3 minute read | October.24.2016
To qualify as a trade secret under either the UTSA or the DTSA, the information in question must not be “readily ascertainable” through “proper means.” But what does “readily ascertainable” mean? If information is ascertainable by the public, but it would take some work to compile it, does that qualify as “readily ascertainable”?
A federal district court in Nebraska recently addressed this question, holding in McDonald Apiary, LLC v. Starrh Bees, Inc., that a database of beehive locations was a trade secret. Specifically, the court concluded that although the beehive locations “realistically” could be ascertainable through means that were not improper, the locations were not “readily” ascertainable given the purported effort necessary to do so. This decision begs the question how fine we can draw the line between “readily” and “realistically” ascertainable.
The case arose from an agreement between the plaintiff McDonald Apiary, LLC and the defendant Starrh Bees, Inc. to bring about 6,000 beehives to Oklahoma and Nebraska. Among other things, McDonald and Starrh had agreed: (1) to place the beehives in locations of McDonald’s choosing; (2) to share transportation costs; (3) that McDonald would extract any resulting honey at its facilities; and (4) that the parties would split the proceeds. McDonald and Starrh’s relationship eventually deteriorated, resulting in McDonald filing suit in 2014. McDonald asserted claims for trade secret misappropriation, breach of contract, and several intentional torts. As to its claim for trade secret misappropriation, McDonald alleged that Starrh misappropriated McDonald’s database of beehive foraging locations in Nebraska.
Starrh filed a motion for summary judgment, arguing that the locations of McDonald’s beehives were not trade secrets because they were ascertainable through proper means. Starrh argued that it could obtain the same information contained in the database by: (1) looking for beehive locations from public roads; (2) observing the area; and (3) using the Internet to obtain information about landowners and crops in the area. The court rejected Starrh’s argument, reasoning that although it may have been possible to ascertain the information through non-improper means, such information was not “readily” ascertainable:
It might have been possible to reconnoiter every highway, country road, and deer path in western Nebraska looking for every one of the approximately 23,000 [McDonald] beehives.... But the Court is not convinced that such a theoretical possibility is enough to make the location database “ascertainable.... ”
The court also rejected Starrh’s other arguments, namely that McDonald’s failed to take reasonable steps to maintain the secrecy of the locations through signed confidentiality agreements. Notwithstanding the absence of any signed confidentiality agreements, the court concluded McDonald’s instructions to Starrh’s employees that the information was “secret and that they shouldn’t tell anyone” were sufficient to create a triable issue of fact.
There appeared to be no dispute that the beehive locations were themselves not invisible. Nor did there appear to be any dispute that the beehive locations were discoverable with independent effort—albeit substantial. Even so, at least on summary judgment, the court was unwilling to hold as a matter of law that the beehive locations were not trade secrets because of the efforts necessary to discover them.
By focusing on the effort necessary to discover the information, the court—at least implicitly—has shifted the inquiry to what efforts are sufficient to constitute “readily” ascertainable. For some, the “difference” between what is “readily” ascertainable and what is “realistically” but not practicably ascertainable may be a distinction without a difference.
Consider, for example, a competing honeybee farmer with the technological capabilities, funds, time, and motive to survey Nebraska and determine where the 6,000 beehives were placed. Would evidence of such an endeavor undermine the protection afforded McDonald’s beehive database? At a minimum, it may be evidence that information is more “readily” ascertainable than the decision suggests. In this respect, McDonald—at least for the moment—may have caught a break.