Theft of Trade Secret Claims Dismissed Because Information Was Disclosed to the Public

On December 11, 2018, Justice Ash of the Kings County Commercial Division issued a decision in Corporate Transp. Group, Ltd. v. Limosys, LLC, 2018 NY Slip Op. 33282(U), dismissing a theft of trade secrets claim because the alleged trade secret had been disclosed to the public, explaining:

To prevail on a claim for misappropriation of trade secrets, a plaintiff must demonstrate: (l) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means. A trade secret is any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.

An essential prerequisite to legal protection against the misappropriation of a trade secret is the element of secrecy. Generally, where customer information is readily ascertainable outside the plaintiff's business, trade secret protection will not attach to such information. Conversely, where the customers are not known in the trade or are discoverable only by extraordinary efforts courts have not hesitated to protect customer lists and files as trade secrets.

Here, Plaintiff seeks trade secret protection for its customer and affiliate list as well as its pricing, but fails to allege what measures Plaintiff has employed to keep said information confidential. Moreover, Plaintiff fails to dispute Limosys's assertion that such information is a matter of public record and that Plaintiff has also freely disclosed said information in other litigation. The complaint also fails to explain how Limosys's alleged use of CTG's information provides Limosys an advantage over its competitors that it did not have previously. With regards to Plaintiff's claim that its trade secrets also pertain to its internal logistical and operational procedures, this claim is too conclusory, especially given the foregoing. Accordingly, Plaintiff's cause of action for misappropriation of trade secrets must be dismissed.

(Internal quotations and citations omitted).

The law protects intellectual property in a number of ways, but that protection is not unlimited, as this decision shows. We frequently litigate intellectual property claims, including trademark, copyright and trade secret claims. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions about whether you have, or face, a claim for theft or infringement of intellectual property.