On October 5, 2015, the nascent industry was rocked when the New York Times reported that an employee of Draft Kings, the current market leader, used proprietary information regarding player usage in Draft Kings’ contests to win $350,000 in a contest hosted by competitor Fan Duel. The industry, and Draft Kings in particular, have since come under a flood of criticism for a lack of internal controls and running a rigged game.
The information that was allegedly misused by the Draft Kings employee is player usage data — the percentages that particular players are “drafted” by contest participants. This information is neither public nor available by any lawful means until changes to a participant’s line-up are “locked” and cannot be changed. By having this information prior to being “locked” in, a DFS participant would get an unfair advantage by being able to calculate a line-up around the players that are owned by existing participants and thus may have a statistically higher change of winning certain large-format contests where a unique line-up makes the chances of winning much greater.
At a time when an ex-employee’s newly created company was subject to an injunction prohibiting misappropriation of his former employer’s supposed trade secret, the new company allegedly used that confidential information on a few occasions in the course of providing services. The former employer sued. Although the trial court found no violation of the injunction, that ruling was reversed on appeal, and the new company was ordered to pay $1.9 million to the former employer. Analog Technologies Corp. v. Knutson, Case No. A14-1721 (Minn. App., July 13, 2015) (not for publication).
Summary of the case. Shortly after leaving the employ of Analog, an electrical engineering company, Knutson formed Dimation, a competitor company. Dimation allegedly used a trade secret process belonging to Analog for installing and repairing printed circuit boards. Analog sued for misappropriation and initially was awarded $1.9 million. The court also enjoined Dimation from using that process for three years. After filing for bankruptcy, Dimation executed a confession of judgment. The confession document contained an Early Payment Option (EPO). Pursuant to the EPO, the judgment would be satisfied if $600,000 was remitted by a specified date, but the EPO would expire if (a) there was a default in payment, or (b) the injunction was violated. Dimation paid as promised, but Analog rejected the final payment. It sued Dimation, claiming the EPO was void because the injunction had been violated. The trial court found no violation. A few days ago, the Minnesota Court of Appeals reversed and awarded Analog the full $1.9 million judgment less the $600,000 already paid.
The Utah Supreme Court recently issued a significant decision laying out a presumption of harm evidentiary standard in trade secret cases, which will be very useful for plaintiffs seeking injunctive relief in cases involving trade secret and breach of non-disclosure claims. InnoSys v. Mercer, 2015 UT 80 (August 28, 2015).
As the 2016 presidential race moves into the debate phase, one issue sure to get more and more attention is the proposed Trans Pacific Partnership (“TPP”). In simplest terms, the TPP is a proposed trade agreement between twelve Pacific Rim countries, including the United States, concerning a wide variety of matters of economic policy. Together, the countries account for 40 percent of world economic output. After years of negotiations, an agreement was recently reached on October 5, 2015 after marathon talks in Atlanta, Georgia.