Tennessee Business Litigation Lawyers Blog
Under the Tennessee Uniform Trade Secrets Act (“TUTSA”), a party alleging a violation of that Act must first prove that the information at issue is a trade secret. To prove that information is a trade secret under TUTSA, a plaintiff must prove, among other things, that the information is not “readily ascertainable by proper means by other persons [besides the defendant].” Sometimes, courts describe this as an obligation of the plaintiff to prove that the information is not “publicly available.” (This requirement is closely related to the requirement that a plaintiff must prove that it took reasonable efforts under the circumstances to maintain the secrecy of the information.)
Anecdotally, plaintiffs frequently file lawsuits alleging that their trade secrets were misappropriated, but courts determine that what the plaintiffs claimed were trade secrets were not because, either the information was publicly available or the plaintiff, itself, disclosed the information to the defendant or others without requiring that the defendant or others maintain the confidentiality of the information and not use it.
Here are summaries of a few select cases where courts have decided that information does not qualify as a trade secret because it was available through other means.
- Care Services Mgmt., LLC v. Premier Mobile Dentistry of Va. (M.D. Tenn. 2020): The plaintiff provided to healthcare providers assistance with payment of claims and reimbursement. The defendant had been employed by plaintiff as a bill collector and later as a supervisor of bill collectors. The plaintiff claimed that forms, or templates, for documents that related to providing and receiving dental treatment were trade secrets which the defendant had misappropriated. Those documents included transmittal letters, emails, spreadsheets, invoices, dental progress notes, memos and the like. The court disagreed finding that the documents were regularly shared with patients, nursing homes, state agencies and others.
- Wright Medical Tech., Inc. v. Grisoni (Tenn. Ct. App. 2001): In this case, the defendant was a highly educated and experienced chemical engineer who, while employed by the plaintiff, had worked on developing a calcium sulfate bone void filler medical product. After his employment was terminated, he began working on a similar product. In finding that the defendant former employee had not violated TUTSA, the court relied on the fact that the former employee was able to point it to public sources which contained information about calcium sulfate bone void fillers and that the plaintiff, his former employer, had published brochures and user guides describing the product it was developing.
- Ecimos, LLC v. Carrier Corp. (6th Cir. 2020): In this case, the court stated that, in determining whether information is a trade secret, the “most important” factor “is whether the information has been publicly disclosed or is easily acquired or duplicated by others.” The court ruled in this case that the plaintiff’s assembled hardware did not constitute a trade secret because the plaintiff had put the product on the market and sold it to third parties.
One very important concept that comes into play in some trade secret cases is that of compiled or organized information. Even if individual items of information may be known to the public or are knowable to the public, where a party has expended resources integrating or organizing that information, it may constitute trade secrets in its integrated or organized form. Whether the integration and organization are to such an extent that it amounts to a trade secret is a question of fact.
In my experience, where a former employee or contractor has downloaded information about customers or accounts from a server or hard drive, it can be difficult to convince a court that, even though those customers and accounts were no secret, the compiled data which was downloaded was available through other means. After all, if it were, the former contractor or employee would have not needed to download it.
There is also legal authority for the proposition that information can amount to a trade secret even where several companies possess it, if it is not generally known. See, Williams-Sonoma Direct, Inc. v. Arhaus (W.D.Tenn. 2015)