Filed: Jul. 27, 2011
Latest Update: Feb. 21, 2020
Summary: CORRECTED OPINION UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1435 HILL HOLLIDAY CONNORS COSMOPULOS, INCORPORATED, d/b/a Erwin-Penland, Plaintiff - Appellee, v. JEFFREY GREENFIELD; 1ST APPROACH LLC, Defendants and Third-Party Plaintiffs - Appellants, v. CELLCO PARTNERSHIP, d/b/a Verizon Wireless; JOSEPH A. ERWIN, Third-Party Defendants - Appellees. Appeal from the United States District Court for the District of South Carolina, at Greenville. G. Ross Anderson, Jr., S
Summary: CORRECTED OPINION UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1435 HILL HOLLIDAY CONNORS COSMOPULOS, INCORPORATED, d/b/a Erwin-Penland, Plaintiff - Appellee, v. JEFFREY GREENFIELD; 1ST APPROACH LLC, Defendants and Third-Party Plaintiffs - Appellants, v. CELLCO PARTNERSHIP, d/b/a Verizon Wireless; JOSEPH A. ERWIN, Third-Party Defendants - Appellees. Appeal from the United States District Court for the District of South Carolina, at Greenville. G. Ross Anderson, Jr., Se..
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CORRECTED OPINION
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1435
HILL HOLLIDAY CONNORS COSMOPULOS, INCORPORATED, d/b/a
Erwin-Penland,
Plaintiff - Appellee,
v.
JEFFREY GREENFIELD; 1ST APPROACH LLC,
Defendants and Third-Party Plaintiffs -
Appellants,
v.
CELLCO PARTNERSHIP, d/b/a Verizon Wireless; JOSEPH A. ERWIN,
Third-Party Defendants - Appellees.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. G. Ross Anderson, Jr., Senior
District Judge. (6:08-cv-03980-GRA)
Argued: March 23, 2011 Decided: June 2, 2011
Corrected Opinion Filed: July 27, 2011
Before GREGORY, AGEE, and KEENAN, Circuit Judges.
Affirmed by unpublished opinion. Judge Agee wrote the majority
opinion, in which Judge Keenan joined. Judge Gregory wrote an
opinion dissenting in part.
ARGUED: Jay Stanley Horowitz, HOROWITZ & FORBES, LLP, Denver,
Colorado, for Appellants. Brenda R. Sharton, GOODWIN│PROCTER,
Boston, Massachusetts, for Appellees. ON BRIEF: Phillip Jeffrey
North, THE LAW OFFICE OF P. JEFFREY NORTH LLC, Hilton Head
Island, South Carolina, for Appellants. Stacey B. Ardini, Kunal
Pasricha, GOODWIN│PROCTER, Boston, Massachusetts, William F.
Sheehan, GOODWIN│PROCTER, Washington, D.C., Bernie W. Ellis,
Rita M. McKinney, MCNAIR LAW FIRM, P.A., Greenville, South
Carolina, for Appellees Hill Holliday Connors Cosmopulos,
Incorporated, d/b/a Erwin-Penland, and Joseph A. Erwin; Robert
A. Muckenfuss, David M. Chromy, Elizabeth M. Z. Timmermans,
MCGUIREWOODS LLP, Charlotte, North Carolina, for Appellee Cellco
Partnership, d/b/a Verizon Wireless.
Unpublished opinions are not binding precedent in this circuit.
2
AGEE, Circuit Judge:
Jeffrey Greenfield collaborated with Erwin-Penland, a South
Carolina advertising agency, on a marketing plan aimed at
securing a contract with the Captain D’s restaurant chain.
Captain D’s declined to implement the proposal, which centered
on the general concept of a gospel choir competition entitled
“How Sweet the Sound.” Erwin-Penland, however, later convinced
another client, Verizon Wireless, to fund a modified version of
the project, but without the participation of Greenfield or his
company, 1st Approach LLC (collectively “Greenfield”).
Greenfield subsequently demanded compensation from Erwin-
Penland, who responded by filing a declaratory judgment action
in South Carolina state court, seeking a ruling that Greenfield
had no ownership interest in the “How Sweet the Sound” concept.
Greenfield removed the case to the United States District
Court for the District of South Carolina and instituted various
counterclaims, including a third-party complaint against Verizon
Wireless and Joseph Erwin — the president of Erwin-Penland.
The district court concluded that Greenfield had no protected
interest in the “How Sweet the Sound” project and granted
summary judgment in favor of Erwin-Penland and the third-party
3
defendants. 1 Greenfield now challenges that ruling on appeal.
For the reasons stated herein, we affirm the judgment of the
district court.
I.
Joseph Erwin heard Greenfield speak on the subject of
“branded entertainment” at a conference. Subsequently, he asked
Greenfield to collaborate with Erwin-Penland on a marketing
proposal aimed at securing an account with the Captain D’s
restaurant chain. Greenfield accepted Erwin’s offer without
entering into a written agreement establishing the terms of his
relationship with Erwin-Penland.
After a series of collaborative phone calls and emails,
Greenfield sent Erwin-Penland a marketing deck outlining a
concept he labeled “‘Amazing Grace’ Captain D’s Branded Reality
Show.” Joint Appendix (“J.A.”) at 1375. Erwin-Penland
subsequently changed the name of the proposal to “How Sweet the
Sound.” Id. at 712, 896. The “How Sweet the Sound” concept
involved “[t]he top 20 church choirs in the US competing for
over $250,000 in prizes and the title of the Best Choir in the
USA.”
Id. at 1376. A production team of producers and
1
We refer to Verizon Wireless and Joseph Erwin collectively
as the “third-party defendants.”
4
cameramen, along with a host “[s]imilar to Ryan Seacrest on
American Idol,” would “cross the country in [a] 6 week trek of
visiting EVERY Captain D’s location,” using local media to
publicize the event. Id. at 1377. Once there, the team would
interview local choir members about their “choir and why they
think they are the best in the US.”
Id.
Competitions would then take place in Atlanta, Georgia;
Jackson, Mississippi; Birmingham, Alabama; and Charleston, South
Carolina between the best twenty-five choirs in each region.
Each contest would be featured in a television episode, take
place “in large arenas,” and “have a large panel of celebrity
judges who [would] vote on the best overall performance.”
Id.
The winners of the regional competitions would then “be invited
to attend [a] National competition in Nashville,” Tennessee
featuring “the 4 best church choirs in the country in an
authentic inspirational contest to find the #1 Choir in the
USA.”
Id. Winning the national competition would entitle a
choir to “the title of the Best Choir in the USA” and “over
$250,000 in prizes.”
Id. at 1376.
In conjunction with the “entertainment” provided by the
gospel choir competition, Greenfield proposed marketing Captain
D’s through three different mediums: product placement, radio,
and the internet. The parties intended that Greenfield would
serve as producer and talent broker for Captain D’s “How Sweet
5
the Sound” project. Although Captain D’s expressed some
interest in the proposal, it ultimately declined to adopt the
plan.
Subsequently, Greenfield and Erwin-Penland presented a
similar “How Sweet the Sound” concept to Verizon Wireless, one
of Erwin-Penland’s existing clients. Modifications were made to
this proposal to better suit Verizon Wireless’ business model.
For example, Greenfield and Erwin-Penland suggested signing
choirs up for the competition at Verizon Wireless stores and
creating “a CD of the winning choirs” that would be distributed
“through stores and agents.” Id. at 1587.
Although Verizon Wireless also expressed interest in the
“How Sweet the Sound” concept, it had concerns about the plan’s
projected cost. Greenfield and Erwin-Penland subsequently
worked to scale back the television component of the project to
a one-hour special or documentary. When Verizon Wireless’
response to this less-expensive model was not immediately
forthcoming, Greenfield inquired as to whether Verizon Wireless
was still interested in the concept or whether he was free to
present it to other clients. Erwin-Penland responded that
Verizon was still considering the scaled-back plan.
Over a year later, Erwin-Penland and Verizon Wireless
implemented a limited “How Sweet the Sound” marketing concept by
organizing a single gospel choir competition in Memphis,
6
Tennessee. The project later evolved into a series of gospel
choir competitions orchestrated throughout the nation. In 2009,
the final contest was televised on the Gospel Music Channel and
a documentary about the series appeared on the Black
Entertainment Television Network (“BET”). Although other
agencies aided Erwin-Penland and Verizon Wireless in
implementing the “How Sweet the Sound” concept, Greenfield was
not asked to assist, and had no part, in executing the plan.
II.
Greenfield demanded compensation from Erwin-Penland for its
use of the “How Sweet the Sound” marketing plan, which he
claimed to have originated. In response, Erwin-Penland filed a
declaratory judgment suit in South Carolina state court,
requesting a ruling that Greenfield had “no co-ownership
interest or rights in the marketing project ‘How Sweet the
Sound.’” J.A. at 28. Greenfield removed the case to the United
States District Court for the District of South Carolina based
on the parties’ diverse citizenship. See 28 U.S.C. § 1332(a).
He then filed a first amended counterclaim and third-party
complaint against Erwin-Penland and the third-party defendants,
which stated numerous claims for, inter alia, fraud, breach of
contract, misappropriation of trade secrets, and unjust
enrichment.
7
Erwin-Penland and the third-party defendants subsequently
filed motions for summary judgment as to all of Greenfield’s
claims. In turn, Greenfield filed a motion for summary judgment
on his unjust enrichment and breach of fiduciary duty claims.
The district court concluded that no genuine issue of material
fact precluded granting judgment as a matter of law to Erwin-
Penland and the third-party defendants. Accordingly, the court
granted summary judgment in their favor on all claims and denied
Greenfield’s competing motion for summary judgment.
First, the district court concluded that “Greenfield’s
purported trade secrets fail[ed] to meet [the] criterion” for
protection under the South Carolina Trade Secrets Act (“the
Act”), see S.C. Code Ann. § 39-8-20(5), because his “claimed
trade secrets [were] not novel or protectable, and, if they
were, Greenfield failed to take reasonable steps to protect
them.” 2 J.A. at 183. Thus, “even assuming the existence of
. . . trade secret[s],” id. at 183 n.3, summary judgment was
appropriate “for the independent reason that Greenfield failed
to take reasonable efforts to protect” them.
Id. at 187.
Second, the district court rejected Greenfield’s argument
that he had “an oral or implied-in-fact contract” with Erwin-
2
Our summary of the district court’s summary judgment
orders focuses solely on the portions relevant to the four
issues Greenfield raises on appeal.
8
Penland that was subject to breach. Id. at 189. Because “[t]he
parties did not discuss, let alone come to an agreement on, the
essential terms of a contract,” the district court concluded “no
reasonable trier of fact could find mutual assent as to any
essential terms” of an agreement, given “either orally, in
writing, or implied” in fact.
Id. at 189.
Indeed, the district court concluded that “[a] careful
review of the documentary record and deposition testimony”
established, “at best, that Erwin-Penland and Greenfield . . .
discuss[ed] potential or speculative options for the [“How Sweet
the Sound”] concept[].” Id. It was “undisputed that no
proposed options made by Greenfield were ever accepted by Erwin-
Penland.”
Id. at 189-90. The district court consequently
determined that Greenfield was unable to “point to any objective
manifestations and expressions by Erwin-Penland that would be
sufficient to establish the existence of a contract.”
Id. at
190; see also
id. (“Mere expectations and one-sided hopes of a
party do not make a contract . . . .”).
Third, the district court held that Greenfield “failed to
satisfy the elements necessary to support” an unjust enrichment
claim. Id. at 199. Greenfield’s “only contribution to” the
“How Sweet the Sound” project “was in conjunction with . . .
speculative pitches . . . to Verizon Wireless and Captain D’s.”
Id. at 200. As he had no “role in executing and implementing
9
the . . . project . . . eventually undertaken by Verizon
Wireless” and “did not contribute any trade secret or other
protectable information” to the marketing scheme, the district
court held that Greenfield was unable to “prove as a matter of
law that a non-gratuitous ‘benefit’ was conferred for which
compensation [was] required.” Id.
Fourth, the district court ruled that Greenfield’s attempt
to cancel Erwin-Penland’s “How Sweet the Sound” trademark based
on fraudulent representations to the United States Patent and
Trademark Office failed as a matter of law. The court stated
that even if Greenfield’s factual allegations were true,
“[t]rademark rights are not based on creativity, but on use in
commerce.”
Id. at 201. Because it was “undisputed that
Greenfield ha[d] not used the [“How Sweet the Sound”] mark in
commerce,” he could not “claim trademark rights in the term” or
demonstrate “that Erwin-Penland committed fraud in procuring
th[e] trademark registration.”
Id.
Greenfield noted a timely appeal of the district court’s
order granting summary judgment. We have jurisdiction under 28
U.S.C. § 1291.
III.
On appeal, Greenfield generally argues the district court
misapplied the summary judgment standard in failing to view the
10
record evidence and all inferences drawn therefrom in the light
most favorable to him, as the non-moving party. He more
specifically avers the district court erred in concluding the
“How Sweet the Sound” concept failed to meet the criteria for
protection under the Act. For example, Greenfield contends the
district court applied “a non-existent novelty requirement” for
trade secret protection and ignored a genuine issue of material
fact as to whether he took reasonable efforts to preserve the
secrecy of the “How Sweet the Sound” marketing scheme. Opening
Br. at 23.
Greenfield also challenges the district court’s “failure to
discern in the” relationship between himself and Erwin-Penland
“the basis for imposing contractual and equitable duties”
predicated on Erwin-Penland’s and Verizon Wireless’ “unjust
enrichment at [his] expense.” Id. at 24. Finally, Greenfield
claims the district court erred in refusing to cancel Erwin-
Penland’s “How Sweet the Sound” trademark based on various
fraudulent assertions made throughout the trademark registration
process. 3 See id.; see also 15 U.S.C. § 1064(3).
3
Greenfield raised various fiduciary-duty claims in his
Opening Brief but informed the Court at oral argument he no
longer asserted those issues on appeal. As Greenfield has now
conceded there was no error as to those claims, we do not
address them here.
11
In response, Erwin-Penland and the third-party defendants
argue the Act offers no protection as to any of Greenfield’s
claims concerning the “How Sweet the Sound” marketing scheme.
They contend the concept was “‘readily ascertainable by proper
means by the public,’” Response Br. at 19, and that Greenfield
“knowingly shared [the plan] with multiple third parties (some
of whom were Greenfield’s competitors)” without the protection
offered by a confidentiality agreement. Id. at 20.
Accordingly, Erwin Penland and the third-party defendants
maintain that “Greenfield cannot prove . . . he took reasonable
efforts to maintain the confidentiality of his supposed
secrets.”
Id.
Based on Greenfield’s admissions that the parties “engaged
only in preliminary proposals in advance of a speculative pitch
for new business and never even discussed the essential terms of
a . . . contract,” Erwin-Penland and Verizon Wireless also
dispute Greenfield’s claim that a binding contractual
relationship was established.
Id. at 20-21. They further argue
that Greenfield is unable to make out a claim for unjust
enrichment, as he contributed neither labor nor a protected
piece of intellectual property to the marketing scheme Verizon
Wireless eventually implemented. Lastly, Erwin-Penland and the
third-party defendants would have us reject Greenfield’s
trademark-cancellation claim because “he makes no claim to ever
12
having used the [“How Sweet the Sound”] mark in commerce.” Id.
at 34.
IV.
“We review de novo a district court’s award of summary
judgment, viewing the facts and inferences reasonably drawn
therefrom in the light most favorable to the nonmoving party.”
Fraternal Order of Police Lodge No. 89 v. Prince George’s
County, 608 F.3d 183, 188 (4th Cir. 2010). Under Federal Rule
of Civil Procedure 56(a), summary judgment is appropriate “if
the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter
of law.” In this case, the record demonstrates that no genuine
dispute as to a material fact precluded granting judgment as a
matter of law in favor of Erwin-Penland and the third-party
defendants. See Estate of Kimmell v. Seven Up Bottling Co. of
Elkton, Inc.,
993 F.2d 410, 412 (4th Cir. 1993) (“[I]n a case
where ‘the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no
genuine issue for trial’ and summary judgment is proper.”
(quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475
U.S. 574, 587 (1986))).
13
A. Trade Secret
The South Carolina Trade Secrets Act protects “trade
secrets” that meet two separate criteria. 4 First, the trade
secret must “derive[] independent economic value, actual or
potential, from not being generally known to, and not being
readily ascertainably by proper means by the public or any other
person who can obtain economic value from its disclosure or
use.” S.C. Code Ann. § 39-8-20(5)(a)(i). Second, the trade
secret must be “the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.” Id. § 39-8-
20(5)(a)(ii). As the plain language of the statute provides,
4
The Act defines a “‘[t]rade secret’” as
information including but not limited to, a formula,
pattern, compilation, program, device, method,
technique, product, system, or process, design,
prototype, procedure, or code that:
(i) derives independent economic value, actual
or potential, from not being generally known to,
and not being readily ascertainable by proper
means by the public or any other person who can
obtain economic value from its disclosure or use,
and
(ii) is the subject of efforts that are
reasonable under the circumstances to maintain
its secrecy.
S.C. Code Ann. § 39-8-20(5)(a) (emphasis added).
14
information must satisfy both criteria in order to be deemed a
“trade secret” under the Act. 5 Id. § 39-8-20(5)(a).
For purposes of this opinion, we assume, without deciding,
that the “How Sweet the Sound” concept satisfies the Act’s first
criterion. 6 A reasonable finder of fact, however, could not
conclude that Greenfield took reasonable efforts to maintain the
secrecy of the “How Sweet the Sound” marketing scheme, the
second criterion for protection under the Act. In Lowndes
Products, Inc. v. Brower, 191 S.E.2d 761 (S.C. 1972), the
Supreme Court of South Carolina construed the reasonable-
efforts-to-maintain-secrecy requirement as setting a high bar
5
See also Restatement (Third) of Unfair Competition § 39
(1995) (defining a “trade secret” as “any information that can
be used in the operation of a business or other enterprise and
that is sufficiently valuable and secret to afford an actual or
potential economic advantage over others”); Restatement (First)
of Torts § 757 cmt. b (1939) (“The subject matter of a trade
secret must be secret. Matters of public knowledge or of
general knowledge in an industry cannot be appropriated by one
as his secret.”).
6
See S.C. Code Ann. § 39-8-20(5)(b) (“A trade secret may
consist of a simple fact, item, or procedure, or a series or
sequence of items or procedures which, although individually
could be perceived as relatively minor or simple, collectively
can make a substantial difference in the efficiency of a process
or the production of a product, or may be the basis of a
marketing or commercial strategy. The collective effect of the
items and procedures must be considered in any analysis of
whether a trade secret exists and not the general knowledge of
each individual item or procedure.”).
15
for trade secret protection. 7 See id. at 766; see also Woven
Elecs. Corp. v. Advance Grp., Inc.,
930 F.2d 913, Nos. 89-1580 &
89-1588,
1991 WL 54118, at *3 (4th Cir. Apr. 15, 1991), as
amended May 6, 1991 (unpublished) (characterizing “a consistent
effort . . . to keep” a “wire weaving process” secret, rather
than “isolated attempts to protect [that information’s]
confidentiality,” as sufficient to meet the reasonable-efforts-
to-maintain-secrecy requirement) (citing Lowndes
Prods., 191
S.E.2d at 765)).
Individuals “entitled to a trade secret” and desiring “to
have its exclusive use in [their] own business” are barred from
“lightly or voluntarily hazard[ing] its leakage or escape.”
Lowndes Prods., 191 S.E.2d at 766 (quotation omitted).
Revealing a trade secret to others is consequently fatal to its
protected status unless one “exercise[s] eternal vigilance.” 8
Id. (quotation omitted). The exercise of “eternal vigilance”
imposes a heavy burden on the owner of a trade secret, as it
“calls for constant warnings to all persons to whom the trade
7
See also 20 S.C. Jur. Intellectual Prop. § 75 (2011)
(engaging in an extensive discussion of the reasonable-efforts-
to-maintain-secrecy requirement based on Lowndes Products).
8
Although the dissent is correct that “[d]isclosure . . .
does not necessarily vitiate secrecy,” Dis. Op. at 28, it fails
to account for South Carolina case law conditioning further
trade secret protection on the exercise of “eternal vigilance.”
Lowndes Prods., 191 S.E.2d at 766.
16
secret has become known and obtaining from each an agreement,
preferably in writing, acknowledging its secrecy and promising
to respect it.” 9 Id. (quotation omitted).
The undisputed evidence in this case demonstrates that
Greenfield did not exercise “eternal vigilance” in sharing the
details of the “How Sweet the Sound” marketing scheme with
others. To the contrary, Greenfield transmitted the “How Sweet
the Sound” concept to Erwin-Penland, J.A. at 775, and presented
the plan to Verizon Wireless in the presence of multiple third
parties — including members of “other ad agenc[ies]” — without
the benefit of any type of nondisclosure agreement. Id. at 791.
The record, without contradiction, also supports the district
court’s finding that “[t]he alleged ‘trade secrets’ in question
had . . . been previously shared with a different third-party,
the restaurant chain Captain D’s, with whom Greenfield . . . had
no confidentiality or other agreement.”
Id. at 186.
It would thus be unreasonable, if not impossible, for a
finder of fact to conclude that Greenfield took “efforts that
[were] reasonable under the circumstances to maintain [the]
9
See also 20 S.C. Jur. Intellectual Prop. § 75 (2011)
(“‘[E]ternal vigilance’ in the form of ‘constant warnings to all
persons to whom the trade secret has become known and obtaining
from each an agreement, preferably in writing, acknowledging its
secrecy and promising to respect it’ is required.” (quoting
Lowndes Prods., 191 S.E.2d at 761)).
17
secrecy” of his marketing strategy. S.C. Code Ann. § 39-8-
20(5)(a)(ii). And such efforts are mandatory under the plain
language of the Act if a trade secret is to merit its
protection. See id.; Lowndes Prods., 191 S.E.2d at 765 (“[A]ll
trade secrets are not entitled to . . . protection . . . .”); 20
S.C. Jur. Intellectual Prop. § 76 (2011) (“A third party who
receives information without any express or implied assurance of
confidence may do what it likes with the information.”).
Although Greenfield unilaterally placed confidentiality
notices on some of his materials, these notations are not
sufficient to create a genuine issue of material fact as to the
reasonableness of his conduct. 10 South Carolina courts do, of
course, require such “warnings to all persons to whom the trade
secret has become known.” Lowndes Prods., 191 S.E.2d at 766
(quotation omitted). But South Carolina law is clear that
warnings alone are insufficient to place a trade secret within
the sphere of protection provided by the Act. See
id.
(characterizing “isolated steps . . . taken to implement
secrecy” as insufficient to merit trade secret protection).
10
In his Opening Brief, Greenfield also notes that he
registered the “How Sweet the Sound” concept as a “Gospel Music
Contest” with the Writers’ Guild of America, listing himself and
Joseph Erwin as co-owners. See Opening Br. at 18. Greenfield
does not contend, however, that this registration constituted
reasonable measures to maintain the secrecy of the “How Sweet
the Sound” marketing plan.
18
A trade secret owner who knowingly discloses proprietary
information to others should also “obtain[] from each an
agreement . . . acknowledging its secrecy and promising to
respect it.” 11 Id. (quotation omitted). Greenfield points to
nothing in the record suggesting he obtained, or attempted to
obtain, a confidentiality agreement from the multiple entities
to whom he presented the “How Sweet the Sound” concept. 12
Accordingly, the district court correctly determined no material
facts were in dispute and correctly held that (1) Greenfield
failed to take reasonable efforts to maintain the secrecy of his
marketing plan, see 20 S.C. Jur. Intellectual Prop. § 76 (2011)
11
We respect the dissent’s viewpoint but are compelled to
adhere to the principle that “federal courts sitting in
diversity must apply state substantive law, decisional as well
as statutory, in the adjudication of state-created rights.”
Hottle v. Beech Aircraft Corp., 47 F.3d 106, 109 (4th Cir.
1995). While obtaining a non-disclosure agreement is not a
mandatory requirement under South Carolina law, we emphasize
that Greenfield’s failure to even attempt to obtain any such
agreement from any of the parties to whom he disclosed his trade
secrets bears substantial weight under the precedent of South
Carolina’s highest court. See Liberty Mut. Ins. Co. v. Triangle
Indus., Inc.,
957 F.2d 1153, 1156 (4th Cir. 1992) (“[A] federal
court sitting in diversity has a duty to apply the operative
state law as would the highest court of the state in which the
suit was brought.”).
12
See Estate of Kimmell, 993 F.2d at 412 (acknowledging
that “the non-moving party may not rest on its pleadings, but
must come forward with specific facts showing that evidence
exists to support its claims and that there is a genuine issue
for trial” (citing Celotex Corp v. Catrett,
477 U.S. 317, 324
(1986)).
19
(“If no understanding of confidentiality exists, there can be no
secrecy regarding information disclosed.”), and (2) this failure
precluded Greenfield from relying on the protection of
intellectual property afforded by the Act. See id. § 73 (“South
Carolina’s statutory definition of a trade secret requires that
the secret be ‘the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.’” (quoting S.C. Code
Ann. § 39-8-20(5)(a)(ii))).
B. Contract
A contract, under South Carolina case law, is defined as
an obligation which arises from actual agreement of
the parties manifested by words, oral or written, or
by conduct. If agreement is manifested by words, the
contract is said to be express. If it is manifested
by conduct, it is said to be implied. In either case
the parties must manifest a mutual intent to be bound.
Without the actual agreement of the parties, there is
no contract.
Stanley Smith & Sons v. Limestone Coll., 322 S.E.2d 474, 477
(S.C. Ct. App. 1984) (internal citations omitted).
“The essentials of a contract [thus] include an offer and
acceptance.” Benya v. Gamble, 321 S.E.2d 57, 60 (S.C. Ct. App.
1984); see also Hodge v. Nat’l Fid. Ins. Co.,
68 S.E.2d 636, 639
(S.C. 1952) (“Regardless of which party makes the offer or
proposal, its acceptance by the other is necessary to the
creation of the contract.”). In this case, Greenfield points to
20
four pieces of evidence, which he believes demonstrate the
formulation of a binding agreement with Erwin-Penland.
First, Greenfield cites a March 28, 2006 email that
demonstrates the parties discussed forming an LLC with Verizon
Wireless if it agreed to fund the “How Sweet the Sound” project,
50% of which would be owned by Verizon Wireless and 50% of which
would be owned by 1st Approach and Erwin-Penland. Second,
Greenfield relies on two slides from the April 26, 2006
presentation to Verizon Wireless indicating the “How Sweet the
Sound” concept was created jointly by 1st Approach and Erwin-
Penland and that they offered Verizon Wireless 40% of net
revenues if it would agree to fund the project. Third,
Greenfield generally points to evidence that he was responsible
for creating at least 50% of the “How Sweet the Sound” marketing
scheme. Fourth, Greenfield references his work scaling back the
“How Sweet the Sound” proposal to address Verizon Wireless’
budgetary concerns, resulting in a new plan similar to that
which Verizon Wireless and Erwin-Penland later implemented
without his assistance.
Greenfield’s first two pieces of evidence do indicate that
he and Erwin-Penland reached an agreement concerning the concept
they would initially pitch to Verizon Wireless. What is lacking
from the record, however, is any evidence demonstrating that
Verizon Wireless ever accepted their proposed terms. And it is
21
clear that Verizon Wireless’ acceptance of the offer was a
condition precedent to the formation of the LLC which Greenfield
and Erwin-Penland had discussed. 13 See Rickborn v. Liberty Life
Ins. Co., 468 S.E.2d 292, 300 (S.C. 1996) (“A meeting of minds
is based upon the intent and purposes as shown by all the
circumstances.”). Because the necessary condition precedent of
acceptance was never satisfied, no reasonable finder of fact
would conclude the parties reached a binding agreement. See
McGill v. Moore,
672 S.E.2d 571, 575 (S.C. 2009) (“If a contract
contains a condition precedent, that condition must either occur
or it must be excused before a party’s duty to perform
arises.”); Allstate Ins. Co. v. Estate of Hancock,
545 S.E.2d
845, 847 (S.C. Ct. App. 2001) (“[N]o contract arises until the
offer is accepted and all conditions precedent are met.”).
Greenfield’s other evidence, which indicates he was
responsible for developing portions of the “How Sweet the Sound”
project later implemented by Verizon Wireless and Erwin-Penland,
is insufficient to change our analysis. The relevant question
on Greenfield’s contract claim is not whether Erwin-Penland and
Greenfield collaborated in formulating the “How Sweet the Sound”
13
See Alexander’s Land Co. v. M & M & K Corp., 703 S.E.2d
207, 214 (S.C. 2010) (“A condition precedent is an act which
must occur before performance by the other party is due.”
(quotation omitted)).
22
proposal submitted to Verizon Wireless — record evidence makes
clear they did. Rather, it is whether Greenfield and Erwin-
Penland ever reached a binding agreement concerning the
implementation of that scheme. On this record, the district
court did not err in concluding there is insufficient evidence
for a reasonable finder of fact to conclude that an agreement as
to the “How Sweet the Sound” plan’s execution was ever reached.
C. Unjust Enrichment
Under South Carolina law, “quantum meruit, quasi-contract,
and implied by law contract are equivalent terms for an
equitable remedy.” Myrtle Beach Hosp., Inc. v. City of Myrtle
Beach, 532 S.E.2d 868, 872 (S.C. 2000). Obtaining this remedy
requires Greenfield to show (1) he conferred a benefit upon
Erwin-Penland and the third-party defendants, (2) they realized
some value from the benefit, and (3) it would be inequitable for
Erwin-Penland and the third-party defendants to retain the
benefit without paying Greenfield its value. See Gignilliat v.
Gignilliat, Savitz & Bettis, L.L.P.,
684 S.E.2d 756, 764 (S.C.
2009); Sauner v. Pub. Serv. Auth. of S.C.,
581 S.E.2d 161, 167
(S.C. 2003).
The list of benefits Greenfield alleges he conferred on
Erwin-Penland and the third-party defendants includes
23
(1) trademark rights, (2) an Effie Award, 14 (3) the BET
television special, (4) various financial benefits resulting
from the “How Sweet the Sound” series, and (5) intellectual
property related to the competitions. As explained below,
Greenfield possessed no trademark related to the “How Sweet the
Sound” concept; he was therefore unable to confer such a benefit
on Erwin-Penland and the third-party defendants. See infra Part
IV.D. We further conclude that Greenfield cannot equitably take
credit for “conferring” critical and financial success on the
“How Sweet the Sound” project when he played no role in the
execution and production of the work. 15
That leaves Greenfield’s argument that he contributed
valuable intellectual property to the project in conceptualizing
14
In 1968, the American Marketing Association established
an annual awards program known as the “Effie Awards” to
recognize the most effective advertising efforts in the United
States.
15
The district court correctly found that
[b]y his own admission, Greenfield has not expended
‘any time or effort having the concerts go forward,’
had no involvement in the ‘day-to-day’ operations of
the concerts, has not worked on any concert logistics,
has not lined up any churches, booked any venues, and
has not traveled for the project. By contrast, Erwin-
Penland, which has worked on the [“How Sweet the
Sound”] project [from] 2007 through the present, has
been compensated for the actual work it performed on
the . . . project. Such compensation for work
performed does not constitute unjust enrichment.
J.A. at 200.
24
the general marketing scheme Erwin-Penland and Verizon Wireless
later utilized. Given the fact that (1) Greenfield’s only claim
to a protected intellectual property right arises under the Act,
and (2) we have already concluded the “How Sweet the Sound”
concept fails to meet the Act’s definition of a “trade secret,”
see supra Part IV.A, Greenfield is unable to show that he
conferred any intellectual property benefit on Erwin-Penland and
the third-party defendants. See
Sauner, 581 S.E.2d at 167
(requiring a plaintiff “confer[] a non-gratuitous benefit on the
defendant”).
We consequently agree with the district court that
Greenfield failed to demonstrate he conferred a benefit upon the
defendants that would be inequitable for them to keep without
paying its value. Summary judgment in favor of the defendants
on Greenfield’s unjust-enrichment claim is therefore
appropriate. See Othentec Ltd. v. Phelan, 526 F.3d 135, 140
(4th Cir. 2008) (requiring “a nonmoving party” on summary
judgment “produce some evidence (more than a ‘scintilla’) upon
which a jury could properly proceed to find a verdict for the
party . . . upon whom the onus of proof is imposed” (quoting
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 251 (1986))).
25
D. Trademark Cancellation
Greenfield also contends the district court erred in
refusing to cancel Erwin-Penland’s “How Sweet the Sound” mark.
See 15 U.S.C. § 1064(3). This argument is based on Greenfield’s
contention that Erwin-Penland fraudulently failed to reveal in
trademark registration paperwork, filed with the United States
Patent and Trademark Office, that he too had “a credible right
to use the mark.” Opening Br. at 41. We find no merit to
Greenfield’s trademark-cancellation claim.
As this Court has previously explained, “[t]here is no such
thing as property in a trade-mark except as a right appurtenant
to an established business or trade in connection with which the
mark is employed. . . . [T]he right to a particular mark grows
out of its use, not its mere adoption.” Int’l Bancorp, LLC v.
Societe des Bains de Mer et du Cercle des Etrangers a Monaco,
329 F.3d 359, 364 (4th Cir. 2003) (quoting United Drug Co. v
Theodore Rectanus, Co.,
248 U.S. 90, 97 (1918)) (emphasis
added); see also Sengoku Works Ltd. v. RMC Int’l, Ltd.,
96 F.3d
1217, 1219 (9th Cir. 1996) (“To acquire ownership of a trademark
it is not enough to have invented the mark first or even to have
registered it first; the party claiming ownership must have been
the first to actually use the mark in the sale of goods or
services.”) (emphasis added).
26
Nothing in Greenfield’s Opening Brief, or the record,
suggests he ever used the “How Sweet the Sound” mark in
commerce. 16 See Opening Br. at 42-42. Therefore, Greenfield
failed to establish the necessary factual predicate for his
trademark-cancellation claim. See Gen. Healthcare Ltd. v.
Qashat, 364 F.3d 332, 335 (1st Cir. 2004) (“Trademark rights may
arise under either the Lanham Act or under common law, but in
either circumstance, the right is conditioned upon use in
commerce.”) (emphasis added). We accordingly uphold the
district court’s grant of summary judgment in favor of Erwin-
Penland. See Celotex
Corp., 477 U.S. at 323 (“[A] complete
failure of proof concerning an essential element of the
nonmoving party’s case necessarily renders all other facts
immaterial.”).
V.
For all of the foregoing reasons, we affirm the judgment of
the district court.
AFFIRMED
16
We decline to address the additional arguments raised in
Greenfield’s Reply Brief, as “arguments not specifically raised
and addressed in opening brief, but raised for the first time in
reply, are deemed waived.” Moseley v. Branker, 550 F.3d 312,
325 n.7 (4th Cir. 2008).
27
GREGORY, Circuit Judge, dissenting in part:
This case is about just compensation for an inventor of a
marketing scheme who was later cut out of the deal by two
entities that had a long-standing relationship with each other:
Verizon and its advertising agency of record, Erwin-Penland
(“EP”). The majority takes the case away from the jury,
concluding that no rational trier of fact could find the
inventor, Greenfield, had taken efforts reasonable under the
circumstances to protect the scheme’s secrecy. Such a
conclusion is premature. There is a rich record with details
pointing in both directions regarding Greenfield’s efforts to
protect his ideas, with both copyright and confidentiality
notices, including one that was specifically removed by EP
without Greenfield’s permission, that indicates while the
arguments in his favor may ultimately be overcome, a jury should
at least have been allowed to view his efforts.
There are three additional points that the majority
overlooks. First, the majority ignores a proposition advanced
by the very treatise it cites: that disclosure to prospective
clients in the advertising context does not necessarily vitiate
secrecy, but rather may, in fact, be reasonable. Second, the
majority assumes without record support that other advertising
agencies were competitors. These agencies may well have been
collaborators whose roles were to take over portions of the plan
28
that could not be executed by EP and 1st Approach, meaning their
presence is a fact the jury has a right to consider and
ultimately discount. The majority thus skews this fact in the
light most favorable to the movants. Finally, the argument that
Greenfield disclosed some secrets to Captain D’s is irrelevant
because these were not the same secrets presented to Verizon, in
particular they did not include the so-called Pastor Packet,
which was an idea unique to the proposal drafted for the
wireless giant. For these reasons, I respectfully dissent as to
the trade secret cause of action. I concur in the remainder of
the majority’s opinion, and do not discuss it here.
I.
Unless otherwise noted, all of the following facts are
uncontested. I relate them here because there are several
important points that the majority omits.
Jeffrey Greenfield is the sole employee of two marketing
companies, 1st Approach and Buzznations. These companies
specialize in branded entertainment: the combination of a brand
with a live event synthesized with internet strategies, word-of-
mouth, grassroots “buzz” marketing, and traditional print and
broadcast media. In addition to being the principal at both
companies, he gives lectures around the country. At one of his
lectures, he met Joseph Erwin, the president and founder of EP,
29
a regional advertising agency located in Greenville, South
Carolina. 1 After hearing his talk about branded marketing, Erwin
approached Greenfield and suggested that the two collaborate.
1st Approach and EP pursued an account with Captain D’s, a
seafood restaurant chain primarily located in the South, to be
what is known in the industry as the “agency of record.” There
is hot dispute over who first originated the concept, 2 but the
two parties agree that the advertising campaign to Captain D’s
centered around the production of a marketing campaign called
“Amazing Grace,” after the hymn. The campaign was designed to
be a reality television series modeled on the show American Idol
in a competition for the best church choir in America.
There was no non-disclosure agreement (“NDA”) between the
parties. Nevertheless, the two had extensive collaboration
including conference calls, meetings, and materials sharing.
The information Greenfield transmitted to EP, in the form of
PowerPoint slides as part of a presentation “deck,” was under
explicit confidentiality provisions. Specifically, the
1
EP was purchased by Hill Holliday Connors Cosmopulos,
Inc., a national advertising agency that is owned by Interpublic
Group.
2
Greenfield testifies that it was his idea to have the
gospel choir competition. In contrast, Erwin testifies that
someone on his team – who used to be a political operative in
the democratic South – had the idea of using churches and faith-
based singing to bring the communities together.
30
disclaimer on the slides presented to Captain D’s read: “[t]he
ideas and concepts contained within this document are the sole
and confidential property of 1st Approach, LLC and will not be
shared with any other agency or utilized without prior written
consent.” J.A. 1375.
After Captain D’s turned down the bid, 1st Approach and EP
decided to market it elsewhere. EP was the ad agency of record
for Verizon. Verizon was EP’s top revenue-generating client and
had been for some number of years. EP had initial discussions
with Verizon about potentially developing the “Amazing Grace”
concept, which later became known as “How Sweet The Sound”
(“HSTS”), after the second line of the song, for the wireless
company. Verizon was trailing its competitors in the African
American community, with only 17% of market-share as opposed to
25% overall, and needed a marketing strategy to reach this
demographic.
When EP initially presented the HSTS idea in December 2005
to Verizon, it labeled the idea “Confidential and Proprietary
Material by [EP].” J.A. 1577. Like the Captain D’s disclaimer,
the material read “[u]se, disclosure or distribution of this
material is not permitted to any unauthorized persons or third
parties except by written agreement.” Id. The regional Verizon
employees passed on the information to Verizon’s Chief Marketing
31
Officer, Stratton, without the knowledge or consent of
Greenfield.
After the December 2005 pitch, in which Greenfield did not
participate, EP followed up with an April 2006 presentation.
The contents of this presentation, a 30-plus PowerPoint slide
deck, lie at the heart of the dispute, because Greenfield
concedes in his deposition that the trade secrets in question
were contained therein. 3 As part of the presentation, Greenfield
came up with numerous ideas he claims were trade secrets
including tax strategies and the so-called Pastor Packet, which
was a direct mailing bundle sent to church preachers and choir
directors that could be used to rope their congregations into
signing up for Verizon subscriptions. Importantly, these
secrets differ markedly from the information that was submitted
to Captain D’s, both in kind and in quantity, with the Pastor
Packet being the most obvious example.
In the lead up to the April 2006 presentation, Greenfield
and EP exchanged many emails and also participated in numerous
3
Greenfield’s reply brief alleges that there were trade
secrets beyond what were contained in the April 2006 pitch at
which other advertising agencies were present. (Appellant’s
Reply Br. at 27.) It is theoretically possible, then, that some
of the secrets may not have been adequately protected, whereas
others were. The majority does not consider this point. I need
not express an opinion on their scope, however, as there are
enough facts on this record for a jury to be able to consider
the secrets even if they are limited to the April 2006 deck.
32
conference calls with each other. On March 13, 2006, Greenfield
drafted a budget that he sent to EP detailing the projected
costs of HSTS. Verizon ultimately did not rely upon this budget
– it went with a scaled-down version of the idea – but it did
pick up the HSTS program and execute it in Memphis, Tennessee as
a test market. The parties did not discuss what would happen if
Verizon did not accept the deal, or as here accepted it, but in
modified form. Greenfield, however, registered his idea with
the Writer’s Guild of America on February 15, 2006, with
ownership vested in himself and EP.
At the April 2006 presentation to Verizon, Greenfield spoke
only briefly, for as short as five minutes, and the people at
Verizon do not remember him independently of this lawsuit.
Nevertheless, the “deck” identified him and 1st Approach as the
co-creators of the HSTS idea and included a copyright notice
from EP and 1st Approach. At the meeting, at least one other
advertising agency was present and possibly more. The deck was
not marked “confidential.” The record does not specify whether
the advertising agencies were competitors or potential
collaborators to 1st Approach or what the relationship was
between Verizon, EP, and the agency or agencies. See J.A. 494-
500 (discussing the role of the respective advertising
agencies). None of the people from advertising agencies or
33
other attendees at the meeting were asked to sign a
confidentiality agreement.
Greenfield was ultimately cut out of the process after the
April 2006 pitch. In the two-month period following the
presentation, he worked with EP to fine tune the proposal,
scaling it back to reduce the television aspect since Verizon
determined that aspect was not within its “core competency.” On
June 9, 2006, Greenfield participated in a conference call with
EP in which Erwin affirmed the “partnership.” The parties
agreed that Greenfield would have to downsize the proposal to
fit Verizon’s needs. On June 19, 2006, Greenfield submitted his
final work-product to EP, reducing the cost of the budget to
$5.4 million. On November 22, 2006, Greenfield wrote to EP and
asked whether Verizon had approved or turned down HSTS and said
that if they had turned it down, he would like to shop around
the idea to other potential clients. Allen Bosworth of EP
responded by saying that the idea was “still being looked at” by
Verizon and that Yahoo! Music was very interested in the deal.
J.A. 1598. After that, Greenfield emailed EP on January 26,
2007, March 29, 2007, and July 26, 2007, but EP failed to
respond.
EP claims that the reason it ceased to do business with
Greenfield is because he was the “television man”; that if
Verizon decided it did not want to do that component of the
34
advertising campaign, then it could simply eliminate him.
However, the record shows that Verizon did adopt a proposal that
was strikingly similar to Greenfield’s original idea.
Specifically, in conjunction with EP and other advertising
agencies, Verizon in both 2008 and 2009 produced eleven events
and a final competition, a one-hour documentary film, and a one-
hour televised finals competition that aired on the Gospel Music
Channel. According to Greenfield, the marketing campaign has
been a financial boon to both Verizon and EP, substantially
creating inroads into the African American community. The
campaign for HSTS ultimately received an Effie Award,
essentially the equivalent of an Oscar within the advertising
community. EP also received trademark registration for HSTS.
II.
There are three important inquiries that must be decided.
First, as a threshold matter, is there a trade secret? Second,
if there is a trade secret, was it adequately protected? Third,
if it was adequately protected, was it improperly taken? The
first inquiry, one that is assumed though not decided by the
majority, is whether Greenfield has a protectable interest to
begin with under South Carolina Code § 39-8-20(5). Because the
answer is not clearly established, I would certify it for the
South Carolina courts.
35
The Act defines trade secret to include “a formula,
pattern, compilation, program, device, method, technique,
product, system, or process, design, prototype, procedure, or
code.” S.C. Code Ann. § 39-8-20(5)(a). It goes on to specify
that:
[a] trade secret may consist of a simple fact, item,
or procedure, or a series or sequence of items or
procedures which, although individually could be
perceived as relatively minor or simple, collectively
can make a substantial difference in the efficiency of
a process or the production of a product, or may be
the basis of a marketing or commercial strategy. The
collective effect of the items and procedures must be
considered in any analysis of whether a trade secret
exists and not the general knowledge of each
individual item or procedure.
Id. at (5)(b). Although there is little to no caselaw on the
issue, it appears from the statute’s text that a marketing
strategy that consists of disparate ideas woven together can be
a trade secret.
Verizon argues that there is nothing protectable contained
in the April 2006 slides. Specifically, Verizon claims that
because the individual elements of the trade secret are in the
public domain there is no trade secret. The district court
seemed to agree with this proposition, holding that “[t]he
concepts themselves are generalized principles that are well-
known in the advertising and marketing industries and are
readily ascertainable by others.” J.A. 165-66. However,
neither Verizon nor the district court cited any authority to
36
support their proposition that because some elements of a
marketing strategy are public, their “collective effect” cannot
constitute a trade secret.
Both the text of the statute as well as what little law
exists on the topic seem to go in the opposite direction. That
is to say, even if elements of the trade secret are public, if
the particular alchemy behind the item as a whole is not, then
it is considered protectable. Greenfield uses the analogy of a
Mrs. Fields cookie; general recipes for chocolate chip treats
are common, but the recipe specific to Mrs. Fields is still
considered a trade secret. Several cases support his point.
See, e.g., Lowndes Products, Inc. v. Brower, 259 S.C. 322, 328
(1972) (“A trade secret can exist in the unique combination of
otherwise known components; although each of its parts, by
itself, may be in the public domain, the unified process, design
and operation of the combination may be the essence of the
secret.”); Servo Corp. of Am. v. General Elec. Co.,
393 F.2d
551, 555 (4th Cir. 1968) (a litigant may not “avoid the
consequences of the breach of confidence by piecing together in
retrospect bits of information which had been disclosed in a
variety of places and which as a combination were not clearly a
matter of public knowledge.”); Elizabeth Carpenter, 20 S.C. Jur.
Intellectual Property § 74 n.3 (2010) (collecting cases); Louis
Altman & Malla Pollack, 2 Callman on Unfair Competition,
37
Trademarks, and Monopolies § 14:22 (2008) (“The internal facts
of a business . . . [t]he subject matter is not necessarily
new, novel or unique; it may be something which, when connected
with a known factor, may be so valuable to a business that its
continued concealment from others is of paramount importance.”).
However, general business know-how is not protected. Altman &
Pollack, supra, § 14:22. Similarly, marketing strategies that
are commonly employed are not protectable. Id. 4
Greenfield alleges that the particular combination of his
marketing plan, with judges selecting the best choirs after they
submit short segments, text message voting, and audience
participation, constituted the essence of his secret. Even
though there are particular elements that are within the public
domain, there are kernels of ideas that are both original and
unknown, and as a result not readily ascertainable by proper
means. Specifically, the idea of the Pastor Packet – which was
utilized by Verizon to outreach to ministers and choir directors
– is an idea original to Greenfield that was ascertainable only
through his private presentation. Thus, while in retrospect
4
It is also important to note that South Carolina has no
“novelty” requirement, unlike other jurisdictions such as New
York and California that require the combination to be new, much
like a patent, must not be “obvious.” The district court seemed
to impose just such a requirement, but I find that to be
unsupported by South Carolina law.
38
some of these ideas may be self-evident, at the time they were
created they were not.
More importantly, however, even if we were to conclude that
the April 2006 presentation contained no trade secrets because
the individual elements were “readily ascertainable,” the
existence of a trade secret is generally one of fact left to the
jury, not for the judge, though a few courts consider the issue
to be a mixed question and a small minority consider it to be an
issue of law. Louis Altman & Malla Pollack, 2 Callman on Unfair
Competition, Trademarks and Monopolies § 14:27 ns.61-63 (Supp.
2010-2) (collecting cases). South Carolina has not weighed in
on the issue and there are no cases that I have uncovered from
this jurisdiction addressing the point. I would thus certify
the issue to the South Carolina courts.
III.
The next question is whether Greenfield took adequate steps
to protect his trade secret. The district court granted summary
judgment on the basis that Greenfield failed to adequately
protect his secrets because he disclosed them at a business
pitch to Verizon and the business pitch included third-parties:
other advertising agencies whose role in the process is
unspecified. The majority agrees and concludes that no
reasonable jury could find otherwise. I disagree. It is
39
striking to me, for instance, that Greenfield did place
confidentiality notices on his materials – notices that were
only subsequently removed by EP. I do not believe that EP’s
unilateral actions should vitiate efforts to protect secrecy nor
that a reasonable jury should be foreclosed from agreeing.
Under South Carolina law, the owner of a trade secret must
show that she or he made “efforts that are reasonable under the
circumstances to maintain its secrecy.” S.C. Code Ann. § 39-8-
20(5)(a)(ii). Thus, “[o]ne may not claim as a trade secret
information ‘completely disclosed by the goods one markets’” or
“information that has been disclosed to the public in a way
which makes ‘the “secret” so obvious as to render meaningless’
any claim of confidentiality.” Carpenter, supra, at § 74.
Nevertheless, “courts have recognized that some disclosure is
necessary for enjoyment of the benefits of a trade secret and
that not every disclosure effectively destroys secrecy.”
Id. A
quintessential example of protected disclosure is a pitch to
potential customers.
Id. at n.7 (citing ILG Indus., Inc. v.
Scott,
49 Ill. 2d 88, 94 (1971)). Most importantly, like the
question of whether or not a trade secret exists as a threshold
matter, the question of adequate protective measures is, at
least under Fourth Circuit caselaw, one of fact. Trades Corp.
v. Guy F. Atkinson Co..
996 F.2d 655, 664 (4th Cir. 1993)
(analyzing a Maryland law that, for our purposes, is identical);
40
Altman & Pollack, supra, § 14:26, n.27 (collecting cases).
Indeed, it is a rare case where summary judgment should be
granted on this issue because “the answer depends on a balancing
of costs and benefits that will vary from case to case and so
require estimation and measurement by persons knowledgeable in
the particular field of endeavor involved.” Rockwell Graphic
Systems, Inc. v. Dev Industries, Inc., 925 F.2d 174, 179 (7th
Cir. 1991). Factors that should be considered by a jury in
evaluating secrecy include, according to the Restatement of
Torts:
(1) the extent to which the information is known
outside of his business; (2) the extent to which it is
known by employees and others involved in his
business; (3) the extent of measures taken by him to
guard the secrecy of the information; (4) the value of
the information to him and to his competitors; (5) the
amount of effort or money expended by him in
developing the information; (6) the ease or difficulty
with which the information could be properly acquired
or duplicated by others.
Restatement (First) of Torts § 757, cmt. b (1939).
In the instant matter, these factors suggest that there was
enough of a track record for the jury to be able to hear the
case. First and foremost, the pitch was not open to the general
public; it was a closed setting and the information was thus not
known outside the business. While it is true other advertising
agencies may have been there, the precise nature of the
relationships is not fleshed out by the record. Indeed, it is a
41
fact that can be spun in many directions, and, according to
summary judgment standards, deserves to be construed in
Greenfield’s favor. These agencies may or may not have been
competitors looking to poach the idea from EP and 1st Approach,
or they may have been collaborators that would be brought in to
handle parts of the deal that were beyond the competencies of EP
and 1st Approach. They may have been agents of Verizon, and
they may have had contractual relationships with EP. To rest
the entire decision on this point seems to me a thin reed
indeed. I think it would be far better to allow the jury to
weigh and consider this in addition to other evidence at trial.
The majority also makes much of the disclosure to Captain
D’s, but there are two responsive points. First, as stated
above, disclosure to potential customers is a protected
activity. Second, the content of the secrets that were
disclosed to Captain D’s differs from the content of the trade
secrets – in particular the Pastor Packet – that made up the
idea Greenfield claims Verizon misappropriated. Thus the
majority seems to be comparing apples to oranges.
Next, even if the other advertising agencies or Captain D’s
were competitors as the majority simply assumes without support,
the deck said that it was copyrighted to EP and 1st Approach.
1st Approach also had confidentiality notices on materials.
J.A. 910; J.A. 941; J.A. 1061-64; J.A. 1186; J.A. 1375
42
(including information that was in talks and Captain D’s pitch
and confidentiality notices from EP on their own behalf).
Indeed, the confidentiality notices that were lacking on the
final deck were, according to Greenfield, removed without his
consent. (Appellant’s Br. at 36-37.) I do not believe that it
is appropriate to hold that EP’s unauthorized and unilateral
efforts vitiate Greenfield’s protective efforts or render them
insufficient as a matter of law.
While a business pitch may be “speculative,” at least
according to Verizon and EP, it arguably does not allow the
customer to appropriate the ideas in the pitch without paying
for them. Any disagreement over the function of business sales,
and precisely how confidential they are intended to be and
actually were, is further justification for vacating summary
judgment and allowing the matter to go to trial.
The contractual relationship between Verizon and EP also
militates against the degree of disclosure necessitated; because
the two companies had a very close working relationship and
Verizon was EP’s biggest client, it is within the purview of the
jury to find that secrets might fall within their legal
relationship. More specifically, the jury could determine an
expectation of secrecy was part of the overall relationship
between the two companies. See, e.g., Burten v. Milton Bradley
Co., 763 F.2d 461, 463 (1st Cir. 1985) (“A confidential
43
relationship generally arises by operation of law from the
affiliations of the parties and the context in which the
disclosures are offered . . . a confidential relationship
typically will be implied where disclosures have been made in
business relationships between employers and employees,
purchasers and suppliers, or prospective licensees and
licensors.”) (internal citations omitted).
Furthermore, the fact that Greenfield himself kept the idea
for the series a secret is telling. He waited after being
assured that Verizon was still considering the pitch instead of
taking it to other potential customers, suggesting he viewed the
matter as both secret and proprietary.
Finally, Verizon points to the fact that there was no NDA
as an example of why Greenfield failed to take reasonable
efforts to protect his material. I strongly caution against
placing too much reliance on the existence of an NDA. While
indicative of secrecy, it is no talisman. Altman & Pollack,
supra, § 14:26 (noting four factors, of which an NDA is only
one). Indeed, according to the treatise on South Carolina law
cited by the majority, a confidential relationship may be
implied from the circumstances of the disclosure rather than be
in the form of an express agreement, as mentioned previously.
Carpenter, supra, at § 76 (“Written agreements are not, however,
essential to protect secret information disclosed to employees
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or others in every case. The required agreement may be implied
by the confidential relation itself.”). Thus, I believe there
are enough facts for a jury at least to be able to evaluate this
issue for itself.
IV.
Last, there is the question as to whether the secret was
indeed misappropriated if it did exist in the first place. The
district court held that it was not; even if the materials were
confidential, it ruled, it had not been acquired by “improper
means.” Under South Carolina law, “improper means” means
“theft, bribery, misrepresentation, breach or inducement of a
breach of a duty to maintain secrecy, duties imposed by the
common law, statute, contract, license, protective order, or
other court or administrative order, or espionage through
electronic or other means.” S.C. Code Ann. § 39-8-20(1)
(emphasis added). The district court ruled that because Verizon
did not consider the material confidential, a fortiori it could
not have been acquired through improper means. I disagree.
Verizon knew that Greenfield had a role in formulating the
marketing strategy, as evidenced by 1st Approach’s inclusion in
the 2006 deck, and a reasonable jury could find that Verizon
intentionally induced EP to breach its duty of secrecy and cut
45
him out from the deal. This is true regardless of whether or
not key Verizon officials knew specifically who Greenfield was.
V.
For the foregoing reasons, I affirm in part and dissent in
part.
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