Claim Tossed in the Trash: Dumpster Pitch to Home Depot Did Not Incorporate Protectable Trade Secret
Simply combining two obvious public domain concepts does not result in a protectable trade secret, even if the resulting idea has not yet been exploited in the marketplace. In a recent decision, Take It Away, Inc. v. The Home Depot, Inc., 2009 U.S. Dist. LEXIS 14279, the U.S. District Court for the District of Massachusetts granted summary judgment to The Home Depot on all claims because the business idea that the plaintiff alleged was misappropriated did not constitute a valid trade secret.
Take It Away, a waste removal services firm, and its principals approached The Home Depot on multiple occasions from 1996 through 2002 with a dumpster rental proposal. Under the proposal, Home Depot would rent dumpsters to its customers, while Take It Away would provide the product, services, and customer support. Additionally, Take It Away would remove the waste generated by the program for a separate fee. In connection with these meetings, Take It Away would sometimes ask The Home Depot to consent to a non-disclosure or confidentiality agreement. On one occasion, a confidentiality agreement was signed, but usually it was refused or not signed by representatives of The Home Depot, and sometimes it was not requested by Take It Away at all. Although The Home Depot requested that Take It Away submit an alternative proposal to lease space to conduct its own on-site dumpster rentals, such a proposal was never made, and no contract was ever executed.
From 2003 to 2005, The Home Depot entered into agreements with four firms under which The Home Depot permitted the rental of dumpsters at its stores. These contracts required the licensees to contract directly with renters, as The Home Depot had requested Take It Away structure its proposal. The Home Depot did not itself engage in the renting of dumpsters, but received only a referral fee. In November 2005, Take It Away sued The Home Depot for trade secret misappropriation, unfair and deceptive business practices, and breach of the parties' nondisclosure agreement.
The district court flatly rejected Take It Away's claim that its business concept of renting dumpsters at do-it-yourself home improvement stores constituted a legally protectable trade secret under Massachusetts law. Specifically, the court found that Take It Away's "invention" was simply the obvious combination of two pedestrian concepts: The Home Depot renting equipment to its customers and the rental of dumpsters. In no meaningful way could this combination of two commonplace practices into a single idea be considered "secret." Moreover, the court found that Take It Away disclosed this concept to The Home Depot before any nondisclosure agreement was tendered and continued to do so to employees of The Home Depot who refused to sign nondisclosure agreements. Finally, there was no evidence that Take It Away spent any significant measure of time or money on creating the business concept at issue. Rather, the idea was hatched "in a few minutes," according to the testimony provided by one of Take It Away's principals.
The court also disposed of the claims related to The Home Depot's alleged breach of its confidentiality agreement with Take It Away and to alleged violations of Chapter 93A, Massachusetts's statute governing unfair and deceptive business practices. Because Take It Away failed to demonstrate that confidential and proprietary information was conveyed to The Home Depot, both of these claims failed as a matter of law.
This case demonstrates that not all business ideas or concepts constitute protectable trade secrets, even if those ideas are not currently being exploited in the marketplace. The mere combination of two ideas that are well-known and quite obvious will not, without more, result in the establishment of a trade secret. Moreover, when a protectable business idea is presented to a potential partner, the party pitching the idea must be diligent to ensure that confidentiality agreements are obtained from all recipients of the information throughout the process. A party may unwittingly forfeit its ability to protect a confidential business concept if it carelessly discloses its idea in its zeal to reach an audience for its pitch.
Thanks for sharing this information with us. It is a great help for anyone of us to know more about this topic and learn things.
I would like to state my high regard of your writing talent and aptitude to make reader to read the while thing to the end. I would like to read more of your articles and to distribute my opinion with you. I will be your regular visitor, that is for certain.