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When Claiming A Business Plan Is A Trade Secret Won't Hold Water

1.16.2015

If there's one thing we hope you have learned from reading my articles on trade secrets, it's that you must take time to learn what your trade secrets are. After all, when your business partner, vendor, or former employee makes use of business information that you believe is a secret, you're not going to be able to sue unless you can provide the details of what that information is and why it is a secret. We've said it many times (see, for example, Three Steps Business Leaders Must Take To Protect Valuable Information).

A federal court in Illinois recently confirmed this very point, this time in the context of a business plan. In Globaltap LLC v. Elkay Mfg. Co., 2015 U.S. Dist. LEXIS 704 (N.D. Ill. 2015), an entity that designed outdoor water bottle filling stations found itself crossways with the entity that was supposed to manufacture and sell such stations. GlobalTap, the former, believed Elkay, the latter, stole its business plan, a 101-page document that contained GlobalTap's 'Market Opportunity and Business Concept,'' ''Marketing Plan,'' ''Operating Plan,'' ''Financial Projections,'' and information concerning GlobalTap's corporate and municipal partners.

Unfortunately, GlobalTap's arguments about its business plan didn't hold water. Here's what the court said in ruling against GlobalTap:

  • A plaintiff cannot state a claim for trade secret protection . . . by simply producing long lists of general areas of information which contain unidentified trade secrets.
  • A plaintiff pursuing a trade secret claim must do more than just identify a kind of technology and then invite the court to hunt through the details in search of items meeting the statutory definition.
  • To sustain a trade secrets claim a party must do more than simply persist in the blunderbuss statement that 'Everything you got from us was a trade secret' . . . That view is wrong as a matter of law.
  • Plainly, much of the information contained in that Plan is not a GlobalTap trade secret. For example, the Business Plan includes statistics on ''global water issues'' from the Blue Planet Run Foundation, such as the fact that ''unsafe drinking water is the world's leading cause of death'' and that ''one in six of all humans, lack safe drinking water.''
  • Another page provides examples of governments around the world that have regulated bottled water.
  • Finally, another page includes a cartoon sourced from ''cartoonstock.com.''
  • GlobalTap has merely pointed to the 101-page Business Plan and invited the court to hunt through the details in search of items meeting the statutory definition.
  • There may well be trade secrets within the 101-page Business Plan, but it was Plaintiff's burden to identify those secrets and it has repeatedly failed to do so.

Fortunately, for GlobalTap, it did provide sufficient details about the actual filling station for the rest of its claim to proceed, and that part of the case will presumably go to trial in the coming months.

Josh Durham, formerly with Poyner Spruill, was the original author of this article.


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