SMALL BUSINESS LAWYER

Though you cannot go back and start again, you can start from now and have a brand new end.

      — Unknown Author


Saturday, August 25, 2007

Yield Dynamics, Inc. v. TEA Systems Corporation - trade secret and civil procedure decision.

The trial court and the appellate court found that it is not true that evidence of “some” helpfulness or usefulness, if credited, would compel a finding of independent economic value.  The court of appeals adopted the Restatement definition of a trade secret as business or technical information “that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.” (Rest.3d, Unfair Competition, sec. 39.) The advantage “need not be great,” but must be “more than trivial.” (Rest.3d, Unfair Competition, sec. 39, com. e, p. 430.) Merely stating that information was helpful or useful to another person in carrying out a specific activity, or that information of that type may save someone time, does not compel a factfinder to conclude that the particular information at issue was “sufficiently valuable . . . to afford an . . . economic advantage over others.” (Rest.3d, Unfair Competition, § 39.) The factfinder is entitled to expect evidence from which it form some solid sense of how useful the information is, e.g., how much time, money, or labor it would save, or at least that these savings would be “more than trivial.” (Rest.3d., Unfair Competition, sec. 39, com. e.) This decision will be relied upon by future defendants in attacking claims.

The decision also discusses what is expected of a trial court in making its findings within a statement of decision under California law.

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Tuesday, June 19, 2007

Parlour Enterprises, Inc. v. The Kirin Group, Inc. - Farrell's franchisor obtains a reduction of damages on appeal.

This case arose involved some of the same people that founded the Farrell’s restaurant.  Franchisee sued franchisor for recovery of lost profits, lost franchise fees, and consequential expenses sustained by plaintiffs when defendants unilaterally terminated their agreement to permit plaintiff to develop subfranchises, the court of appeals ruled that the award of lost profits was speculative where based on projections for businesses that never opened and unsupported by facts showing those profits would actually have materialized. Defendants’ and franchisor’s wrongful termination of agreement to permit development of subfranchises did not permit recovery of damages by potential subfranchisees for interference with prospective business advantage where evidence showed that potential economic advantage was lost when potential owner of proposed business site, with whom subfranchisor was negotiating lease, elected not to purchase the property, and not because of any misrepresentations or other misconduct by defendants.

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