AirFacts, Inc. v. Diego De Amezaga
909 F.3d 84 (2018)
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Rule of Law:
A unique compilation of publicly available information, arranged through significant effort and expertise to create independent economic value, qualifies as a trade secret under the Maryland Uniform Trade Secrets Act (MUTSA) if the owner takes reasonable measures to maintain its secrecy. A claim is not abandoned through mere omission during closing arguments if it has been consistently pursued throughout litigation.
Facts:
- Diego de Amezaga worked for AirFacts, a developer of airline revenue accounting software, from 2008 to 2015 under an employment agreement that included non-compete and confidentiality clauses.
- While at AirFacts, de Amezaga spent several months creating 'Flowcharts' that compiled and uniquely organized publicly available airline fare data (from ATPCO) to make ticket auditing more efficient.
- De Amezaga also developed 'Proration Documents,' including a spreadsheet and database model, for a new software product AirFacts was creating.
- On his final day of employment, February 13, 2015, de Amezaga emailed the Proration Documents to his personal email account.
- Approximately one month after his employment ended, de Amezaga used his old company credentials to access a cloud storage account and download the Flowcharts he had created.
- De Amezaga subsequently submitted the downloaded Flowcharts to a travel agency as part of a job application.
- Three months after leaving AirFacts, de Amezaga began working for American Airlines, an AirFacts customer, in its Refunds department, a role focused on processing refunds directly to passengers.
Procedural Posture:
- AirFacts, Inc. sued its former employee, Diego de Amezaga, in the U.S. District Court for the District of Maryland, alleging breach of contract and misappropriation of trade secrets.
- The district court held a five-day bench trial.
- During the trial, AirFacts abandoned its claim for conversion.
- The district court entered a judgment in favor of de Amezaga on all remaining counts.
- The district court found that AirFacts had abandoned its breach of contract claim related to the return of company property (Paragraph 4.2).
- The district court also found that the Flowcharts were not trade secrets and that de Amezaga did not breach the non-compete clause of his employment agreement.
- AirFacts, Inc. (Appellant) appealed the district court's judgment to the United States Court of Appeals for the Fourth Circuit.
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Issue:
Does a compilation of publicly available data, arranged into a unique and valuable format through significant employee effort, qualify as a protected trade secret under the Maryland Uniform Trade Secrets Act (MUTSA) if the company takes reasonable steps to maintain its secrecy?
Opinions:
Majority - Judge Agee
Yes, a compilation of publicly available data arranged into a unique and valuable format can qualify as a protected trade secret. The court found that while the underlying airline fare data in the Flowcharts was public, the Flowcharts themselves were a protectable trade secret. A trade secret can exist in a unique combination of components, each of which is in the public domain, if the unified design affords a competitive advantage. Here, de Amezaga’s 'painstaking, expert arrangement' of the data, which incorporated his own knowledge and expertise, gave the Flowcharts independent economic value not readily ascertainable by others. Furthermore, AirFacts took reasonable steps to maintain secrecy by requiring confidentiality agreements, using computer monitoring software, and restricting access to the Flowcharts to only a few employees. Therefore, the district court erred in concluding the Flowcharts were not trade secrets. The court affirmed, however, that de Amezaga did not misappropriate the Proration Documents, as the trial court credibly found he emailed them to himself with authorization to assist the company after his departure. The court also affirmed that de Amezaga did not breach his non-compete agreement because his new role processing passenger refunds was not 'similar to' AirFacts' service of auditing ticket sales for airlines. Finally, the court reversed the district court's finding that AirFacts abandoned its claim regarding the return of company documents, holding that failure to mention a claim in closing argument does not constitute a clear and unambiguous abandonment when the claim was pursued throughout litigation.
Analysis:
This decision strongly reinforces the 'compilation theory' of trade secret law, clarifying that the value of intellectual labor in organizing public information is protectable. It establishes that the 'secret' can lie in the unique combination and arrangement resulting from expertise and effort, rather than in the novelty of the underlying data. The ruling also sets a high procedural bar for finding that a legal claim has been abandoned, requiring a clear, unambiguous act rather than a mere omission during oral argument. This protects parties from inadvertently losing claims due to oversights in court and underscores that a court must address all claims properly raised.
