In reversing an Indiana superior court’s grant of a preliminary injunction motion, the State of Indiana First District Court of Appeals found that domain names and other information contained on a publicly accessible website could not be the subject of a trade secret action under Indiana’s version of the Uniform Trade Secret Act. Paramanandam v. Herrmann, Case No. 84A01-0408-CV-345 (Ind. Ct. App. May 24, 2005).
Victoria Hermann hired Ivan Paramanandam and other business associates to improve the website for her internet scale distribution business (Dynamic Scales). In addition to modifications to the website, Mr. Paramanandam registered 400 domain names and developed 6,000 corresponding keywords on behalf of Ms. Hermann’s business. Dynamic Scales subsequently developed the largest online retail store in the scale industry.
Mr. Paramanandam terminated his employment with Dynamic Scales and started his own internet scales business (Scalable Scales). Aside from the name and logo, Scalable Scales’ website was nearly identical to that of Dynamic Scales. Scalable Scales also utilized domain names previously registered to Dynamic Scales and used keywords to redirect searches for "Dynamic Scales" toward the Scalable Scales site.
Ms. Hermann sued Mr. Paramanandam, alleging "the information contained on [Dynamic Scales’] website" and "domain names developed, created and maintained by Dynamic Scales" were stolen trade secrets. The superior court found likely the misappropriation of trade secrets and granted a motion for preliminary injunction. Mr. Paramanandam appealed.
The appellate court limited its analysis to whether there was a prima facie case of misappropriated trade secrets. In Indiana, the definition of trade secret, which is based on the Uniform Trade Secrets Act (UTSA), requires the secret be the "subject of efforts that are reasonable under the circumstances to maintain its secrecy."
The appellate court concluded Dynamic Scales failed to establish that any efforts were made to maintain the secrecy of the information alleged to be a trade secret. The court noted Dynamic Scales did not restrict the access to its website via a password or paid subscription, and the identity of domain names was likewise publicly accessible. The court further noted Dynamic Scales "seeks to prevent competition by its former agent more than it seeks to protect a trade secret." However, Dynamic Scales had not protected itself with a non-competition agreement.
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