IP Law Daily, TRADE SECRETS—S.D. Ohio: Summary judgment granted against trade secrets claim based on annuity language and advertising, (Aug 4, 2022)

By Kevin M. Finson, J.D.

A trade secrets claim based on the language of an annuity product and the advertising material for it failed because those items did not derive independent economic value from being secret, and could only produce any economic value once they were made public.

An annuity company did not create a genuine dispute of material fact in its claims for trade secret misappropriation, the U.S. District Court in Columbus has held. The claimed secrets were materials that must necessarily be made public in order to have any economic value (Novus Group, LLC v. Prudential Financial Inc., August 1, 2022, Sargus, E.).

Novus Group, LLC (Novus) was formed by two financial advisors to market their idea for a new annuity product. The product, which they called the Transitions Beneficiary Income Rider, would be aimed at older individuals who wanted to guarantee their descendants a steady stream of income. Novus engaged in talks with Nationwide Life Insurance Company (Nationwide) to market their product, but Nationwide declined. Shortly thereafter, two Nationwide employees, Rodney Branch and Lisa Ferris, departed Nationwide for roles at Prudential Financial, Inc. (Prudential). Prudential then brought to market its Legacy Protection Plus rider annuity product, which Novus alleged mimicked its own product and was the result of Prudential’s use of numerous trade secrets which Novus alleged Branch or Ferris must have brought with them from Nationwide to Prudential. Novus filed suit against Prudential for violation of the Ohio Uniform Trade Secrets Act. Prudential moved for summary judgment.

Protectable trade secret. Prudential argued that the language of the annuity itself and the advertising campaign based around it were not protectable trade secrets because neither derived independent economic value from not being generally known. In fact, both could only produce value once they were released to the public and therefore became easily replicable. Novus agreed that its products would be replicable once published, but that they derived value from being secret because that would allow Novus the advantage of being first to market. Novus was unable to offer case law to support its interpretation of the Ohio statute, while Prudential offered interpretations of identical language in the Michigan trade secrets act to support its interpretation. The Court held that materials which have no value until they are published cannot be trade secrets, which was sufficient basis to grant summary judgment to Prudential.

Confidential relationship. Prudential also argued that, even if the materials were protectable, Novus had offered no evidence that Prudential had misappropriated them. There was no evidence in the record from which a factfinder could determine that anyone, Nationwide or its employees included, had entered into an agreement with Novus to protect Novus’s information. The closest Novus could come was that a third-party had given it the impression that Nationwide would not disclose the material, but without some evidence that Nationwide itself had done some act to support even an implicit agreement of confidentiality, there could be no breach of a confidential relationship to support a trade secrets claim. This was an independent ground on which the Court held that summary judgment was appropriate.

The Case is No. 2:19-cv-00208-EAS-EPD.

Attorneys: Henry B. Ward III (Moore & Van Allen PLLC) for Natural Dog Acquisition LLC. Justin Eldreth (Eldreth Law Firm, P.C.) for Pet Go Round of Greensboro.

Companies: Natural Dog Acquisition LLC; Pet Go Round of Greensboro

Cases: TradeSecrets OhioNews