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Exceptional and accessible legal representation across Kentucky and Nationwide

EXCEPTIONAL AND ACCESSIBLE LEGAL REPRESENTATION ACROSS KENTUCKY AND NATIONWIDE

Major federal case on combination trade secrets, part 2

On Behalf of | Jan 25, 2023 | Intellectual Property, Trade Secrets |

In part 1, we introduced Caudill Seed & Warehouse Co., Inc., v. Jarrow Formulas, Inc., a Nov. 2022 case from the U.S. Court of Appeals for the Sixth Circuit where the court discussed the concept of the “combination trade secret.” Broadly, a combination trade secret is the result of combining a string of elements that may or may not be publicly known into a unique economically valuable combination asset.

Reasonable particularity requirement

The case makes important points about the requirement that a trade-secret plaintiff must describe its trade secrets with sufficient particularity so that it is clear what the company wants to keep secret. In a case involving complex technological, technical or scientific processes, it is not sufficient to assert trade-secret protection in sweeping, broad language like everything in a database, category, list or spreadsheet. Rather, the secret, specific compilations of information or components must be clearly described.

The court said, “Caudill repeatedly demonstrated that it had assembled a unique combination of processes and information that aided its research and development processes at a level of depth beyond merely listing technical concepts.”

The court also clarified that for misappropriation of a combination trade secret, the plaintiff does not need to show that “each atom” of the process was improperly taken or used. Nor must the plaintiff show that the defendant used the “entire combination” of elements exactly as the secret’s owner had. Rather, “when the law grants protection over many interconnected pieces of information, an even-higher threat exists of a misappropriating party changing one element of the combination to evade liability.”

Takeaways

Businesses using proprietary, complicated processes or methods benefit from collaborating with experienced legal counsel early on. For example, a departing employee may take their general knowledge within a specific field to their next employer, but not any trade secrets. In this case, the departing director reportedly took internal documents, research strategy and results to his new employer, supporting a finding of misappropriation.