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1. INTRODUCTION介绍
Taco-Delight公司（“Taco-Delight”）正计划收购Meow消息。几乎所有的猫咪按摩的顾客都在使用他们的产品。Purrfect沐浴露的主要功能是防止人们对猫产生过敏反应，这也会使猫有明显的蓝莓味。Meow Massages已经在网上和当地报纸上发布了该产品的广告，这就是为什么该产品在消费者中很受欢迎的原因。在计划收购Taco Delight的过程中，该产品非常重要。
宠物商场是一家全国连锁店，直到几周前才有类似的产品。宠物商场正在宣传该产品，称其为“阻止你的朋友对你的猫过敏”。他们的产品也能让猫有明显的蓝莓味。更可能的是，宠物商场正在模仿Purrfect沐浴露，在这种情况下，Meow按摩可能会失去所有的顾客。
Sean Holiday（“假日”）是Taco Delight的董事会主席，他正计划收购Meow按摩。Holiday相信，由于两家公司的产品有许多相似之处，所以Meow按摩产品的采购沐浴产品配方被宠物商场仿制。由于MEOW按摩产品的配方尚未获得专利，因此无法依照专利法提起诉讼。
Taco Delight Corporation (“Taco Delight”) is planning to acquire Meow Messages. Almost all the customers of Meow Massages are using their Purrfect Bath product for cats. The major function of Purrfect Bath shampoo is to prevent people from having an allergic reaction with the cat, which can also leave the cat with a distinct blueberry smell. Meow Massages has already advertised the product online and in the local newspaper, that’s why the product is popular among customers. In the planned acquisition of Taco Delight, this product is quite important.
Pet Emporium is a national chain, who didn’t have a similar product until a few weeks ago. Pet Emporium is advertising the product as “stop your friends from being allergic to your cat”. Their product can also leave the cat with a distinct blueberry smell. It is more likely that Pet Emporium is copying the Purrfect Bath shampoo, and under the circumstances Meow Massages may lose all the customers.
Sean Holiday (“Holiday”) is the chairman of directors of Taco Delight who is planning to acquire Meow Massages. Holiday is convinced the formula of Purrfect Bath product of Meow Massages was copied by Pet Emporium because products of the two companies have many similarities. Because Meow Massages has not patented the formula of Purrfect Bath product, it cannot file suit according to Patent law.
2. QUESTION PRESENTED提出的问题
i. Is it possible for Meow Messages to file suits against Pet Emporium about trade secret misappropriation?是否有可能对宠物商场提起商业秘密盗用诉讼？
ii. Whether the court is likely to find that Pet Emporium engaged in trade secret misappropriation?法院是否有可能发现宠物商场从事商业秘密盗用？
iii. How Taco Delight and Meow Messages can files suit against Pet Emporium in New York state court and in the Supreme Court for Albany County?纽约州法院和奥尔巴尼县最高法院对宠物商场提起诉讼时，Taco Delight和Meow信息如何？
3. BRIEF ANSWER简短回答
是的，法院很可能会发现宠物商场在商业秘密中盗用猫咪按摩生产的Purrfect沐浴露。因为猫用猫咪按摩浴产品配方有可能被宠物商场复制。事实总结如下。Yes, a court would likely find that Pet Emporium engaged in trade secret misappropriation of Purrfect Bath shampoo produced by Meow Massages. Because it is possible that the bath product formula of Meow Massages for cat was copied by Pet Emporium. The facts are summarized in the following.
4. FACTS
First, products of Pet Emporium are quite similar to that of Meow Massages. That’s because: both products can prevent people from being allergic to their cat; and both products can leave the cat with a distinct blueberry smell.
Second, Pet Emporium did not have similar products until a few weeks ago. In addition to this, a key staff of Meow Massages, Lewis Moore, left the company after a fight with Jennifer, the owner of Meow Massages, because they could not agree with each other on the direction of Meow Massages. Lewis Moore got a new job in Pet Emporium to help launch their new cat spa services.
Facts which are legally relevant are listed in the following.
a. Meow Massages has Purrfect Bath product which can prevent people being allergic for their cat, and advertises this product online and int he local newspaper;
b. The bath product formula of Meow Massages has not patented;
c. A key staff of Meow Massages left the company after a fight with the owner and got a new job in Pet Emporium;
d. Pet Emporium does not have similar products until a few weeks ago;
e. Bath products of Pet Emporium are quite similar to that of Meow Massages;
5. DISCUSSION
In this section, it is going to discuss this case from two aspects. On one hand, it will discuss why and how the formula of Purrfect Bath product constitutes a trade secret; on the other hand, it will discuss how the behaviors of Pet Emporium meets the basic conditions of “trade secret misappropriation”. Finally, based on the mentioned discussions, it will also predict filling a suit against Pet Emporium.
a. The court may find formula of Purrfect Bath product constitutes a trade secret.
i. Holiday wants to know whether Meow Massages would have a claim of trade secret misappropriation against Pet Emporium. Whether the formula of Purrfect Bath product of Meow Massages constitutes a trade secret is question of fact. (see, Ashland Management Inc. v. Janien, 82 N.Y.2d 395) No general accepted definition of trade secret can be found, however according to section 757 of Restatement of Torts, comment b cited a definition which was used by the court of Ashland Management Inc. v. Janien, 82 N. Y. 2d 407. The Court adopted the definition, any “trade secret”, or other protected proprietary information, in general, refers to any formula, pattern, device, or compilation of information which have two features: first it can be used in one’s business, second it can give the business an opportunity to obtain advantages over competitors who do not have it or do not use it. (Id. 407)
ii. In Ashland Management Inc. v. Janien, 82 N. Y. 2d 395 (1993), one of the issues is what can be defined as a trade secret. The court addresses the issue that Ashland Management Inc is an investment advisory company. Id. 400 It has a computerized mathematical stock selection model, known as Alpha, which is used to select financial information and help to make the initial buy or sell determination of stock. Id. Defendant Janien exploited a model with the six criteria used by Alpha and concluded an exceptional model, known as Eta. Id. Based on Alpha, Janien developed his model Eta, and because of the new Eta, Janien can be employed by Ashland in 1985 and further came into an agreement with Ashland about the development of Eta. Id. In 1989, Ashland terminated Janien’s employment and in the meantime asserted that Alpha was a trade secret which formed an integral part of Eta. Id. Alshland wanted to bar Janien from using Eta. Id. 401 The Supreme Court, New York County, concluded Alpha was not a trade secret because even the calculation method of Alpha was confidential, its six financial criteria were public knowledge. (cf., Integrated Cash Mgt. Servs. v. Digital Transactions, 920 F.2d 171, 174) Anyone in the market could acquire and duplicate the information of the six financial criteria. Id.
In deciding whether Alpha is a trade secret, several factors suggested by the Restatement are considered: “(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others” (Restatement of Torts§757, comment b) (Matter of New York Tel. Co. v. Public Serv. Commn., 56 N.Y.2d 213, 219, n. 3, 451 N.Y.S.2d 679, 436 N.E.2d 1281).
iii. In our case Meow Massages v. Pet Emporium, even Meow Massages has not patented the formula of Purrfect Bath shampoo, the formula is not known by public outside the company. Only key staff is more likely to know the formula. Purrfect Bath product can prevent people from being allergic for cats and leave cats with blueberry smell, these features have won many loyal customers and are of great value to Meow Massages’ competitors. The formula is the foundation of Meow Massages, all the customers of Meow Massages use this product. Because of the formula, Meow Massages occupied certain market shares and cultivated many customers. Based on the above analysis, the formula of Purrfect Bath shampoo is a trade secret.
b. The claim of “trade secret misappropriation” should meet some basic conditions.
i. The first question of fact is whether the formula is a trade secret. According to our analysis, it has reasons to believe that the formula of Purrfect Bath shampoo is a trade secret. Whether the produce and sale of similar products by Pet Emporium constitutes misappropriation of trade secret is another question of fact.
ii. Lewis Moore is a former employee of Meow Massages. He believed the Purrfect Bath shampoo is a great product Meow Massages came up with, and the company should make it into a national product. However the owner of Meow Massages Jennifer did not think the same way. After a fight with Jennifer about the direction of Meow Massages, Lewis Moore left the company and got a new job in Pet Emporium. The main task of Lewis Moore in Pet Emporium is to help launch their new cat spa services because Pet Emporium liked his previous pet experience in Meow Massages. In order to judge whether Pet Emporium constitutes misappropriation of trade secret, we should judge whether Lewis Moore, the former employee of Meow Massages disclose the product formula or other confidential information to Pet Emporium. As stated in Leo Silfen, Inc. v. Cream, 29 N. Y. 2D 387 (1972), Court of Appeals of New York holds a view that “customer lists and files will be protected as trade secrets if they are not known in the trade or are discoverable only by extraordinary efforts”. No doubt the formula of Purrfect Bath shampoo is a trade secret, but other resources acquired by Meow Massage during its business activities will not constitute a trade secret if these resources are readily ascertainable outside Meow Massage’s business. Lewis Moore in Pet Emporium has launched the new cat spa services and advised it can “stop your friends from being allergic to your cat”, which attracted customers who are users or prospective users of Meow Massages. Even so, the court will not enjoin Lewis Moore from soliciting Meow Massages’ customers, because customer list or file cannot constitute to trade secret here since it can be acquired outside Meow Massage’s business activity. Id. #p#分页标题#e#
iii. Generally speaking, If a person obtains a trader secret improperly, for example by means of theft, bribery, or breach of a confidentiality agreement, or publishes the trade secret, or knowing someone else has acquired the trade secret improperly, this person has misappropriated the trade secret.
In Leo Silfen, Inc. v. Cream, 29 N. Y. 2D 387 (1972), a physical taking or studied copying of former employee is not necessarily as violation or misappropriation of a trade secret, but definitely is a breach of trust and confidence. In Marietta Corp. v. Fairhurst, 301 A. D. 2d 734 (2003), competitor’s hiring of former employee may “not establish that confidential information and trade secret would be inevitably disclosed”; although the former employee could get access to confidential information, “there was no evidence that he had intentionally disclosed any proprietary information to the competitor”.
In the case Ashland Management Inc. v. Janien, 82 N.Y.2d 395 (1993), plaintiff insists that Alpha is a trade secret of plaintiff, since Alpha is an integral part of Eta, any use of Eta by defendant constitutes misappropriation of the trade secret. However Supreme Court concluded Alpha was not a trade secret because it can be acquired outside plaintiff’s business activity, so there is not a factual base of a trade secret misappropriation. The Appellate Division also affirmed the judgment 190 A.D.2d 591, 593 N.Y.S.2d 790.
Back to the targeted case, product formula cannot be acquired from open resources, which is a trade secret of Meow Massage. Lewis Moore acquired this formula because he is former employee of Meow Massage. The former employee-employer relationship between Lewis Moore and Meow Massage has formed a confidentiality agreement. Any publishing or using the formula without Meow Massage’s consent is a misappropriation of the trade secret. There is no evidence showing that Lewis Moore has a physical taking or studied copying of the formula of Purrfect Bath product. Even Lewis did so, it is not necessary to constitute a misappropriation of a trade secret. No evidence showing that Lewis Moore had intentionally disclosed the formula to Pet Emporium. In assessing whether Lewis Moore had disclosed trade secrets to Pet Emporium, Lewis Moore’s mere knowledge of previous pet experience is not enough to establish a disclosure of trade secret. (see Marietta Corp. v. Fairhurst, 301 A. D. 2d 734) However, when Lewis Moore left Meow Massages, he had put a lot of himself in developing the Purrfect Bath shampoo, and he thought Meow Massages disappointed him. He even persuaded Jennifer, the owner of Meow Massages to join Pet Emporium after she sell Meow Massages. Even no evidence showed that there is any physical taking or studied copying, but (1) Lewis Moore joined Pet Emporium to immediately launch the same kind of business, (2) new product of Pet Emporium is almost the same to the product of Meow Massages and Pet Emporium does not have this kind of product until recently, (3) Lewis Moore had access to the formula of Purrfect Bath shampoo and had put a lot of himself in developing the product. Based on above mentioned facts, we have reasons to believe that the trade secret misappropriation existed. First, no evidence indicates that Pet Emporium has researched a similar formula which has the same function and smell with formula held by Meow Massage; second, the formula cannot be acquired by anyone from open resources; third, Lewis Moore and Pet Emporium had used the formula, who are also advertised and sold products based on the formula. Therefore, conduct of Lewis Moore and Pet Emporium will most likely be regarded as a misappropriation of the trade secret by the cout. (cf. Ashland Management Inc. v. Janien, 82 N.Y.2d 395 (1993); Leo Silfen, Inc. v. Cream, 29 N. Y. 2D 387 (1972))
c. Prediction of filing a suit against Pet Emporium.
i. Since the findings (1) formula of Purrfect Bath shampoo is a trade secret, and (2) Pet Emporium is more likely to constitute trade secret misappropriation, Meow Massages can file a suit against Pet Emporium in the Supreme Court for Albany County.
ii. If Taco Delight succeeds in acquiring Meow Massages, Pet Emporium would be the direct competitor of Taco Delight. The Trade secret misappropriation by Pet Emporium hurts the interests and market share, even the reputation of Meow Massages, which will in turn affects the legal rights of Taco Delight. Therefore it is reasonable for Taco Delight to have a case against Pet Emporium in New York state court.
6. CONCLUSION
It is more likely that Meow Massages, or its acquirer Taco Delight succeed with the trade secret misappropriation claim against Pet Emporium because: (1) the court may find formula of Purrfect Bath product is definitely a trade secret owned by Meow Massages due to its special function of preventing people being allergic with their own cats and leave the cats with blueberry smell; (2) the misappropriation of trade secret by Pet Emporium has met some basic conditions, that is: first Pet Emporium’s products are almost the same as that in Meow Massages; second Pet Emporium hired a former employee of Meow Massages who left Meow Massages because he did not agree with the owner about the direction of the company; (3) former employee is key staff who should have access to the formula and because of this pet experience, he was appointed to launch a new cats spa product in Pet Emporium, which directly competed with Meow Massages. Based on these facts, the court might conclude Pet Emporium constitute misappropriation of trade secret.
Even there is a issue of trade secret misappropriation by Pet Emporium which hurts the legal rights of Meow Massages. Taco Delight can still follow the plan to acquire Meow Massages. The issue of trade secret misappropriation is governed by New York law. Both Meow Massages and Taco Delight can file a suit and claim a recovery of damages against Pet Emporium.
REFERENCE
[1] All the issues in this case governed by New York law, including what can be presumed as a trade secret, what kind of act can be presume as a misappropriation of trade secret, and how the company and its acquirer could initiate a suit. Ashland Management Inc. v. Janien, 82 N. Y. 2d 395 (1993), Leo Silfen, Inc. v. Cream, 29 N. Y. 2D 387 (1972), Marietta Corp. v. Fairhurst, 301 A. D. 2d 734 (2003), and Andrew Greenberg, Inc. v. Sir-Tech Software, Inc., 4. N. Y. 3d 185 (2005).
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