Cases from Entertainment

Circuit court of Harrison County, Mississippi
Isle of Biloxi Casino Claims Ex-Employee Took Trade Secrets to Margaritaville

On February 8, 2013 Riverboat Corporation of Mississippi, owner of the Biloxi Hotel Casino ("Biloxi"), brought suit against its competitor and ex-employees. The suit brings claims against defendants Doug Shipley, Stacey McKay and the Margaritaville Casino & Restaurant ("Margaritaville") both individually and collectively, including breach of contract and trade secret misappropriation

From September 14, 2008 through November 29, 2012, defendant Shipley served as Vice President and General Manger of Biloxi. Shipley’s employment agreement with Biloxi included non-compete and non-solicitation of employees clauses, as well as a confidentiality agreement. Shipley left Biloxi to work as General Manager at Margaritaville, which is located less than two miles from Biloxi. Biloxi alleges that Shipley not only initially lied about accepting the position, but also began actively soliciting employees of Biloxi and using Biloxi's confidential information. Shortly thereafter, McKay, who was Director of Marketing at Isle Biloxi, left to join Margaritaville.

Plaintiff seeks injunctive and declaratory relief, as well as monetary damages including compensatory and punitive damages, and attorney’s fees.

Western District of Washington
W.D. Wash. Rules NFL Scouting Grades May be Trade Secrets

Defendant Rang, a sports writer, published NFS’s proprietary “Player Grades” intended for use by its customer football teams. The Western District of Washington denied cross-motions for summary judgment finding questions of material fact as to whether plaintiff's subjective assessments represented by the player grades were protectable as trade secrets.

The court first addressed the issue of whether Rang had violated copyright law through release of the National’s player grades. Finding three of the four fair use factors weighed in Rang’s favor, the court decided that while the grades were copyrightable, Rang’s use of the grades constituted fair use. On the issue of trade secret misappropriation, the court found that the grades did constitute “information” under the relevant trade secrets statute, and therefore, could be considered trade secrets. However, the court found that any determination on whether the grades were in fact trade secrets was an issue for a jury, since questions remained over whether National made reasonable attempts to protect the secrecy of the grades.

Superior Court of the State of California
Zynga Alleges Ex-Employee Used a Personal Dropbox Account to Steal the Company's Trade Secrets

On October 12, 2012, Zynga Inc. (“Zynga”) brought suit in California Superior Court against former employee Alan Patmore for Misappropriation of Trade Secrets and Breach of Contract. The suits concerns theft of confidential information related to Zynga’s online games, and includes additional defendants (“DOES 1 through 50”) whom Zynga does not yet know the identity of, but who allegedly aided and abetted Patmore’s wrongful conduct.

Zynga, Inc. is a San Francisco-based online social gaming company, responsible for popular games such as CityVille and Words With Friends. Patmore was the General Manager for CityVille at Zynga, and signed a Confidentially Agreement with Zynga pursuant to his employment. The contract obligated Patmore to protect Zynga’s confidential, proprietary, and trade secret information. However, on August 16, 2012, Patmore resigned from Zynga. Zynga alleges that at that time (if not earlier), Patmore had been recruited by, and agreed to join, Zynga’s competitor Kixeye. On the day of his departure, Patmore allegedly transferred 760 confidential Zynga files to his personal Dropbox account without Zynga’s consent, which he intended to provide to Kixeye. During Patmore’s exit interview, he refused to sign a Termination Certification that he had complied with his prior contractual obligations.

Zynga alleged that the stolen information – which includes “unreleased game design documents” and other “strategic roadmaps”– could be used to improve Kixeye’s “internal understand and know-how of core game mechanics and monetization techniques, its execution, and ultimately its marketing standing to compete more effectively with Zynga.” According to the complaint, Patmore attempted to cover up his conduct by uninstalling Dropbox. However, Patmore’s attempts were apparently unsuccessful, and “he left a forensics trial of his wrongful conduct.” Both the relatively new subject matter of the claim (i.e. “free-to-play online social games”), as well as the defendant’s alleged use of cloud technology to misappropriate his employer’s trade secrets, make this an interesting case and one to follow as the litigation moves forward.

UPDATE: Kixeye's CEO Will Harbin fired back at Zynga: "Zynga is burning to the ground and bleeding top talent and instead of trying to fix the problems -- better work environment and better products -- they are resorting to the only profit center that has ever really worked for them: their legal department." Two weeks after making that statement, Zynga expanded the suit to include Kixeye as named Defendants.

Superior Court of the State of California
Former Stage Designer Sues Mötley Crüe Over Idea For "Tommy Lee Loop Coaster"

On September 20, 2012, Howard Scott King brought suit against popular rock band Mötley Crüe (itself, its touring company and bassist Tommy Lee as an individual, collectively “MC”), for misappropriation of trade secrets in the Superior Court of California. The suit relates to MC’s allegedly unlawful use of King’s proposal for a “Tommy Lee Loop Coaster” (“Coaster”).

According to his complaint, King developed the idea for the Coaster as part of his now defunct business “Stages ‘N’ Motion.” King described it as “a track on which [Tommy Lee] would play his drums on a platform on wheels which follow the track until Lee was in an upside down position playing the drums and he would continue playing the drums as the platform followed the track in a complete loop.” On or about November 21, 1991, King alleged that he discussed a proposal for the Coaster with Top Rock Development Corp. (MC’s agents). King claims that both the proposal, as well as a signed confidentiality agreement (which has since been lost or misplaced), expressly stated that the ideas were confidential, and that King was to be compensated should MC implement the Coaster. In June 2011, MC begin using the Coaster, or a substantially similar device, as a centerpiece for concerts, as well as in commercials and other promotions.

(link to video of device in question)

King brings trade secret misappropriation actions under both the California Uniform Trade Secret Act (CUTSA), as well as common law. The key difference between the claims is that the CUTSA claim seeks relief in the form of actual damages ($400,000), or in the alternative, a “reasonable royalty”; conversely, the common law claim does not seek a reasonable royalty damages award. Both claims seek injunctive relief, as well as punitive damages in light of MC’s alleged “willful and malicious” conduct.

Indiana Court of Appeals
Indiana Appellate Court Adopts Majority "All or Nothing" Approach to UTSA Preemption, Denies Protection for Information Not Rising to the Level of Trade Secrets

On August 10, the Court of Appeals of Indiana in HDNET LLC v. North American Boxing Council joined states which have held that their enactment of the UTSA preempts related common law claims pertaining to trade secret misappropriation. The court reversed a lower court’s grant of partial summary judgment which held that the Indiana Uniform Trade Secrets Act did not preempt common law claims for idea misappropriation and civil conversion.

The North American Boxing Council (“NABC”), a mixed martial arts (“MMA”) sanctioning body, sued Mark Cuban’s HDNET television channel for misappropriation of a branded fight series concept that the parties had tried to develop in partnership. NABC also alleged misappropriation of trade secrets, but there had been no determination of whether the series concept met the IUTSA’s statutory definition of a trade secret because the Court of Appeals first heard an interlocutory appeal on the question of preemption.

The court’s analysis focused on a provision of Indiana’s enactment which it noted was “stronger than that found in either the 1979 or 1985 versions of the UTSA.” Indiana’s version provides that “the IUTSA ‘displaces all conflicting law of this state pertaining to the misappropriation of trade secrets, except contract law and criminal law.’” Although NABC’s claims all related to the same subject matter, i.e. the series concept, it argued that its alternative claims did not “pertain” to trade secrets under the statute’s meaning because they were not predicated on the existence of a trade secret.

The court, reasoning that the legislature intended the UTSA to be construed consistent with other UTSA jurisdictions, followed the Supreme Court of Hawai’i in holding that the UTSA “abolishes all free-standing alternative causes of action for theft of misuse of confidential, proprietary, or otherwise secret information falling short of trade secret status (e.g. idea misappropriation, information piracy, theft or [sic] commercial information, etc.).” (quoting BlueEarth Biofuels, LLC v. Hawaiian Elec. Co., 123 Hawai’i 314, 321 (Haw. 2010)) (internal quotation marks omitted).

The court emphasized that the IUTSA “does not preempt claims for misappropriation of information or ideas that are protected by contract.” Nevertheless, under similar circumstances where no express obligation has been created, the decision bars recovery for a defendant’s use of confidential information that does not rise to the level of a trade secret.

The court also rejected NABC’s argument that its conversion claim was “derivative” of criminal law, and thus entitled to the statute’s exception. In so holding, the court distinguished civil conversion claims from civil claims brought under RICO, which are not preempted.

U.S. District Court for the Central District of California
CBS Broadcasting sues ABC, Inc. and affiliates for misappropriating secret production processes for the hit CBS show, “Big Brother”

CBS Broadcasting, Inc. (“CBS”) filed suit against ABC, Inc. and the Walt Disney Co. on May 10, 2012 in the Central District of California, alleging trade secrets misappropriation amongst nine other claims. CBS claims that defendants, in developing a new series “Life in a Glass House,” misappropriated CBS’ trade secrets about several production processes for the “Big Brother” reality television show. CBS argues that these processes are unique in the industry and make the show successful by enabling the “Big Brother” staff to “prep, produce, edit and deliver each episode in two and a half days.” It adds that the defendants (and anyone else) could not have independently discovered the processes by merely watching the show. Rather, CBS believes that ABC improperly acquired knowledge about these processes from former “Big Brother” producers and staff who have signed non-disclosure agreements with CBS but are now working for ABC on “Life in a Glass House.”

CBS requested a preliminary injunction in order to stop ABC from premiering the show, however U.S. District Judge Gary Allen Feess said he is unlikely to grant it.

United States District Court for the Northern District of Illinois - Chicago
Television producers allege court proceeding spoiled outcome of reality show

Contestants on a women's mixed martial arts reality show called "Ultimate Women's Challenge" were sued by the show's owners and investors for willful misappropriation of trade secrets and tortuous interference with prospective economic advantage. Each of the sixteen female contestants on the show signed a “Participant Agreement and Release from Liability” before filming commenced. However, seven of the contestants filed a lawsuit against the show's producer in Wisconsin circuit court and, in doing so, revealed the outcome of multiple matches and the ultimate winner of the series. The plaintiffs Sean Morrison Entertainment (SME) claimed that the lawsuit should have been filed under seal in order to prevent the events and outcome of the reality show from being revealed. Plaintiffs also claim that the contestants and their attorneys leaked details about "Ultimate Women's Challenge" to the media and various websites. The lawyers who represented the contestants in the Wisconsin lawsuit were also been joined as defendants.

On December 28, 2011, the Northern Illinois District court dismissed the owner-investor claims against the MMA contestants for lack of personal or specific jurisdiction. The court asserted that SME's alleged contacts were too attenuated for Illinois to be the proper forum for their claims. Further, citing only an "impact theory of minimal contacts," the court concludes that SME failed to allege activities by Thompson et al "that create a substantial connection with the forum state." (See Also Burger King v. 471 US at 475-476). Furthermore, the court found none of the individuals joined the action had any substantive connection to Illinois that would warrant personal jurisdiction for the court. Thus the Illinois court never reached the substantive issue of the trade secret misappropriation by the athletes in filing their separate Wisconsin matter, as the SME claim was dismissed for want of personal or specific jurisdiction.

County of Los Angeles, Superior Court of the State of California
Clash between Hollywood talent agency and competitor over stolen client information

Hollywood talent agency Diverse Talent Group, Inc. sued three of its former agents who left for a competitor, but not before allegedly stealing confidential information to poach clients. In the suit, filed August 23, 2011 in Los Angeles Superior Court, Diverse alleged misappropriation of trade secrets, intentional interference, breaches of duty and contract, conversion, and slander. The agency also sought a temporary restraining order prohibiting the disclosure or use of proprietary information. According to its website, Diverse represents actors and directors from TV shows like "Mad Men" and "Lost."

The complaint alleges that former Diverse employees Isam Durzi, Ehab Durzi and Wendy Morrison left Diverse to join Function Talent Group (also named as a defendant) and diverted business to their new employer by using confidential client information misappropriated from Diverse and by falsely claiming their former agency was closing. The three supposedly used the confidential materials, such as customer lists and the personal and financial information of clients, to poach those clients for Function. "Defendants have taken the confidential information without the permission of Diverse and have used it for their own financial gain and business purposes," the suit said. "Despite demands to cease and desist from using this information, defendants continue to use the confidential information." Diverse demanded that the files be returned, but the employees refused, according to the complaint.

Diverse claims that the Durzis and Morrison agreed as a condition of their employment that the agency's client list and other customer information were property of the agency. According to the complaint, the three accepted positions at Function earlier this year, but before they started their new jobs, the employees sent letters to Diverse customers soliciting them to take their business to Function. The letters made "false, defamatory and damaging statements," including that Diverse was going out of business, according to the complaint. The complaint goes on to say that they had some success, causing the termination of some of the plaintiff’s client representations.

The complaint also asserts that the employees "hacked into Diverse's computer system and changed the agency's contact information," and sent messages to clients instructing them to contact Ehab Durzi using the newly-diverted number.

The suit seeks unspecified damages, an injunction barring the employees from disclosing Diverse's confidential information and an order compelling them to arbitrate the dispute. According to the complaint, Diverse expects the dispute to be headed to arbitration as a result of employment agreements with the three former agents, but the company says it was forced to seek provisional remedies to deter the diversion of its clients.

The talent agency says on its website that its "highly valued clientele" includes "Academy Award winners, top sitcom actors, one-hour drama directors, editors and producers." The site states that the agency's clients have worked on shows including "The Big Bang Theory" and "Battlestar Galactica" and movies including "Transformers" and "Good Night and Good Luck."

The parties are scheduled to appear before Judge Meiers for a case-management conference on January 10, 2012.

District Court for the District of Massachusetts
Marketing vendor alleges that Procter & Gamble misappropriated its strategic marketing plan

On August 2008, Electronic Arts (“EA”) launched Procter and Gamble’s ("P&G") joined together to promote P&G’s subsidiary Gillette. The strategic alliance is now the subject of a lawsuit filed by Alternative Productions, Inc. (“API”) against P&G in Massachusetts federal court on August 23, 2011.

API alleges that a former P&G marketing consultant, Michael Fuccillo, approached it in June 2007 to discuss a strategic plan for a Nascar promotional campaign for Gillette. API delivered a marketing plan which included the “novel idea of establishing online, console-based gaming tournaments” through a partnership with EA. Fuccillo, however, informed API that Gillete had rejected the plan, which nonetheless became integrated into a larger marketing campaign produced by Gillette’s principal advertising agency.

API asserts that Fuccillo shared its strategic alliance plan with other P&G employees, in breach of his non-disclosure agreement with API. Additionally, it argues that P&G knew or should have known that the alliance plan with EA did not originate with Fuccillo, whose duties at P&G did not include creating marketing ideas.

Defendant's motion to dismiss the case for lack of jurisdiction is currently pending before the Court.

District of Oregon
Music festival producer settles suit against competitor after alleging misappropriation of trade secrets

The plaintiff, a music festival producer, claimed that the defendant, the organizers of a competing festival, misappropriated trade secrets such as customer lists, leases, and contracts with providers. Defendant contacted providers and told them it would be putting on the plaintiff's annual music festival under new management, when in fact the festival had no relation to the plaintiff. The defendant obtained contracts in excess of $60,000.

The case was conditionally settled on April 13, 2011. The matter is stayed pending completion of the settlement agreement.