as trade secrets, ideally protecting them in perpetuity. While trade secrets aren’t formally registered with a government entity, they can still be protected from misappropriation, but proving the item in question was in fact a trade secret and that misappropriation has occurred is not always simple. This was the case in Six Dimensions Inc. v. Perficient Inc. et al., Case Number 4:17-cv-02680, in the U.S. District Court for the Southern District of Texas, Houston Division.
Trade secret litigation is different than other types of intellectual property litigation in that the U.S. Patent and Trademark Office does not protect trade secrets. Advances in technology are causing an increase in data and modeling use as trade secrets. This is particularly true in the energy industry, as companies develop new ways to find, extract, and process natural resources. With the rise of trade secrets litigation, some parties are trying to use their Fifth Amendment rights to prevent certain information from coming to light, which is complicating trade secret issues.
What is a trade secret? Companies and their lawyers grapple with this question when tasked with defending confidential information. Unlike patents or trademarks, which must be approved by the U.S. Patent and Trademark office, the trade secret question is more amorphous. Last year, a Bexar County jury found that data-driven valuation models and methods, delivered in app form, deserved trade secret protection when it entered a $706 million verdict in favor of a startup named HouseCanary.