On August 18, 2011, Judge Walls of the District Court of the District of New Jersey held in Syncsort Incorporated v. Innovative Routines International, Inc. that a trade secret does not automatically lose its secret status if it has been posted online. His opinion, instead, offered practical guidance on how to determine whether a trade secret should remain secret after exposure on the Internet.
The case dates back to July 29, 2004, when Syncsort Incorporated (“Syncsort”) filed suit against its competitor in the data transformation market, Innovative Routines International, Inc. (“IRI”). As explained in the complaint, data transformation is the process of taking data in one form and changing it to another, such as by editing, reordering, or aggregating portions of the data. Syncsort’s and IRI’s data transformation programs (SyncSort UNIX and CoSORT, respectively) were incompatible.
Syncsort alleged that IRI misappropriated 1) the SyncSort UNIX command language, an “extensive symbolic system by which a user instructs the SyncSort UNIX program to perform specific data processing and transformation jobs” and 2) the SyncSort Unix Reference Guide that “defines commands, parameters and syntax and formal grammar definitions of the SyncSort UNIX command language.” In 2000, IRI developed software programs, SSU2SCL and RESCRIPT, which translated the SynSort UNIX command language for compatibility with CoSORT. Syncsort alleged that the translation programs were developed using pilfered scripts from the SyncSort UNIX command language and the Reference Guide, which IRI partly obtained from various websites.
IRI challenged that the scripts it found on the Internet had already lost their trade secret status and that Syncsort did not take precautions to maintain the secrecy of the scripts. Judge Walls, however, declared that “public posting of parts of the command language did not destroy the trade secret because the information contained in those postings were insufficient to develop the translator.” He considered the circumstances around each online posting and concluded that Syncsort did not lose its trade secrets. He wrote, “Widespread, anonymous publication of the information over the Internet may destroy its status as a trade secret…. But publication on the Internet may not destroy a secret if it is ‘sufficiently obscure or transient or otherwise limited so that it does not become generally known to the relevant people, i.e., potential competitors or other persons to whom the information would have some economic concern.’ The guiding ‘concern is whether the information has retained its value to the creator in spite of the publication.’”
Importantly, this decision marks a progressive benchmark in the acknowledgment in federal courts of the vast and pervasive nature of the internet. Moreover, Judge Walls also recognized the inevitable interplay with the internet and trade secret information, and how even if available on the internet, information may retain trade secret status if it cannot be replicated and is of some value.