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March 4 --A party asserting a trade secret must have defined with particularity the parameters of its purported trade secret at the time that it disclosed the relevant information to the defendant and also throughout the subsequent legal proceeding, the U.S. District Court for the Southern District of New York ruled March 3 (Big Vision Pvt. Ltd. v. E.I. du Pont de Nemours & Co., 2014 BL 57264, S.D.N.Y., No. 1:11-cv-08511-KPF-AJP, 3/3/14).
Granting a motion for summary judgment in favor of DuPont on trade secret and contract claims brought by an Indian company that developed a recyclable banner, the court adopted this standard for specificity as applied by federal appeals courts outside the Second Circuit and by district courts inside the Second Circuit, but had not been explicitly adopted by the U.S. Court of Appeals for the Second Circuit itself.
The court also said that boilerplate confidentiality assertions at the bottom of e-mail messages were insufficient under the terms of a non-disclosure agreement to make the content of those messages confidential.
Big Vision Pvt. Ltd. of Mumbai, India, designs and prints advertising banners and billboards. In 2007, it began developing an idea for recyclable banners. E.I. du Pont de Nemours & Co. of Wilmington, Del., is a multinational chemicals and materials developer and manufacturer.
In 2008, Big Vision and DuPont discussed, subject to non-disclosure agreements, the possibility of using a DuPont-made fabric for use in making Big Vision's recyclable banner product. The companies participated in three trials of DuPont-created materials. But by 2010, DuPont had introduced its own recyclable banner products in the market.
In November 2011, Big Vision sued DuPont, alleging misappropriation of trade secrets and breach of contract, among other claims. DuPont moved for summary judgment.
Judge Katherine Polk Failla first noted that Big Vision's descriptions of its asserted trade secret had “changed dramatically over the course of the litigation” and extensively detailed Big Vision's responses and pleadings throughout the discovery process.
Addressing the breach of contract claim, the court determined that even though there were non-disclosure agreements governing the parties' relationship, that Big Vision had not at the appropriate time designated as confidential what it now asserted as being subjected to that agreement.
The court rejected the argument that a boilerplate disclaimer in the footer of two electronic mail messages stating that “[t]his message (including any attachments) is privileged, confidential, and intended only for the use of the individual or entity to whom it is addressed” was adequate to subject the asserted trade secret to the agreements.
First, the court said, this did not comply with the terms of the NDA regarding how confidential material would be designated. Second, the court noted, the information had by the time those e-mail messages been sent already been disclosed in even greater detail without any such disclaimer.
Similarly, a statement in an e-mail message stating that “all our communications [must be] dealt with … confidentiality” was untimely and inadequate to designate specific information as being subject to the NDAs.
“The NDAs require written information to be contemporaneously designated as Confidential to qualify as such; because this information was already disclosed, it could not be designated as Confidential,” the court said.
The court also rejected Big Vision principal Shailesh Visaria's argument that it was unreasonable to expect that every message including confidential information include a statement designating the information as being subject to the agreements; thus it should be considered understood by the parties what information the agreements applied to. The court said:
Beyond the self-evident proposition that Visaria's personal opinion cannot supplant the expressed mutual intent of the parties in the NDAs, his understanding of the NDAs would, if adopted, render its confidentiality provision a nullity.
There is no evidence that the terms of the NDAs were so onerous as to be infeasible; each contains the simple requirement that information must be designated as Confidential before it will be treated as such. … If Big Vision believed the confidentiality designations in the NDAs were too burdensome, it was free to negotiate different terms. Big Vision cannot expect to engage in three trials--and then succeed on a breach of contract claim based upon a belated, one-sentence, boilerplate confidentiality designation and an even-more-belated, one-sentence, catch-all confidentiality designation.
The court next rejected as untimely Big Vision's argument that the terms of the confidentiality agreements had been modified through course of conduct.
Thus, the court granted summary judgment in favor of DuPont on Big Vision's breach of contract claim.
Turning to the issue of misappropriation of trade secrets as governed by New York state law, the court found numerous faults with Big Vision's claim, including that it had failed to adequately define its asserted trade secret either at the time that it had supposedly disclosed this secret to DuPont, or even throughout the legal proceeding before the court.
The court noted that the U.S. Court of Appeals for the Second Circuit had not explicitly set forth a particularity requirement for the scope of an asserted trade secret at the time of disclosure, but that several other federal appeals courts had done so, in cases such as IPX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002); MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 26 U.S.P.Q.2d 1458 (9th Cir. 1993); Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 82 U.S.P.Q.2d 1452 (5th Cir. 2007) ; and SL Montevideo Tech., Inc. v. Eaton Aerospace, LLC, 491 F.3d 350 (8th Cir. 2007).
In this vein, the court explicitly adopted the requirement that a plaintiff asserting a trade secret must have defined such trade secret with particularly at the time that it disclosed the relevant information to the defendant, as well as throughout the litigation. Applying this standard to the instant facts, the court found that Big Vision had done neither.
In so finding, the court noted that Big Vision had used the terms “trade secret” and “confidential” interchangeably, and pointed out that not all material subject to a confidentiality agreement was necessarily a trade secret. Furthermore, the court noted:
Most of Big Vision's witnesses subscribed to the idea that everything that occurred during the trials constituted Big Vision's trade secret. In fact, its counsel espoused that rather remarkable claim at oral argument. Significantly, however, Big Vision's belief in the confidentiality of its information, however fervent, does not transform that information into trade secrets.
With regard to Big Vision's attempts to define its trade secret within the context of the proceeding, the court said, “Even now, the putative trade secret is notable for its imprecision.” The court noted that in two years of litigation, Big Vision had failed to define its putative trade secret with particularity.
The court thus concluded that Big Vision had failed to assert a trade secret in which it could assert the protection of New York state law.
Furthermore, the court said, to the extent that Big Vision had finally defined a trade secret, this information had already been known to the public and thus did not constitute a secret. Finally, the court found that “DuPont did not use the trade secret or discover it by improper means.”
Big Vision was represented by Ariel Lavinbuk of Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, Washington, D.C. DuPont was represented by Edward Stephen Bloomberg of Phyllips Lytle LLP, New York.
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