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.
Six Dimensions, a digital marketing firm, filed a lawsuit in September 2017 against Perficient and an ex-employee for breach of contract and improper use and disclosure of trade secrets. Six Dimensions alleged the company developed expertise in the software support market, specifically helping clients implement Adobe Marketing Cloud. With the implementation of this software, Six Dimensions created and maintained websites for clients, including McDonald’s and Bass Pro Shops. Six Dimensions claimed Perficient poached employees from its organization and also utilized Six Dimensions’ proprietary training materials and client information.
The case went to trial and jurors were tasked with determining whether or not Six Dimensions’ training modules and materials, employee performance evaluations, critical employee list, and customer pricing and project information were in fact trade secrets. If so, Six Dimensions deserved protection from and compensation for any trade secret theft. The company asked a federal jury to award them $50 million in compensation for the alleged trade secret misappropriation.
It did not take long for the jury to decide there was no trade secret misappropriation; however, the jury did award $287,000 as damages for one former employee’s breach of her employment agreement by soliciting Six Dimensions’ employees after she resigned. While the jury found that some of Six Dimensions’ alleged trade secrets met the legal definition, the jury found that Perficient did not misappropriate those trade secrets.
The Uniform Trade Secrets Act defines a trade secret fairly broadly. A trade secret can range from a device prototype or even intangible methods, but what classifies an item as a trade secret is how it is protected and how its secrecy adds value to a company. Owners of trade secrets must show they took steps to protect the trade secret and that the trade secret gave the owner a competitive advantage or he or she obtained economic value from the trade secret.
For Six Dimensions, the jury found training modules and materials and customer pricing and project information to be trade secrets but did not consider employee performance evaluations and a critical employee list to be trade secrets. While the jury did not specify which aspect of the trade secret definition the materials did not meet, the jury’s ruling illustrates the nuances of trade secret protection and litigation.
The Houston trade secrets attorneys at Burford Perry LLP understand the importance of protecting trade secrets through proactive action and aggressive representation in litigation. We also know not all information will legally be considered a trade secret. If you are facing any type of trade secret litigation, contact us today to schedule an appointment with one of our dedicated attorneys to see how we can help