Legal Resource Center

What Are Trade Secrets?

 

A trade secret claim occurs when a defendant obtains or publishes a company’s trade secrets. The company may then file a lawsuit against the defendant for trade secret misappropriation. A trade secret is information not available to the public that confers a competitive business advantage on its owner by virtue of not being public to its competitors. When the defendant obtains a trade secret improperly, or publishes it, knowing that someone else acquired it improperly, the defendant has misappropriated the trade secret.

Trade secrets come in various forms. It may include formulas, plans, designs, patterns, supplier lists, customer lists, financial data, personnel information, physical devices, processes, and computer software.

 

Elements for Trade SecretsWhat are trade secrets?

The common three elements for trade secrets are:

• The information conveyed is secret and not open to the public. For information to be a secret, it must not be known by competitors.
• It confers a competitive advantage on its owner. The information gives its owner an economic advantage over its competitors.
• It is subject to reasonable efforts to maintain its secrecy. The owner of a trade secret must make reasonable efforts to keep the information secret.

 

Defenses for Trade Secrets

There are several defenses to trade secrets. One common defense is that what the defendant published was not a secret because it was already generally known or easily ascertainable to the public. Another defense is that the trade secret failed to generate any economic value to the defendant. If the defendant received no economic advantage over its competitors using the trade secret then it might be a defense to the tort. A third defense is that the plaintiff and owner of the secret did not take reasonable steps to maintain its secrecy. If the plaintiff failed to take any affirmative steps to protect the trade secret then the defendant may have a defense for using it.

Another defense is that the defendant did not commit misappropriation of the trade secret. If the defendant discovered the trade secret legally such as by independent invention or accidental disclosure it is not misappropriation.

 

Damages for Trade Secrets

If a court finds that a defendant has misappropriated a plaintiff’s trade secrets, it may impose a number of damages or remedies for the plaintiff. First, a court may award injunctive relief. A court may order a defendant to stop violating the plaintiff’s rights and to take steps to preserve the secrecy of the plaintiff’s information.

Second, a court can make a defendant pay money damages to the plaintiff for the economic harm suffered because of a trade secret violation. This may include the plaintiff’s losses resulting from the misappropriation and the defendant’s profits derived from it. In addition, a court may award royalty fees if the invention has been in the stream of commerce for a while.

The law of trade secrets is complex. If you believe that, you are a victim of the misappropriation of your trade secrets or your company’s trade secrets then contact the experienced attorneys at Meyers Roman Friedberg & Lewis, LPA to evaluate your case. The laws regarding trade secrets vary depending on the state. Call (216) 831-0042 today to find out more information.

How to Get Trade Secrets Removed from the Internet

Because of the power afforded by the CDA, since the law’s inception, websites across the Internet have been left to their own devices to create policies and make decisions as to when each will voluntarily remove or alter content. It’s no small secret that many sites use this power to profit, and, demand payment in exchange for removing or editing unwanted material.

For example, the website RipoffReport.com has a “Corporate Advocacy Program.” In exchange for payment (and a company’s “commitment to customer satisfaction”), Ripoff Report reviews and updates complaints on its site so they are more favorable to businesses.

Once enrolled, the program also allows businesses the opportunity to review and resolve future complaints submitted to the site before they ever get posted. As long as the business keeps making it’s required monthly payments to Ripoff Report, and complies with other aspects of its program, it will be given the chance to resolve complaints and stop content from being posted to RipoffReport.com in the future that is submitted to the site.

Similarly, consumer complaint websites Pissedconsumer.com and Consumeraffairs.com offer paid services that demand money in exchange for brand advocacy and monitoring programs.

Other sites, particularly “cheater sites” (like Cheaterville.com), which primarily host content of individuals outing prior unfaithful romantic partners, allow for removals if an “independent arbitration” service is paid a fee. These same “independent” arbitration services then pay the cheater websites “advertising fees” to be listed on each site as a removal source they work with.

There are also websites like BadboyReport.kr, TheDirty.com, and Mugshot websites that also appear to offer ways in which content can be removed for payment as well. Although the “schemes” and “programs” from site to site vary, the concept is always the same, websites are charging money to remove and/or alter unwanted negative content.

But is this legal?

For businesses and individuals listed on these sites, having to pay money to remove or edit content can feel unfair. In fact, many assert that this type of activity is more than just “unfair,” that it is in fact unlawful, and constitutes extortion. Although there may exist circumstances where this is the case, as the title of this post suggests, a recent ruling by the Ninth Circuit Court of Appeals involving the consumer review website Yelp!, Inc. affirms that most of the time it’s completely legal for a website to demand payment in exchange for removing or altering content.

LEVITT v. YELP!, INC.

The case, which was originally filed back in 2010, asserted claims that Yelp! had attempted to extort a group of businesses by trying to unlawfully induce them to buy advertising. The plaintiffs asserted in their Complaint that Yelp representatives had offered to manipulate and even hide negative reviews if a business agreed to buy advertising. The lawsuit also alleged that Yelp had created its own negative reviews of businesses to induce businesses to buy advertising as well.

In its ruling, the 9th Circuit Court of Appeals affirmed a lower court ruling that even if the Plaintiff’s allegations were true, Yelp’s actions did not amount to extortion. The Court found that removing content in exchange for money was not extortion because Yelp has the legal right to post and sequence reviews.

The Court also found that the lawsuit did not state sufficient facts to believe that Yelp had actually created negative reviews of businesses.

ANALYSIS

The ruling by the court in this case was limited, but significant. For starters, the ruling itself was not that surprising. A website demanding money in exchange for removing or editing content will rarely constitute extortion, if ever. Most states and federal legal definitions of extortionrequire a “threat” to be present. For example, “unless you pay me, I will post negative/defamatory information that will harm you.”  That’s a threat.

Here, the content at issue is already published. There is no threat. The websites at issue have a legal right to have the content published and also have the legal right to remove or edit the content at issue and keep it published. Demanding money to engage or not in engage in behavior that one is already legally entitled to engage in is not illegal, and certainly not extortion.

In this respect, the ruling is significant because it can and likely will be used by other websites to defend themselves against extortion accusations in the future (such as those I mention above).

Nonetheless, the ruling was limited in several respects. The Court made clear that it’s holding did not mean that “no cause of action exists” or could ever exist for extortion in this type of circumstance. I.e., there may be facts and circumstances that can constitute a valid claim. Additionally, the Court stopped short of ruling that websites such as Yelp are immune from claims of extortion under the CDA, which was in part what the lower court had relied upon when originally ruling in Yelp’s favor.

The ruling also means that in the future we are likely going to see more and more websites that gather negative content and demand money to remove it. I’m not sure that’s something that most people are going to like, but it doesn’t appear to be something that is going away any time soon. It will be interesting to see if this ruling continues to stand as websites modify and expand their removal policies. Only time will tell.

The landscape for owners of websites and those posted to them can be confusing. If you or your business is being defamed online and a website is demanding payment to remove or edit the content, or, if you are the owner of a site that is interested in setting up a program or policy to remove content from your site, the Internet attorneys at Meyers Roman Friedberg & Lewis, LPA can assist.  Call Aaron Minc at (216) 373-7706  today to discuss your matter. Or e-mail me at Aminc@meyersroman.com.

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