Discussing a Trade Secret during a ZOOM Meeting? Beware!

Smash Franchise Partners, LLC v. Kanda Holdings, Inc. is a case out of the Delaware Court of Chancery that includes an interesting analysis regarding Zoom meetings and Trade Secrets. In a nutshell, Smash (mobile trash compaction business) held a Zoom call with potential franchisees. On that call, Smash had disclosed a bit about its business plan to partner with local waste management companies.

Ultimately, the Court found that Smash failed to establish a reasonable likelihood of success that it had a protectable trade secret in the form of its plan to partner with local waste management companies. Notwithstanding that finding, and for the sake of analysis, the Court went on to analyze whether Smash took reasonable steps to protect its trade secrets.

The Court reasoned that:

1. Smash freely gave out the Zoom information for the Franchisee Forum Calls and the Founder Calls to anyone who had expressed interest in a franchise.

2. Smash used the same Zoom meeting code for all of its meetings.

3. Smash did not require that participants to enter a password and did not use the waiting room feature to screen participants.

4. Anyone who had expressed interest and received the code could join the calls, and participants could readily share the code with others.

Furthermore, the Court went on to explain that Smash did not even follow its own procedures. In particular, Smash was supposed to take roll at the beginning of each call and remove anyone who did not belong, but it did not. In fact, twenty participants who cannot be identified listed to the meetings and there was no evidence that these individuals signed an NDA. Consequently, the Court concluded that because Smash did not take reasonable steps to protect its trade secrets, Smash did not establish a reasonable likelihood of success on the merits of its claim for misappropriation of trade secrets.

This case should be a good wake-up call to all companies now working 100% remote -- familiarize yourself with the confidentiality and security tools put in place by the various virtual meeting rooms being leveraged nowadays. By simply not implementing a security protocol that is built into the virtual meeting platform (ZOOM, TEAMS, GoToMeeting, Webex, etc.), you may unwittingly give away your trade secret rights.