IP Law Daily StubHub did not violate DTSA through use of publicly available computer code
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Friday, August 10, 2018

StubHub did not violate DTSA through use of publicly available computer code

By Deirdre Kennedy, J.D.

Online ticket marketplace StubHub did not violate the Defend Trade Secrets Act when it hired three employees from another company who allegedly misused proprietary information to create a group-scheduling mobile app for StubHub, the federal district court in Los Angeles has ruled. Computer code asserted by StubHub did not qualify as trade secret information because it was publicly available. The code was not entitled to trade secret protection as a compilation of publicly available information because there was no evidence that it was compiled in a novel way (Calendar Research LLC v. StubHub, Inc., August 7, 2018, Wilson, S.).

StubHub sold tickets for live sports, music, and theatre events in more than 40 countries. Michael Gray was co-founder and CEO of a company called Calaborate, which had developed a group-scheduling mobile app called Klutch. Gray had an assignment agreement with Calaborate which provided that all proprietary information, including concepts, works in progress, designs, computer programs, and proposed and future products, were the sole property of Calaborate, and that all innovations belonged to Calaborate and not to Gray. In 2015, Gray tried to sell Calaborate along with its mobile app, Klutch, to StubHub. The deal did not go through, but Gray left Calaborate to work for StubHub, along with two other Calaborate employees.

Calendar Research, which purchased Calaborate’s assets when it went insolvent, claimed that Gray downloaded proprietary Calaborate information, maintained access to Calaborate’s source code, and misappropriated the information while working for StubHub. Calendar Research brought a claim under the Defend Trade Secrets Act (DTSA) against StubHub.

Expert testimony. Both parties engaged experts to compare the code used in the Klutch app with apps developed by StubHub while Gray and the other Calaborate employees worked there. Calendar Research’s expert found similarities in the code used. StubHub’s expert testified that the code in question was publicly available, and that several other apps available during the development period of Klutch and StubHub’s apps offered the same features that Calendar Research cited as evidence of misappropriation.

StubHub also showed that the GitHub repository—where code was stored for the StubHub apps—showed no "check ins" by Gray or the other two former Calaborate employees, which it claimed was evidence that they likely did not work on the StubHub code.

Compilation theory. The court stated that since publicly available information cannot be protected as a trade secret, it had to consider whether publicly available code could still constitute a trade secret through a "compilation" theory. In order for a compilation of public information to constitute a trade secret, it must be compiled in a novel way. Although Calendar Research claimed that its code was a protectable compilation, its expert did not provide any information regarding what part of the compilation would be novel, leaving the contents of a protectable compilation to mere speculation.

Therefore, the court lacked evidence that StubHub acquired, disclosed, or used Calendar Research’s trade secrets with knowledge, nor could it impute that knowledge, considering that the code did not show any similarities and Calendar Research’s alleged compilations did not have novelty. Since Calendar Research failed to show a genuine dispute of material fact with regard to the misappropriation of information, the court granted StubHub’s motion for summary judgment on those grounds.

This case is No. 2:17-cv-04062-SVW-SS.

Attorneys: Carolynn Kyungwon Beck (Pierce Bainbridge Beck Price and Hecht LLP) for Calendar Research LLC. David M. Grable (Quinn Emanuel Urquhart and Sullivan LLP) for StubHub, Inc. and eBay Inc.

Companies: Calendar Research LLC; StubHub, Inc.; eBay Inc.

MainStory: TopStory TechnologyInternet TradeSecrets CaliforniaNews

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