Daktronics, Inc. v. McAfee
1999 S.D. 113, 1999 S.D. LEXIS 133, 599 N.W.2d 358 (1999)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An idea or concept that is not novel and is comprised of components that are readily available in the public domain does not constitute a protectable trade secret. Combining existing technologies in a way that is within the general skills and knowledge of an industry cannot be protected as a trade secret.
Facts:
- In March 1988, David Baker, a college baseball coach, contacted Daktronics about a business idea.
- In an April 1988 meeting, Baker disclosed his idea to Daktronics: a pitch speed indicator to display the type and speed of a pitched baseball to spectators at a game.
- Daktronics built a prototype for Baker by combining a radar gun (which Baker purchased), a console, and a digital display board, all of which were readily available commercial products.
- Prior to 1988, Daktronics had already utilized similar speed indicators for other sporting events like ski jumping.
- Also prior to 1988, another company had developed and was using a pitch speed indicator in amusement arcades.
- Miles McAfee became Baker's partner, and between 1988 and 1992, they ordered four units from Daktronics and marketed the product.
- In the fall of 1996, Daktronics began independently manufacturing and selling its own pitch speed indicators for use in major league ballparks.
Procedural Posture:
- Daktronics initiated the lawsuit by seeking a declaratory judgment against McAfee in a state trial court.
- McAfee filed a counterclaim against Daktronics, alleging misappropriation of a trade secret, unjust enrichment, conversion, and breach of a fiduciary duty.
- The trial court granted summary judgment in favor of Daktronics, dismissing all of McAfee's counterclaims.
- Miles McAfee and David Baker, as appellants, appealed the trial court's grant of summary judgment to the Supreme Court of South Dakota.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the concept of displaying a baseball pitch's speed and type to spectators using publicly available components constitute a protectable trade secret under South Dakota law?
Opinions:
Majority - Amundson, Justice.
No, the concept of displaying a baseball pitch's speed and type using publicly available components does not constitute a protectable trade secret. To qualify for trade secret protection, an idea must derive economic value from not being generally known or readily ascertainable, and a mere marketing concept or new product idea does not meet this standard. The court reasoned that McAfee and Baker's concept failed this test because it simply combined readily available components—a radar gun, a console, and a display board. This combination was considered to be within the 'realm of general skills and knowledge' of the industry, not a novel invention. Furthermore, the core idea was already in the public domain, as evidenced by Daktronics' prior use of similar technology in other sports and another company's use of pitch speed indicators in arcades. Since the idea was not novel and could be easily duplicated, it was not a protectable property interest.
Analysis:
This decision solidifies the principle that trade secret protection does not extend to general business concepts or the novel application of publicly available technologies. It establishes a high bar for what qualifies as 'secret' and 'not readily ascertainable,' especially within a specific industry. The case serves as a precedent against claims where plaintiffs attempt to protect an idea that is essentially a combination of existing, well-known components. Future innovators in similar situations must rely on patents or contracts for protection, as trade secret law will not protect ideas that are considered part of the industry's general knowledge.
