Social media giant Twitter has accused Meta Platforms of stealing trade secrets to develop its new microblogging site, Threads. In a letter sent on Wednesday, Twitter alleged that Meta had hired former Twitter employees who had “improperly retained” devices and documents from the company. Twitter demanded that Meta stop using the information and assigned these employees to work on Threads intentionally. While it remains uncertain whether Twitter will file a lawsuit, legal experts suggest that Twitter would face significant challenges if it pursues legal action.
The Difficulty of Proving Trade Secret Theft
Many companies have accused their competitors of stealing trade secrets after hiring former employees with similar products. However, proving such claims in court is challenging. According to Polk Wagner, a law professor at the University of Pennsylvania, a company must demonstrate that its competitor took economically valuable information that was kept secret through “reasonable efforts.” The definition of “reasonable effort” is subjective and can be perplexing. Wagner explains that companies must strike a balance between protecting their trade secrets and allowing others to utilize the information.
The Importance of Designating Trade Secrets
Meta’s launch of Threads on Wednesday poses a potential threat to Twitter, which has faced criticism from users and advertisers since Elon Musk acquired the platform. To determine the validity of trade secret theft claims, courts also consider whether a company explicitly communicated to its employees that certain information was classified as trade secrets. According to Sharon Sandeen, a professor at Mitchell Hamline School of Law, companies have lost trade-secret cases when they claimed that all company information was confidential without specifying which information was designated as trade secrets. Clear designation is crucial in establishing the protection of trade secrets.
Experts emphasize that companies often initiate trade-secret cases only to discover that their claims are weaker than anticipated. For instance, the legal battle between Waymo, Alphabet’s self-driving vehicle unit, and Uber Technologies started with allegations of thousands of stolen documents but concluded with a dispute over a small number of files. Uber eventually settled the case for $245 million worth of its shares, just before the trial. While trials in trade-secret cases are rare, settlements are common due to the desire to limit public discussion of sensitive information.
Twitter’s allegations against Meta Platforms for trade secret theft may ignite a legal battle between these social media giants. However, Twitter would face significant obstacles in proving its claims. Demonstrating the theft of economically valuable information and the reasonable efforts made to protect it presents a challenge in such cases. Clear designation of trade secrets and communication with employees are crucial factors in establishing the integrity of a company’s claims. While trials are infrequent, settlements are common in trade-secret cases to prevent further exposure of sensitive information.
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