IP Law Daily, TRADE SECRETS—D. Utah: Business analytics company failed to define claimed trade secrets, (Aug 15, 2024)

By Kevin M. Finson

Summary judgment was granted in favor of a defendant in trade secrets claims because the owner of the claimed secrets failed to delineate them in a way that would allow a fact-finder to determine if they existed.

A business analytics company failed to sufficiently delineate its claimed trade secrets against a competing company formed by two former consultants the U.S. District Court in Salt Lake City has held, granting summary judgment to the defendants. There was no evidence from which a finder of fact could determine what was a claimed secret and what was generally known in the industry (Applied Predictive Technologies, Inc. v. MarketDial, Inc., No. 2:19-cv-00496-JNP (D. Utah. Aug. 12, 2024)).

Applied Predictive Technology, Inc. (APT) was in the business of providing business analytics. APT developed and licensed to its clients software called Test & Learn, which it claimed was the result of tens of millions of dollars of investment and more than 20 years of development efforts. APT shared documents and information with McKinsey & Co., a consulting firm, under a confidentiality agreement. Two employees of McKinsey, John Stoddard and Morgan Davis, allegedly used the information they obtained from APT to found MarketDial, Inc., a competitor to APT.

APT brought suit against MarketDial, Inc, Stoddard, and Davis (collectively, MarketDial) for patent infringement, trade secret misappropriation under the Defend Trade Secrets Act (DTSA) and the Utah Uniform Trade Secrets Act (UTSA), and unfair competition. The patent and unfair competition claims were disposed of on a motion to dismiss in 2020. Following discovery, MarketDial moved for summary judgment on the remaining trade secret claims.

Trade secrets. MarketDial argued that APT failed to define its claimed secrets in a way that would allow a fact-finder to determine if they existed. APT had identified voluminous compilations of claimed secrets in such documents as a deployment guide, capabilities briefing, and presentations intended for specific clients. Crucially, the court held, these compilations lacked any explanation or limitations to spell out what exactly was claimed as a secret and what was generally known within the industry. They did not define exactly what was claimed or how those things derived value from not being generally known, as required by both the federal and state trade secrets statutes. “APT’s arguments reflect broad assertions that fail to provide evidence on which a reasonable jury could conclude that the statutory definition of trade secrets has been met,” the court said.

The court noted that the Utah Supreme Court has declined to read into Utah’s uniform trade secrets statute a per se “particularity” requirement. However, even under the seemingly more lax standard that Utah courts have adopted under the UTSA, APT failed to adequately define its trade secrets.

The court granted summary judgment in favor of MarketDial.

The Case is No. 2:19-cv-00496-JNP.

Judge: Parrish, J.

Attorneys: David W. Tufts (Dentons Durham Jones & Pinegar PC) for Applied Predictive Technologies, Inc. Gregory S. Osborne, MarketDial, Inc., for MarketDial, Inc.

Companies: Applied Predictive Technologies, Inc.; MarketDial, Inc.

Cases: TradeSecrets UtahNews