Software's Functions and Features Are Not Trade Secrets: Eleventh Circuit | Practical Law

Software's Functions and Features Are Not Trade Secrets: Eleventh Circuit | Practical Law

In Warehouse Solutions, Inc. v. Integrated Logistics LLC et al., the US Court of Appeals for the Eleventh Circuit affirmed the district court's grant of summary judgment and holding that the features and functions of Warehouse Solutions, Inc.'s software did not qualify as trade secrets under the Georgia Trade Secrets Act of 1990.

Software's Functions and Features Are Not Trade Secrets: Eleventh Circuit

Practical Law Legal Update 6-613-0945 (Approx. 4 pages)

Software's Functions and Features Are Not Trade Secrets: Eleventh Circuit

by Practical Law Intellectual Property & Technology
Published on 15 May 2015USA (National/Federal)
In Warehouse Solutions, Inc. v. Integrated Logistics LLC et al., the US Court of Appeals for the Eleventh Circuit affirmed the district court's grant of summary judgment and holding that the features and functions of Warehouse Solutions, Inc.'s software did not qualify as trade secrets under the Georgia Trade Secrets Act of 1990.
On May 8, 2015, in Warehouse Solutions, Inc. v. Integrated Logistics LLC et al., the US Court of Appeals for the Eleventh Circuit affirmed the US District Court for the Northern District of Georgia's grant of summary judgment holding that the features and functions of Warehouse Solutions, Inc.'s (WSI) software did not qualify as trade secrets under the Georgia Trade Secrets Act of 1990 (GTSA) (No. 14-cv-14943, (11th Cir. May 8, 2015)).
In 2002, WSI, a logistics business, entered into a relationship with Integrated Logistics LLC (ILL) in which ILL resold WSI's package-tracking software product to ILL's customers under the name ShipLink. As part of this relationship, ILL was:
  • Given a user ID and password to access WSI's software.
  • Authorized to create and give user IDs and passwords to ILL's customers.
  • Given greater access to the program's features than other resellers or end users because ILL was the most active user of WSI's software system.
  • Never given access to the software's source code.
During this relationship, WSI verbally told ILL that the software was highly confidential and proprietary and directed not to share the program with anyone outside of ILL, with the exception of ILL's customers who signed a nondisclosure agreement. However, WSI and ILL never executed a written agreement for this resale arrangement in general or any other aspect of their relationship. In 2004, ILL retained Platinum Circles Technologies to start developing its own package-tracking program that was visually and functionally similar to WSI's software. Later, in 2005, ILL ended its business relationship with WSI and began selling the program developed by Platinum under the ShipLink name.
WSI sued ILL for copying its software and subsequently amended its complaint to include a claim for misappropriation of trade secrets under the GTSA (O.C.G.A. § 10-1-760 et seq.). WSI argued that its software was a trade secret that ILL had misappropriated by creating a functionally identical program. The parties then cross-moved for summary judgment. The district court granted summary judgment in favor of ILL on all of WSI's claims, including misappropriation of trade secrets.
On appeal, the Eleventh Circuit affirmed the district court's grant of summary judgment, holding that:
  • The dissemination of WSI's software necessarily revealed the program's functions and features and was therefore readily ascertainable by proper means.
  • The program's source code, unlike the program's functions and features, was:
    • confidential and not distributed to anyone outside WSI; but
    • not alleged to have been misappropriated.
  • WSI's efforts to maintain secrecy were not reasonable under the circumstances because:
    • WSI did not require ILL to sign any written confidentiality agreement before granting ILL high-level administrative access.
    • Many of WSI's security efforts only served to restrict access to customer data, rather than the software's functionality.