In August, a district court in New Jersey issued a significant decision addressing the issue of whether, and under what circumstances, the posting of materials on the Internet destroys trade secret status. SyncSort Inc. v. Innovative Routines, Int’l, Inc., Civ. No. 04-3623, 2011 U.S. Dist. LEXIS 92321, (D.N.J. August 18, 2011). Rather than adopting a bright-line rule, the court conducted a more nuanced, fact-specific analysis before ultimately concluding that plaintiff’s proprietary UNIX command language was sufficiently “secret” to merit trade secret protection, despite several public disclosures of the command language on the Internet.
Plaintiff, SyncSort Incorporated (SyncSort) and the defendant Innovative Routines International, Inc. (IRI), are competitors who develop and sell data transformation software. SyncSort produces and licenses a data transformation software product called SyncSort UNIX, which relies on the use of a proprietary command language that SyncSort had been developing since the early 1990s. SyncSort took various precautions to ensure that the elements and workings of the command language would not become publicly known, such as requiring all SyncSort employees to enter into confidentiality agreements, and implementing a firewall to prevent outsiders from obtaining access to SyncSort’s internal computer network. SyncSort also applied confidentiality labels to all readable materials, including the comprehensive Reference Guide defining the commands, parameters and syntax and formal grammar definitions of the SyncSort UNIX command language.
In 2000, IRI developed a computer program that was capable of translating scripts written in the SyncSort command language into scripts that would be compatible with IRI’s competing software product. The creation of this translation program required extensive knowledge of SyncSort’s command language. After IRI’s launch of the competing product, SyncSort filed suit alleging that IRI developed its translation programs using pilfered scripts from the SyncSort UNIX command language as well as the confidential Reference Guide. In response to the allegations, IRI produced evidence that various snippets of the command language, as well as the Reference Guide in its entirety, had been posted on the Internet and that such public exposure had automatically destroyed the trade secret status of any information contained in those postings.
But the judge declined to adopt this inflexible approach, emphasizing that “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.’” Examining the content and context of each Internet posting, he determined that the publicly posted pieces of command language did not negate trade secret protection because the information contained in those postings was insufficient, either individually or in the aggregate, to develop the translator. Even though the judge acknowledged that the Reference Guide document would have provided IRI with sufficient information to develop the translator, the judge pointed to the lack of any evidence that competitors or other unauthorized persons had accessed or even attempted to access the Reference Guide on the two occasions it was posted on third-party foreign websites. The fact that SyncSort had taken measures to promptly remove the postings of the Reference Guide further supported the judge’s conclusion that these two isolated postings did not destroy the trade secret status of the information.
SyncSort’s rejection of the notion that trade secret status is automatically destroyed by Internet exposure is in line with several other district court decisions in recent years and serves as an important reminder that a well-established protocol for protecting trade secrets and other proprietary information, as well as swift actions to remove any unauthorized Internet postings of such information, may be sufficient to preserve trade secret protection for information that is unexpectedly posted