Related Topics and Emerging Issues

• Jurisdiction: Maryland

VII. RELATED TOPICS AND EMERGING ISSUES

A. Social Media

Recently, courts have been presented with questions that relate to protection of information in social networking accounts such as "friend" lists on Facebook, Twitter, or MySpace, and have been asked to determine whether such lists constitute protectable trade secrets. Though the few courts that have examined the issue have not explicitly found that information contained in social media accounts qualify for trade secret protection, they have denied motions to dismiss such claims.

In Christou v. Beatport, LLC., the owner of several well-known Denver area nightclubs sought trade secret protection for his clubs' MySpace pages and its lists of thousands of "friends."²⁴⁹ The defendant, formerly employed as a talent buyer and booking agent for the plaintiff's clubs, founded a competing nightclub and online source for purchase of electronic dance music. The defendant also retrieved the plaintiff's login credentials to its MySpace pages, which he later used to post his own information promoting his own competing business on the plaintiff's social media sites.²⁵⁰ Rejecting the defendant's motion to dismiss, which was premised on the argument that the "friend" information could not constitute a trade secret because it was publicly broadcast via the Internet, the court pointed to the plaintiff's representations that it took reasonable steps to protect secrecy of the information by securing the accounts with web profile login and passwords and by restricting access to a limited number of individuals.²⁵¹ The court concluded that the "nature" of the information "militate[d] in favor of trade secret status" because the "friend" list was more than merely a list of names or potential customers, but rather "information about ... interests and preferences, and perhaps most importantly for a business, contact information and a built-in means of contact," the creation of which required substantial effort and expense.²⁵²

In a similar case involving an employee charged with operation and maintenance of its employer's Twitter account and promotion of its employer's services, the employer terminated his employment and he took with him contact information for approximately 17,000 Twitter followers.²⁵³ The plaintiff sued for trade secret misappropriation in the Northern District of California, asserting that the Twitter information was the equivalent of a proprietary customer list and that it had suffered harm through reduction in advertisers who purchased space on its website.²⁵⁴ Denying the defendant's motion to dismiss in PhoneDog v. Kravitz, the court determined that the plaintiff "sufficiently described the subject matter of the trade secret" and that the defendant had not shown any basis for dismissal of plaintiff's misappropriation claim.²⁵⁵

B. The Doctrine of Inevitable Disclosure

The underlying theory of this controversial doctrine is that under certain circumstances, a departing employee with intimate knowledge of his employer's trade secrets will inevitably disclose them in the course of his subsequent employment with a competitor.²⁵⁶ In states where the doctrine is applied, courts are forced to balance the interests of employee mobility with a trade secret owner's right to safeguard its proprietary information.²⁵⁷ Some courts utilize the doctrine as an equitable tool to enjoin competition where threatened misappropriation is demonstrated.²⁵⁸

In LeJeune v. Coin Acceptors, the Maryland Court of Appeals refused to apply the doctrine, instead leaning toward Maryland's policy favoring employee mobility.²⁵⁹ On the last day of his employment before moving to a competitor, the defendant transferred his employer's confidential documents from the company laptop to a compact disk that he kept for his personal use.²⁶⁰ The former employer sued for misappropriation and sought to enjoin the former employee from working for the competitor in related industries, where disclosure and future use of its trade secret would give the new employer an unfair competitive advantage. The Court of Appeals declined to adopt the theory of "inevitable disclosure" on the ground that it would unduly restrict employee mobility, and would also permit a court to infer disclosure of trade secrets "merely from an individual's exposure to them."²⁶¹ In 2018, fourteen years after the LeJeune decision, Maryland still has not adopted the "inevitable disclosure" theory.²⁶²

The Seventh Circuit, however, applied the doctrine in the case of PepsiCo v. Redmond, and legitimized inevitable disclosure as a basis for granting injunctive relief for misappropriation of trade secrets by a former employee.²⁶³ Redmond was employed by PepsiCo in a high-level position where he was privy to its trade secrets, including pricing, distribution, and packaging systems, and in particular, information relating to its "All Sport" sports drink, a product designed to directly compete with Quaker Oats' "Gatorade" drink, which dominated the market at that time.²⁶⁴ PepsiCo obtained a signed confidentiality agreement from Redmond during the course of his employment.²⁶⁵

Quaker Oats courted Redmond and offered him a position as Vice President of Field Operations for its Gatorade product, which he ultimately accepted after disclosing to several PepsiCo employees that he was still entertaining offers. PepsiCo immediately sought a preliminary injunction barring...