610 F. App'x 881
11th Cir.2015Background
- WSI developed a web-based package-tracking program called Intelligent Audit and licensed/resold it (via Scott Langley) to resellers, including ILL, which marketed it as "ShipLink."
- ILL had high-level administrative user accounts enabling it to create user IDs/passwords and view the program’s visible output and functionality; neither ILL nor third-party developers ever had access to Intelligent Audit’s source code.
- Lebovich (WSI) repeatedly told ILL the program was confidential but WSI did not obtain a written non-disclosure agreement from ILL before granting access.
- In 2004 ILL hired a developer (Platinum) to build a visually and functionally similar web program and in 2005 terminated WSI and began selling that product as ShipLink.
- WSI sued under the Georgia Trade Secrets Act alleging misappropriation of Intelligent Audit’s features and functionality; the district court granted summary judgment to ILL, finding the program’s visible output was not a trade secret and WSI’s secrecy measures were insufficient.
- On appeal, the Eleventh Circuit affirmed summary judgment for ILL, holding WSI failed to show the program’s features/functions were trade secrets or were protected by reasonable secrecy measures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Intelligent Audit’s visible output and functionality qualify as trade secrets under the GTSA | Functional aspects (reporting, data processing, look-and-feel) are protected if WSI took steps to preserve their secrecy | Visible output and functionality are readily ascertainable by users and thus not trade secrets; only source code can be a trade secret here | Court held visible output/functionality are not trade secrets where dissemination to users reveals them and source code was never alleged to be misappropriated |
| Whether WSI made reasonable efforts to maintain secrecy | WSI employed technological measures (passwords, encryption) and confidentiality provisions for customers to protect the program | WSI did not require ILL to sign an NDA and security measures protected customer data, not the program’s look/feel; warnings were verbal only | Court held WSI’s efforts were not reasonable under the circumstances; absence of a written NDA and open exposure to authorized users were dispositive |
Key Cases Cited
- Penalty Kick Mgmt. Ltd. v. Coca Cola Co., 318 F.3d 1284 (11th Cir.) (establishes GTSA elements and that trade-secret status is a factual question)
- Morales v. Zenith Ins. Co., 714 F.3d 1220 (11th Cir.) (standard of review for summary judgment)