Trade secrets are a form of intellectual property. Their theft can lead to civil litigation against the alleged thief, as well as criminal prosecution by the government. However, whether certain information qualifies as a “trade secret” is often hotly disputed by those accused of wrongfully taking that information.
On the one hand, you have information that definitely qualifies as a trade secret, such as, for example, Coke recipe, which the company has managed to keep secret for over a 100 years. On the other hand, you have information that is revealed to the public online or in patent applications, which clearly is not a trade secret because, well, it is not “secret.”
But what about information that is public, but has been gathered by a company, curated by it, and compiled into a private database?
The Fifth Circuit Court of Appeals* recently addressed this very question, finding that a company’s compilation of resumes, which were public information, nevertheless qualified as a trade secret under the Texas Uniform Trade Secrets Act.
In this case, a company compiled resumes into a database, and its subscribers had to pay to access the database and sign a contract that prohibited the reselling of and limiting the use of information obtained from the database. A defendant accused of wrongfully misappropriating resumes from the database argued that resumes were not a trade secret because their value derived from being shared rather than being kept secret.
The Fifth Circuit rejected the defendant’s argument finding that the owner of the database provided witness testimony that established that it took the owner a considerable amount of time and monetary resources to collect the resumes, that the uniqueness of the resume collection provided it a competitive advantage, and customers paid a lot of money to access the resume database.
Conclusion: Public information can possibly qualify as a trade secret if the owner of the trade secret spent a lot of time and / or money gathering that information and took reasonable measures to protect the secrecy of the compilation or the collection of the public information.
Leiza Dolghih is the founder of Dolghih Law Group PLLC. She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at firstname.lastname@example.org or (214) 531-2403.
*The Fifth Circuit’s opinion was not published and is not precedent.