Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In a recent Ninth Circuit decision, the Court reversed a grant of summary judgment for defendant in a trade secret misappropriation case. The district court determined that the plaintiff had not identified its alleged trade secrets with sufficient particularity. In reversing the grant of summary judgment, the Ninth Circuit made a few rulings that may create cause for concern. First, the Court applied the particularity standard used under California law to the particularity requirement under the federal Defend Trade Secrets Act (DTSA). Whether this results in California’s particularity requirement being applied to all DTSA claims in district courts is unclear, but possible. Second, the Ninth Circuit seemed to indicate that there can be something akin to a rolling disclosure of trade secrets, which may not square with applicable law requiring disclosure of trade secrets with particularity before substantial discovery can be taken. This decision from the Ninth Circuit has the potential to create a mess of federal trade secret law at least as to the “particularity” requirement for trade secret misappropriation cases, and which law should be applied. The takeaway here is that particularity must be alleged to sustain a trade secret claim, whether under state or federal law, and it may be possible to identify the trade secrets on something of a rolling basis.
2. In another trade secret decision, this time from the Northern District of California, the Court dismissed a trade secret misappropriation claim without leave to amend because the plaintiff failed to show that the alleged trade secret conferred a business advantage. The facts are interesting – the plaintiff is a cryptocurrency exchange company that alleged its physical location was a trade secret because of safety reasons. The alleged violation occurred when a former employee disclosed the plaintiff’s physical address in a separate wrongful termination case. While the address may have been secret, the Court determined that it did not confer a competitive business advantage because it was unclear how the plaintiff’s competitors awareness of plaintiff’s physical location would afford a competitive advantage. While this may be the correct ruling overall, it does not square up with a literal reading of the language of the DTSA. Instead, the DTSA requires that the trade secret have “independent economic value” by virtue of its not being known. The takeaway here is that secrecy is not enough to sustain a trade secret misappropriation claim under the DTSA. Rather, the value of the trade secret based on its secrecy must also be adequately alleged.
3. In a final opinion from the Trademark Trial and Appeal Board (TTAB), Lucasfilm successfully opposed a musician’s attempt to register “Millennial Falcon” as a trademark. The trademark applicant asserted that the name was a parody about Disney corporate culture, but the TTAB disagreed and noted that the “Millennium Falcon” was so well known because of its longstanding use in the Star Wars stories that consumers would be confused by the applicant’s trademark into thinking of Star Wars and the iconic spaceship that is a centerpiece of the Star Wars story. The takeaway here is that parody typically applies where the marks are not confusingly similar.