The newly filed trade secret lawsuit Collateral Analytics v Nationstar Mortgage (N.D. Cal., No 18-cv-019) may be interesting to follow. Collateral Analytics offers a searchable database of real estate information to its customers (a large number of customers). According to the complaint, Nationstar was one of the customers and abused that relationship by downloading much of the database and is preparing to use that information to start a competitor (Quantarium).
- Can a database provided to thousands of customers on a retail basis be considered a “trade secret” – even if subject to a confidentiality contract?
- Reverse engineering is a legitimate mechanism for discovering competitive trade secrets. Is a contract that prohibits such reverse engineering enforceable? (Here, there were apparently some software limits to protect the data that had to be overcome before the data could be obtained en mass.
- In some ways, the approach here is designed to fit database property rights within the trade secret realm. Is that appropriate — especially recognizing that Congress has considered but rejected sui generis database protections. (The lawsuit also claims violation of the Computer Fraud and Abuse Act).