1. This case was heard in federal court. Why does the court use MUTSA?

2. Explain why the court found that the PowerPoint presentations were trade secrets.

3. The court upheld the damage awards, including $10 million in punitive damages. Under Missouri law, punitive damages may be awarded for conduct that is “outrageous, because of the defendant’s evil motive or reckless indifference to the rights of others.” Do you agree that punitive damages were warranted in this case?

Hallmark Cards, Inc., hired a consulting group, Monitor Company Group, to compile research on the greeting cards market. Monitor created several PowerPoint presentations containing its findings. Hallmark and Monitor signed confidentiality agreements preventing Monitor from sharing these findings with anyone else. Monitor was closely affiliated with Clipper, a private equity firm founded by two of Monitor’s original partners and headquartered in Monitor’s building. Shortly after Hallmark hired Monitor, Clipper became interested in acquiring Recycled Paper Greetings, a greeting card company that competed with Hallmark. Clipper asked Monitor for the research it had compiled for Hallmark. Clipper ultimately won the auction for RPG. Hallmark settled its claims of trade secret misappropriation with Monitor but the case against Clipper went to trial. A jury found for Hallmark and awarded it $21.3 million in compensatory damages and $10 million in punitive damages. Clipper appealed arguing that the PowerPoint presentations were not “trade secrets” under the Missouri Uniform Trade Secrets Act (MUTSA).

JUDICIAL OPINION

WOLLMAN, J.…

MUTSA defines a trade secret as: Information, including but not limited to, technical or nontechnical data, a formula, pattern, compilation, program, device, method, technique, or process, that:

a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

First, Clipper argues that the presentations were not “the subject of efforts … to maintain [their] secrecy” because Hallmark published the central conclusions of the presentations before Clipper acquired them. Second, Clipper asserts that the information contained in the presentations had grown “stale” in the four years between Monitor’s creation of the presentations and Clipper’s acquisition of them.…

We find neither argument persuasive. Hallmark did publish some general conclusions about the greeting cards market based on information contained in its PowerPoint presentations, but these conclusions never went beyond broad generalities.… “Th[e] value [of a trade secret] is not dependent on how much of the information is otherwise unavailable because ‘the effort of compiling useful information is, of itself, entitled to protection even if the information is otherwise generally known.’ ”

Nor did the passage of four years deprive the Power- Point presentations of their economic value. The record discloses that Clipper found information about the greeting cards market to be “sparse” in 2005, when it acquired the presentations. While the economic value of the presentations may have diminished in the four years prior to Clipper’s misappropriation, the paucity of other information available meant that the presentations still provided a value source of knowledge about the greeting cards market. We thus conclude that the jury had sufficient evidence before it to find that Hallmark’s PowerPoint presentations constituted trade secrets under MUTSA.