StubHub, an online ticket exchange company, successfully defeated a suit brought by start-up company Calendar Research LLC. Calendar had alleged that three of its former employees used proprietary data in developing applications for StubHub. In its suit, Calendar Research alleged that the former employees downloaded proprietary information that belonged to the startup that they didn’t return and maintained access to Calendar Research’s source code.
A California federal judge found that Calendar Research failed to show that the application created by StubHub used proprietary information. The applications did not use the same source code or have any other similarities. Furthermore, Calendar failed to meet an element of a claim for misappropriation under the Defense Against Trade Secrets Act (DTSA) that requires plaintiffs to show that a defendant had knowledge that the trade secret was improperly acquired. The court held that it “lacks any evidence to make a finding that StubHub acquired, disclosed, or used plaintiff’s trade secrets with knowledge. And the court lacks any evidence with which to impute that knowledge, considering that the code does not show any similarities and plaintiff’s alleged compilations do not have novelty.” In reaching this decision, a thorough review of the source code for both applications revealed that proprietary information was not misappropriated. For seven of eight StubHub apps for which the ticket company submitted source code, the judge said that neither of the experts who analyzed the code from those apps found that it was “similar, let alone identical, to the Calendar Research code.”
Although he dismissed the DTSA claims, the judge lifted the stay on several other claims, including allegations brought under the Computer Fraud and Abuse Act. The attorneys for Calendar Research stated that they are considering appealing the order because “Through this lawsuit, we are sending a message on behalf of tech startups everywhere that StubHub and other large companies have to pay a fair price for technology they want, they cannot just take it.”