Yours Aren't Trade Secrets but Mine Are

When two companies in the same industry do battle over alleged misappropriation of trade secrets, there often comes a point in the lawsuit where the defendant is forced to reconcile its claim that the plaintiff's secret sauce is not a trade secret, but their secret sauce is. Such was the case in the matter of McElmurry v. Alex Fergusson, Inc., 2006 WL 572330 (M.D.N.C., March 8, 2006)(slip opinion). In McElmurry United States District Court Magistrate Judge Dixon was asked to grant summary judgment as to McElmurry's claim of misappropriation of trade secrets of certain chemical formulas for certain food processing agents. Alex Fergusson, Inc. apparently told Magistrate Judge Dixon "them ain't trade secrets." The good judge decided there was enough to McElmurry's claim to let it go to a jury and he noted in a footnote that "Defendant has admitted that its own chemical formulas are proprietary and confidential trade secrets. (See Noble Decl. at Ex. J, Admission Nos. 2 and 3.) Defendant has not sufficiently explained why its chemical formulas are trade secrets, but Plaintiff's chemical formulas are not trade secrets. "

We wonder if defense counsel could've come up with at least some explanation as to why their formulas were trade secrets and plaintiff's were not - it's not clear. But we know this: when making a claim that another company's formulas are not trade secrets and your competitive formulas are, you have to take a shot at explaining why that is the case or else you will be seen as talking out of both sides of your mouth.