The U.S. Court of Appeals for the Eighth Circuit affirmed a district court’s decision holding that a private equity firm had misappropriated confidential information that had been prepared for a greeting card company.  Hallmark Cards, Inc. v. Monitor Clipper Partners, LLC, Case No. 13-1905 (8th  Cir., July 15, 2014) (Wollman, J.).

The plaintiff, Hallmark Cards, hired a consulting company to conduct research regarding customer behavior in the greeting cards market. The consulting company prepared confidential information in the form of PowerPoint presentations regarding its research and results thereof and delivered to Hallmark.  Later, the consulting company transmitted the same confidential presentations to a private equity firm, Clipper, to aid Clipper in its bid for another greeting card business.  Hallmark sued both the consulting company for breaching its contractual obligations and Clipper for misappropriating Hallmark’s trade secret.  Hallmark settled with the consulting company, but its case against Clipper moved forward.

The district court held that Clipper had misappropriated the confidential material prepared by the consulting company and awarded Hallmark $21.3 million in compensatory damages and $10 million in punitive damages. Clipper appealed.

On appeal, Clipper argued that the PowerPoint presentations that had been held to constitute confidential material and trade secrets could not be considered trade secrets under the Missouri Uniform Trade Secrets Act because Hallmark had published the central conclusions before Clipper had acquired the other greeting card business.  However, the court explained that although Hallmark did publish some general conclusions about the greeting cards market based on information in the PowerPoint presentations, the disclosure never went beyond broad generalities.  The court said that “Hallmark did not publish any of the evidence supporting the conclusion or explain how it had reached this conclusion.  This unpublished evidence might have led another company to reach a different conclusion.”  Clipper also argued that the information contained in the PowerPoint presentations had grown stale in the years that had lapsed between the consulting company’s presentations and Clipper’s use of that same information.  The court did not agree.  “The economic value of the presentations may have diminished in the four years prior to Clipper’s misappropriation, but the paucity of other available information meant that the presentations still provided a valuable source of knowledge about the greeting cards market.”

Finally, Clipper argued the jury verdict gave Hallmark a double recovery because it had already settled a claim against the consulting company and that these two acts created a single injury. The court rejected this argument as well and held that the settlement with the consulting company compensated Hallmark for the transmission of Hallmark’s trade secrets to Clipper and the jury verdict compensated Hallmark for Clipper’s use of those trade secrets in its acquisition of the other greeting card business.

Hallmark Cards, Inc. v. Monitor Clipper Partners, LLC - Trade Secrets / Misappropriation