Tuesday, February 14, 2006, 2/14/2006 08:21:00 AM

Cut Out the Middleman -- Just Don't Use Trade Secrets

From the Court of Appeals for the First Circuit, APG, Inc. v. MCI Communications Corp., 2006 WL 295503 (1st Cir. Feb. 8, 2006), concerned a small company's attempts to sell MCI phone cards through CVS drug stores. Ultimately, plaintiff was bypassed when CVS contracted directly with MCI.

Plaintiff claimed that it brought CVS to the brink of finalizing an agreement but that MCI stepped in at the last minute after learning information in an email concerning the status of plaintiff's discussions with CVS. That email -- containing information concerning CVS's needs, its interests in MCI's product, and the imminence of the decision -- was a trade secret according to plaintiff.

Not so, said the Court of Appeals. Although MCI did not previously have the information, the court agreed that "it was obtainable within normal business channels had MCI sought to do so." That was the case even though the information may have contained "knowledge that MCI had originally obtained unfairly and then used to its advantage without properly compensating" plaintiff.

While plaintiff could not state a trade secrets claim, the Court of Appeals held that it might be able to assert an unjust enrichment claim under the circumstances.


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