CALL US: 206.533.3854
CALL US  206.533.3854
AEON Law logo full color transparent
By Will (Wiki Ed) - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=77143987

No Trade Secret Protection for Info Disclosed on Zoom Call

Secrets aren’t secret
If you discuss via Zoom,
and meeting’s public

Although it’s far from the only video communications platform, Zoom has become increasingly popular during the pandemic.

In August, the company reported that its revenue for May-June had quadrupled since the same period last year, to $663.5 million.

As the AP noted,

The sudden demand seemed to catch Zoom off guard initially, leaving its service vulnerable to hackers and mischief-makers who exploited security weaknesses to barge into or snoop on meetings. Zoom says it believes it has closed most of the loopholes and eventually won back some school districts that temporarily abandoned the service because of security concerns.

Also, many companies have failed to use good security practices when using Zoom and similar communications platforms.

This failure may have cost one company its trade secret claim.

Smash Franchise Partners, LLC v. Kanda Holdings, Inc. is a recent case involving plaintiffs Smash Franchise Partners, LLC, and Smash My Trash, LLC (jointly, “Smash”), which operate a mobile trash compaction business and sell franchises to entrepreneurs.

The business uses truck-mounted mobile trash compactors to squash trash in dumpsters. This lets clients put more trash in each dumpster and thus saves on waste management fees.

The defendant, Todd Perri, was initially interested in a Smash franchise. He had an engineering degree and later came to feel that he could create his own mobile trash-compacting business without working with Smash.

When Perri expressed interest in a franchise, he was invited to participate in Zoom calls with Smash and with other franchisees to learn more. He was also required to sign an NDA.

As the court noted,

Zoom has features that a host can use to control who participates in a meeting, such as requiring a password for access and placing participants into a waiting room so that the host can admit them individually after verifying their identity.

Perri attended about 10 hours of Zoom calls, during which he took copious notes and wrote down the names of the other participants – about 114 people.

While Perri was pretending to still be interested in a Smash franchise, he and a frat brother formed a competing business and bought the name “Smash My Trash” from Google AdWords, so that his company would come up on top in search results. Perri’s company launched in March 2020.

Smash sought a preliminary injunction to shut down Perri’s business. The court noted that in order to get an injunction Smash would need to show that Perri obtained and used Smash’s confidential information.

The court found that Smash didn’t properly protect its trade secrets (assuming any were disclosed on the Zoom calls):

Assuming for the sake of analysis that Smash had protectable trade secrets, Smash did not take reasonable steps to protect their secrecy. Smash freely gave out the Zoom information for the Franchisee Forum Calls and the Founder Calls to anyone who had expressed interest in a franchise and completed the introductory call. Smash used the same Zoom meeting code for all of its meetings. Smash did not require those participants to enter a password and did not use the waiting room feature to screen participants. Anyone who had expressed interest and received the code could join the calls, and participants could readily share the code with others.

This case serves as a reminder that trade “secrets” will only be protected by the courts only if they’re actually treated as valuable secrets by their owners. Sharing “secrets” in a public Zoom meeting means those “secrets” aren’t “secret” at all.


Just like the haiku above, we like to keep our posts short and sweet. Hopefully, you found this bite-sized information helpful. If you would like more information, please do not hesitate to contact us here.

Related Articles

Patent and Trademark Offices Publish Study on NFT IP Issues

The US Patent and Trademark Office (USPTO) and the Copyright Office have published the results of their joint study on non-fungible tokens (NFTs) and intellectual property (IP). ...
Read More

Fourth Circuit Overturns $1 Billion Copyright Infringement Verdict

The Fourth Circuit has overturned a $1 billion verdict in a copyright case against Cox Communications. As the court explained, Defendant Cox Communications sells internet, ...
Read More

Will Federal Circuit Soften Test for Design Patent Obviousness?

An en banc panel of the Federal Circuit recently heard arguments in a case that could change how courts assess design patents for “obviousness.” LKQ ...
Read More

Let's work together.

Contact us to set up a meeting with an attorney or team member.

Stay Informed

Sign up to receive Patent Poetry—a monthly roundup of key IP issues in our signature haiku format. Four articles (only 68 syllables); zero hassle.

SECTORS

HIGH
TECHNOLOGY

Artificial Intelligence

Blockchain & Cryptocurrency

Computer Technology & Software

Consumer Electronics

Electrical Devices

MECHANICAL
& PRODUCTS​

Cleantech

Mechanical Devices

Consumer & Retail Products

Hardware & Tools

Toys & Games

LIFE SCIENCES
& CHEMISTRY​

Biotechnology

Chemical Compounds

Digital Health

Healthcare Products

Pharmaceuticals

BRANDING
& CREATIVE​

Books & Publications

Brand Creation

Luxury Products

Photography & Video

Product Design

SERVICES

PROTECT

DEAL

DEFEND