Written by Michael D. Weil and Tierra Piens
As surprising as it may be to city dwellers, the deer farming industry generates $3 billion per year for the U.S. economy. According to the North American Deer Farmers Association, "deer farming is one of the fastest growing industries in rural America." The corollary of the deer farming industry is a burgeoning deer breeding industry. As a court in the Eastern District of Texas recently noted, the "deer breeding industry is a potentially lucrative industry with single straws of buck semen selling for $5,000 to $20,000 on average, and ranging all the way up to $1 million to purchase the entire buck."
Auction houses that sell deer require deer to be registered, or if it is a fawn, to have registration pending. Companies that maintain deer registries can provide their customers information about a deer's lineage and genetic information. The registries rely on vendors to process and analyze biological material, and host databases consisting of their findings. Deer registries consider this information to be highly valuable, proprietary information. Here enters the potential for trade secret protection, and its foe, misappropriation.
Earlier this year, the North American Deer Registry (NADR) filed a complaint in the Eastern District of Texas alleging trade secrets misappropriation under the Defend Trade Secrets Act (DTSA) and the Oklahoma Uniform Trade Secrets Act. Specifically, NADR alleged that its vendor, DNA Solutions (DNAS), retained NADR's trade secret information, the contents of the database, after the conclusion of their contractual relationship.
NADR hired DNAS to process the genetic information of various deer, perform genetic matching services, and host a database that eventually contained information on 230,000 deer. The contractual agreement contained a "Return of Information" provision that required DNAS to return "all NADR and NADR member Information, Biological Materials, Genetic Information and Genotype Data" at the conclusion of their contractual relationship. The contract expired on January 1, 2017. Per the contract, DNAS returned the information regarding the deer in NADR's registry, but DNAS admittedly retained a duplicate of the information.
After defeating a motion to dismiss, NADR filed a motion for preliminary injunction to enjoin DNAS' use of NADR's information. A party seeking a preliminary injunction must establish the following elements: (1) a substantial likelihood of success on the merits; (2) a substantial threat plaintiffs will suffer irreparable harm if the injunction is not granted; (3) the threatened injury outweighs any damage the injunction might cause the defendant; and (4) the injunction will not disserve the public interest.
In an opinion on June 2, 2017, the Eastern District of Texas granted NADR's preliminary injunction, finding that NADR's Deer Registry was a trade secret. The court rejected DNAS' argument that the information was not a trade secret because some of the information appeared on NADR's marketing materials. Instead, the court noted that "while small pieces of the Registry have been made public, this has not been enough to affect the economic value of NADR's secret" because the value is derived from the compilation of many data points. Ultimately, the court found that NADR took significant steps to keep its biological materials, genetic information, genotype analysis data, and membership directory secret. While a final judgment has yet to be made, the preliminary injunction affirms an important adage: where there is valuable information, there is a potential for trade secret protection.
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