Monday, May 11, 2015

Top Agent v. Zillow: need to plead trade secrets with specificity

ACC on trade secret case   Top Agent Network, Inc. v. Zillow, Inc.:

In February, 2014, Top Agent’s Chief Executive Officer contacted Zillow’s Chief Revenue Officer about a potential investment by Zillow in Top Agent.

On a call, Zillow’s executive assured Top Agent’s executive that all information provided by Top Agent to Zillow would be kept confidential and used by Zillow solely to evaluate a potential investment. The Zillow executive also said that he intended to sign a nondisclosure agreement (NDA).

After this call, Top Agent provided Zillow with access to its member-only content, including the “Upcoming Listings” feature.
Zillow later told Top Agent that Zillow would not be making the contemplated investment.
In June, 2014 Zillow launched its own “Upcoming Listings” feature. According to Top Agent, this Zillow offering contained all the core features of the Top Agent offering.

The Lawsuit

Top Agent sued Zillow in October 2014, alleging causes of action including:
  • misappropriation of trade secrets under California’s Uniform Trade Secrets Act (CUTSA)
  • misappropriation of ideas
  • breach of confidence
Zillow moved to dismiss most of the causes of action.
The court dismissed Top Agent’s trade secret claims because Top Agent failed to plead the existence of trade secrets with sufficient specificity.

The court noted that:
trade secret laws do not protect “ideas,” or “conceptual” data, but rather facts, or “empirical data” — “such as the customer’s preferences, or the location of a mineral deposit”… It is far from clear that the “features” and “strategy” to which the complaint vaguely refers are comprised of empirical data, protectable under CUTSA, rather than ideas or functions, which are not.
The case is Top Agent Network, Inc. v. Zillow, Inc.

Protecting Ideas

The case illustrates the challenges of protecting a business “idea” from use by others, even when the idea is revealed subject to an NDA. A business idea that rises to the level of an “invention” can be protected via a business method patent, but these types of patents are increasingly challenged in the courts.



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