U.S. District Court of MD Dismisses Trade Secret Claim

Thursday, May 30, 2019

The U.S. District Court for the District of Maryland took up another trade secret case in Ultimate Outdoor Movies, LLC v. Funflicks, LLC, No. SAG-18-2315, 2019 WL 2233535 (D. Md. May 23, 2019).  The plaintiffs asserted that their “client list” constituted a trade secret that the defendants had misappropriated in violation of the Maryland Uniform Trade Secrets Act (“MUTSA”) and the Federal Trade Secrets Act (“FTSA”).  District Court Judge Stephanie A. Gallagher granted the defendants’ motion in part, and dismissed several claims, including the trade secret claim under the MUTSA and FTSA.  The plaintiffs’ client list was found not to satisfy the Restatement of Torts’ six-factor test for determining a trade secret.  With regard to the confidentiality factor of that test, Judge Gallagher found that the plaintiffs had failed to adequately ensure confidentiality of the information with an independent contractor by not using contractual obligations of confidentiality with that contractor.  Further, Judge Gallagher found that the complaint did not include specific factual allegations regarding the acquisition, use, or disclosure of the client list by the defendants. 

The case makes clear that trade secrets must be just that- secrets.  Failure to protect the confidentiality of information that is otherwise protectable, will lose secret status if reason steps are not taken to preserve confidentiality.