Rivendell Forest Prods v Georgia Pacific Corp

Rivendell Forest Prods. v. Georgia-Pacific Corp., 28 F.3d 1042 (10th Cir. Colo. 1994)

Facts: Rivendell and Georgia-Pacific were competitors in the lumber business. Over its years in the business, Rivendell created a software system, which allowed employee wholesalers to determine a final price very quickly and, thus, manage inventory and conduct customer service in a uniquely efficient manner. Defendant Cornwell, a wholesaler employed by Rivendell, left Rivendell to work for Georgia-Pacific. Within three months of Cornwell leaving, Georgia-Pacific had a virtually identical software system to that of Rivendell. Rivendell brought an action for trade secret misappropriation.

Procedural Posture: The District Court for the District of Colorado granted Cornwell and Georgia-Pacific’s motion for summary judgment on the basis that the software system was not a trade secret. Rivendell appealed to the Tenth Circuit.

Holding: The District Court erred in finding that the software system was not a protectable trade secret under Colorado Law. While patent law would have required more novelty and invention, trade secret standards could have been met in this case. In cases of trade secret misappopriation, a trade secret may consist of unique combination of techniques already in the public domain. The court remanded the case for further proceedings consistent with its opinion.

Important Dicta: Most notably, the court set out that "a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.” The court pointed out that this requires a lower degree of novelty than is required by patent law. Moreover, the court highlighted factors to consider in determining whether a piece of information, etc., is a trade secret: "1) The extent to which the information is known outside the business; 2) The extent to which it is known to those inside the business i.e., by the employees; 3) The precautions taken by the holder of the trade secret to guard the secrecy of the information; 4) The savings effected and the value to the holder in having the information as against competitors; 5) The amount of effort or money expended in obtaining and developing the information; and 6) The amount of time and expense it would take for others to acquire and duplicate the information.”

Likely future importance or unanswered questions: Could this allow businesses to circumvent patent law requirements in obtaining protection of intellectual property? Or, does it merely provide protection for information deserving of protection but not rising to the level of “novelty” required by patent law?

Critical Analysis: This case is significant in that it provides a corroborative view of how to analyze trade secret subject matter. It also provides an avenue for analyzing trade secret misappropriation in a certain niche.

Portions © 2006-2019 by Michael Risch, Some Rights Reserved | Copyright Notice| Legal Disclaimer