Misappropriation in the 21st Century

There may be no more perplexing legal issue in today’s fast-paced, exploitative world of apps, smart watches and 4G than protecting one’s work product. Commercial Division Justice Melvin L. Schweitzer recently ushered New York into the 21st century by creating a new cause of action in Schroeder v. Pinterest, Inc., 2014 N.Y. Misc. LEXIS 3083, 2014 NY Slip Op 31809(U): Misappropriation Of Skills And Expenditure .Plaintiff Schroeder developed a new idea for a socially networked bulletin board where users could share their physical locations — and ultimately, all of their interests — on the Internet. He spent more than 5,000 hours, four years and the lion’s share of funds to create and develop the necessary technology, products and applications. A Mr. Brian Cohen subsequently worked along with Schroeder.

Unbeknownst to Schroeder, Cohen subsequently presented Schroeder’s work product to others, who used Schroeder’s work product to create what is now known as, you guessed it, Pinterest.

In addition to his claim for misappropriation of trade secrets, Schroeder alleged misappropriation of skills and expenditure — a modern-day unfair competition claim. A misappropriation of skills and expenditure plaintiff must allege (1) investment of labor, skill or expenditure, (2) that the information was misappropriated in bad faith and (3) that the information was used for defendant’s own benefit.

While the Court dismissed Schroeder’s trade secrets claim against Cohen because the “secrets” had been made public, Schroeder’s misappropriation of skills and expenditure claim survived. The takeaway is that additional avenues of relief are now necessary given the ease and rapidity with which information can be made public.

Technology continues to evolve quickly, and the free flowing exchange and publication of ideas is at risk. Wrongdoers are now able to actualize their intent more quickly given the resources available, and quick and easy misappropriation now more than ever applies to much more than trade secrets.

Present-day commercial contracts must reflect this rapidly changing business environment. To address today’s reality, protection requires the adjustment of traditional contract terms and the addition of entirely new ones. Entrepreneurs and companies need cutting edge counsel to spearhead future commercial advancement.

The Law Office of Aaron M. Schlossberg, P.C.

(This writing is for general informational purposes only, should not be construed as legal advice and does not establish an attorney-client relationship.)