Gyms, Romance, And Reality TV: Rethinking What Qualifies As Trade Secret Theft

by Orrick - Trade Secrets Group
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http://blogs.orrick.com/trade-secrets-watch/files/2013/11/21Nov13-Resized-200x150.jpgWhen you think of gyms, romance, and reality TV, what’s most likely to come to mind is an episode of Jersey Shore — not a lawsuit for trade secret misappropriation.  But you won’t hear about JWoww, Snooki, or The Situation in three recently-filed trade secret complaints.  These complaints reflect a growing trend in which trade secret cases aren’t limited to traditional spheres like corporate espionage or technical secrets like source code, but instead are based on creative trade secret assertions that go after competitors in unique settings.

Working Out May be Hazardous to Your (Financial) Health

In October 2013, popular upscale gym franchise Equinox Holdings filed a lawsuit against SoHo Strength Lab, a competitor gym created by three former Equinox personal trainers.  Equinox alleges that it spent extensive time and money compiling databases of information about its members — including not only their contact information but also data on their height, weight, fitness levels, buying histories, and training programs.  Although this type of data doesn’t fit the traditional mold, it’s not hard to see how it could potentially be valuable to a competitor in the health and fitness industry.  Equinox’s trade secret allegations are based on “information and belief,” meaning that it still needs to develop its evidence and theories for how the theft occurred, so it remains to be seen how its claims will work out (so to speak).  All we know is that if Equinox wins it will be able to buy a lot of exercise bikes — it’s seeking $40 million in compensatory and punitive damages.

Romance is a Trade Secret

“Hell hath no fury like a speed dating service scorned.” In December 2012, Match.com contracted with Speed Date to set up speed date events on behalf of Match.com members, but the fling was short-lived: Match broke off the relationship just six months later in May 2013.  A few weeks ago, Speed Date sued, claiming that Match.com stole Speed Date’s trade secret “formula and pattern for marketing and running speed dating events, which resulted in their status as the most successful speed dating business/service in the nation.”  Speed Date alleges that Match improperly used the secret formula to host its own speed dating events, and is seeking $5.65 million in damages to help mend its broken heart.

Reality TV is (Not Surprisingly) Drama

You don’t hear about reality TV and trade secret actions every day (or really ever), but the Western District of Wisconsin will have some “must see” courtroom drama in the coming months.  Plaintiff Sean Morrison Entertainment was the producer of “Ultimate Women’s Challenge,” a reality TV series about 16 female mixed martial arts fighters competing in a tournament that was supposed to air on network television.  Each of the MMA fighters signed a participation agreement providing that the outcomes of the individual matches and the overall tournament winner were trade secrets.  The agreement prohibited the disclosure of the tournament results.  Sean Morrison alleges that since this was a reality show, the economic value of the show was entirely dependent on maintaining the secrecy of the contest elements.  (Those who watch The Bachelor would probably agree.)

So how did the fighters misappropriate the trade secrets?  According to a federal complaint filed by Sean Morrison last month, they and their law firm O’Flaherty Heim Egan & Birnbaum (OHEB) intentionally leaked the results of the series —  including the winner of the challenge — when they previously sued Sean Morrison for non-payment and discussed the results in their publicly-filed complaint.  An MMA blog found out about the suit and broadcast the names of the winners, destroying the secrecy (and allegedly, the value) of the series.  Sean Morrison argues that the defendants should have filed their lawsuit under seal to preserve the confidential information about the results of the show and that no network will now pick up the series because the results are all over the Internet.  Sean Morrison is seeking $1 million in damages and attorneys’ fees.

What these cases show is that trade secrets come in all shapes and sizes.  Trade secrets don’t always have to be top secret source code, technical designs, or the formula for Coke.  All companies have trade secrets, but sometimes you need to think creatively to realize what they are and how they’ve been misused.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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