How can a company go to court to defend its trade secrets without discussing those secrets publicly? The answer: with difficulty and a lot of motions to file sealed documents. This is why trade secret cases are so rare and such a big deal when companies decide to file them. It is not a light undertaking, potentially revealing knowledge that constitutes the bread and butter of your business.
For this reason, an accusatory letter dealing with trade secrets, sent by Elon Musk’s X (formerly Twitter) to Meta, has already caused ripples in the IP world – though legal experts have already predicted the failure of this claim based on the information released so far.
X’s Case Against Meta
Several competitors to the former Twitter website have cropped up since Musk’s takeover, including BlueSky and Mastodon. Part of their proliferation hinges on Musk’s alienation of many X site users – at this point, they may be primed to jump to any similar competitor. Meta’s answer to this opportunity was Threads.
Musk’s letter alleges that former Twitter employees ferried trade secrets when they started working at Meta. He claims this is why the structure of Threads resembles X so closely. Both are “micro-blogging” social platforms, in which users make fairly short, mostly text-based statements. Other users can interact by leaving comments, liking, or sharing the statements publicly or privately.
But… Do They Really Have a Case?
However parallel their functionalities, a trade secret claim is a hefty one to substantiate, especially since it is difficult to put one’s finger on what is so special about the X/Twitter formula. Link sharing? No. Comments, shares, and DMs? No. Character limits? Maybe, but that boundary has loosened over time, relinquishing Twitter’s distinctive forced brevity.
Furthermore, Meta denies that its current employees have any history with Twitter. A spokesperson for the tech giant gave his take on the Threads platform: “No one on the Threads engineering team is a former Twitter employee — that’s just not a thing.”
Details, Details, Details
First of all, what sort of claim are we dealing with here? Is this infringement?
In the realm of trade secrets, we speak of misappropriation rather than infringement. This means that the trade secret was wrongfully taken, wrongfully acquired, and/or wrongfully used.
As Reuters aptly describes in this legal article, many companies seeking trade secret misappropriation claims get the cart before the horse. This is because, to be legitimate, trade secret claims need to follow a logical, three-step order:
- Establish that the trade secret was eligible for protection
- Show that you took reasonable measures to protect the trade secret
- Demonstrate that, in spite of these measures, the trade secret information was acquired or disclosed improperly
Many businesses try to jump to Step 3 before they have adequately proven that something meets the narrow qualifications of a trade secret. On top of that, they have not taken basic security measures, like encrypting digital information. Businesses will also make the mistake of leaning on overly broad NDAs – but the reality is, if they do not specifically articulate what employees cannot disclose, they may not be able to solidify a trade secret claim.
In terms of misappropriation, what makes an acquisition or disclosure “improper”? This often signifies subterfuge on the part of one business to obtain a competing business’s “special sauce,” or a breach of confidentiality on the part of a trade secret holder. And, yes, this can include almost theatrical actions like spying, stealing, or misrepresenting oneself to get information.
Is Misappropriation of Trade Secrets Ever “Appropriate”?
No – but, like infringement, there are lawful instances in which a trade secret might surface or occur. If a business discovers their competitor’s trade secret independently, even if they were intentionally trying to reverse engineer the result, it is not misappropriation. If a former employee of a company discloses a trade secret to their new employer, but the new employer could not logically deduce that it was a trade secret – that is also not misappropriation, on the part of the employer.
However, if the company who learns a trade secret should have known that it was one – for instance, if a new employee leaves a notecard on the desk of the CEO titled “COCA-COLA’S SUPER SECRET RECIPE FROM MY OLD JOB” – they can be held liable for trade secret misappropriation, even if they did not ask to be told the trade secret.
Unlike copyrights and trademarks, trade secrets can be pursued in both civil court and criminal court, depending on the circumstances.
Cloudy with a Chance of Settling Out of Court
Because it behooves most businesses to keep their trade secrets, well, a secret, it is common for these claims to be settled confidentially outside of court. Well before litigation, seek the help of a legal professional as soon as you realize your business’s operations may harbor a trade secret. This is valuable intellectual property that needs solid protection.