United States: Financial Projections, Strategic Plans, And Customer Contract Proposals Can Be Trade Secrets

Last Updated: October 6 2015
Article by Paul E. Freehling

Two competitors who do research and analysis for advertisers and media companies, concerning how television viewing impacts consumer purchasing, have been in a legal battle over alleged trade secret misappropriation, patent infringement, and other causes of action. The dispute already has produced at least six district court opinions. Recently, in a 47-page non-precedential order issued by the Court of Appeals for the Federal Circuit, the district court's summary judgment order — reported at 984 F. Supp. 2d 205 (S.D.N.Y. 2013) (Scheidlin, J.) — was affirmed in part, reversed in part, vacated in part, and remanded. TNS Media Research, LLC v. TiVo Research & Analytics, Inc., No. 2014-1668 (Fed. Cir., Sept. 16, 2015).

Status of the case.

TNS Media Research (referred to by the courts as "Kantar") sued TiVo (referred to as "TRA"). Kantar sought a declaratory judgment that it did not infringe a particular TRA patent. TRA counterclaimed for infringement of that patent and two others, plus misappropriation of trade secrets, breach of contract, and breach of fiduciary duty. After extensive discovery, TRA moved for summary judgment. Judge Scheidlin granted the motion in substantial part. She (a) held that TRA did not infringe Kantar's patents, (b) dismissed TRA's misappropriation claim as a discovery sanction, (c) ruled that TRA's allegedly confidential information did not constitute trade secrets, (d) held that TRA submitted insufficient evidence to support a claim for damages, and (e) denied TRA's requests for injunctive relief relating to allegations of a breach of fiduciary duty and for a jury trial on compensatory damages. According to the appeals tribunal, many of these rulings were erroneous.


Before they were competitors, Kantar was a substantial investor in TRA, a seemingly valuable corporation at the time. As a result of its investment, Kantar was given a seat on TRA's Board and considered merging with TRA. Kantar allegedly was given access to TRA's trade secrets both as a Board member and in the course of the companies' merger negotiations, ultimately abandoned. After Kantar purchased and began operating a competing analytics company, TRA's fortunes dwindled, and it was sold for a fraction of its former value. The purchaser continued to operate the acquired company under the TRA name.

The ruling below regarding TRA's trade secret claims.

Absence of trade secrets. In its counterclaim, TRA alleged that Kantar misused TRA's confidential information. After originally asserting more than 20 categories of trade secrets, on the eve of summary judgment briefing TRA reduced the number to five including characteristics of its products and its strategic plans.

Judge Scheidlin found that TRA had disclosed publicly most of the properties of its products. Further, she ruled that there was no evidence that Kantar's products used any of TRA's technical information. Regarding TRA's strategic plans, she concluded that these were merely goals which are not protectable trade secrets under New York law. Judge Scheidlin added that "TRA's trade secret claims had no colorable basis and were brought in bad faith." Thus, she granted summary judgment as to misappropriation. She did not consider whether TRA's customer contract terms, proposals and pricing were protectable.

Dismissal as a sanction. Kantar alleged that TRA had failed during discovery to identify trade secrets with sufficient specificity. The district court agreed. It held that dismissal of the misappropriation claims was warranted as a sanction because TRA's violation of Federal Civil Procedure Rule 26(e) (requiring timely supplementation or correction of disclosures and responses) was "manifestly prejudicial to [Kantar] and taxing on the Court."

Rulings on appeal by the Federal Circuit.

Grant of summary judgment. TRA had a proprietary product called Media TRAnalytics. The company claimed that the product's speed, reliability, scalability and performance were trade secrets. The Federal Circuit concluded that the information concerning Media TRAnalytics that was publicly disclosed was merely an overview. In addition, the court held that the question of whether Kantar improperly used TRA's confidential product information to gain a competitive advantage requires a determination by a fact finder rather than a summary disposition. Further, proprietary financial projections and strategic plans may be protectable if "not publicly known, not readily identifiable, or otherwise complex."

In the Federal Circuit's view, customer contract terms, proposals and pricing can be trade secrets. The district court was held to have committed reversible error by granting summary judgment regarding misappropriation without considering whether TRA's customer information warranted protection. Similarly, "TRA presented sufficient evidence to create a colorable question about Kantar's intent to injure TRA," and so TRA was entitled to a trial on the subject of its entitlement to punitive damages.

Dismissal of trade secrets claims as a sanction. The Federal Circuit said that dismissal as punishment was not warranted here: "[T]here is no indication that TRA purposefully shirked its discovery obligations." Further, TRA was not given a warning, and the lower court's finding of prejudice to Kantar was unexplained. On remand, the district court was directed to consider a less harsh sanction.


The Federal Circuit's order teaches that proprietary financial projections, strategic plans, and customer contract terms, proposals and pricing, all may be trade secrets. Further, a mere overview, or only partial disclosure, of a product's confidential characteristics does not defeat trade secret protection for the undisclosed portion. In addition, whether a party's protected information was used by another to gain a competitive advantage is a question to be decided by the fact finder.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Paul E. Freehling
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