Late in January 2018, a judge in New York’s Southern District denied summary judgment in a case involving trade secrets.
The parties in Elsevier Inc. v. Doctor Evidence LLC are scientific publishing giant Elsevier and a medical analytics company called Doctor Evidence (DRE). When Elsevier sued DRE for breach of a professional services agreement, DRE asserted counterclaims for breach of contract, unjust enrichment, conversion, and misappropriation of trade secrets.
What were the trade secrets? DRE said Elsevier, in obtaining services, persistently asked how things could be done differently and better. Once armed with DRE’s recommendations, Elsevier allegedly incorporated them into its own product while cutting DRE out of the picture — and also preventing it from getting paid for what amounted to consultancy work. In fact, DRE asserts that the recommendations it gave to Elsevier amounted to trade secrets. DRE also alleged that Elsevier was “unjustly enriched,” which is something one sometimes hears in the corridors of the hopeful and the disappointed.
An unjust enrichment claim (“it’s not fair, they got rich!”) is always barred if there is a contract that addresses the same subject matter as what’s at issue in the unjust enrichment claim. So, the judge dismissed that claim, as well as the other counterclaims for other simple reasons, but what interested me was the dismissal of the trade secret claim.
In its brief, the counter claimant DRE used the terms “trade secret” and “confidential information” almost interchangeably. But they are not the same thing. Trade secrets are a subset of confidential information; they have to be treated with more protection. DRE may very well think that everything it does is special, but in this case they failed to prove the steps they took to secure their supposedly “secret formula.”
Also problematic: DRE didn’t specify what it was that was supposedly subject to protection. To some extent, they might have thought, “We can’t be specific. We don’t want to spread our trade secrets all over the world.” Nonetheless, as the judge reminded them, they could have filed sealed documents with the court; that would have protected whatever they alleged to be worthy of protection. Without some specificity as to what secrets they conveyed, there was no way for the court to know what it is they’re complaining about.
One of the things that the judge didn’t touch on, but I thought was important, was that DRE gave everything to Elsevier willingly and without stipulation. They apparently thought they were making a pitch and wanted to show all the shiny bells and whistles that would come with their services.
Be that as it may, it wasn’t sufficiently protected. If you own a secret sauce, don’t spread it on everything you touch.
