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DTM Research, L.L.C. v. AT&T Corp.

United States Court of Appeals for the Fourth Circuit

January 24, 2001, Argued ; March 27, 2001, Decided

No. 00-1450

Opinion

 [***1237]   [*329]  NIEMEYER, Circuit Judge:

DTM Research, L.L.C. ("DTM"), a Maryland limited liability company, commenced this diversity action against AT&T Corporation ("AT&T"), seeking a declaratory judgment, injunctive relief, and $ 24 million in damages. The complaint alleges that AT&T misappropriated DTM's trade secrets during the course of contract negotiations between the two companies involving AT&T's possible employment of DTM's expertise in data mining. During the course of discovery, AT&T issued subpoenas to agencies of the United States and persons who have dealt with the agencies to discover evidence in support of AT&T's hypothesis that DTM's claimed trade secrets related to technology that DTM misappropriated from the United States. When the district court granted the United States' motion to quash the subpoenas, based on the United States' assertion of a "state secrets" privilege, AT&T moved for summary judgment on the ground that the district court's protective order precluded it from defending the case effectively. The district court denied AT&T's motion, but agreed to certify two issues to [**3]  this court under 28 U.S.C. § 1292(b). Although the questions cannot be definitively answered in the absence of fact-finding, we affirm the district court's conclusions at this stage of the proceedings.

In connection with AT&T's interest in efficiently marketing its telecommunications products and services to the rapidly growing work-at-home market by better exploiting its own extensive databases, it entered into negotiations with DTM in early 1995. DTM claimed special knowledge and expertise in analyzing large amounts of data and offered its "Orca Blue" process, which it described as a "new and unprecedented group of methods, techniques and processes for mining and analyzing immense quantities of call detail data, to identify, for marketing purposes, various segments of the population from telephone-call records." Because DTM claimed that its knowledge and information were trade secrets, [***1238]  it demanded that AT&T  [*330]  personnel who would be evaluating "Orca Blue" enter into confidentiality agreements.

AT&T personnel signed the confidentiality agreements and then worked with DTM personnel to set up a demonstration of DTM's data mining techniques in a limited market [**4]  in San Diego. Following the demonstration, AT&T acknowledged that the results were promising. The parties could not, however, agree on a contract because AT&T believed that the $ 24 million asking price was too high and that it would be better served if it used its own in-house capability to complete the task of data mining. AT&T also believed that issues of customer confidentiality counseled against awarding the contract to DTM because the operation of "Orca Blue" might require sharing confidential consumer information with DTM.

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245 F.3d 327 *; 2001 U.S. App. LEXIS 4925 **; 58 U.S.P.Q.2D (BNA) 1236 ***

DTM RESEARCH, L.L.C., Plaintiff-Appellee, and UNITED STATES OF AMERICA, Intervenor-Appellee, v. AT&T CORPORATION, Defendant-Appellant.

Prior History:  [**1]  Appeal from the United States District Court for the District of Maryland, at Greenbelt. Peter J. Messitte, District Judge. (CA-96-1852-PJM).

Disposition: AFFIRMED and REMANDED.

CORE TERMS

trade secret, technology, misappropriation, district court, secret, state secrets, discovery, ownership, secret information, confidentiality, disclosure, subpoenas, improper means, possesses

Antitrust & Trade Law, Intellectual Property, Bad Faith, Fraud & Nonuse, Misappropriation, Torts, Business Torts, Unfair Business Practices, General Overview, Trade Secrets Law, Misappropriation Actions, Labor & Employment Law, Employee Privacy, Invasion of Privacy, Elements of Misappropriation, Trade Secret Determination Factors, Acquisition, Civil Actions, Remedies, Ready Availability, Disclosures, Improper Means, Protection of Secrecy, Existence & Ownership, Definition Under Common Law, Real Property Law, Estates, Present Estates, Fee Simple Estates, Evidence, Privileges, Government Privileges, State Secrets Privilege, Governments, Federal Government, Domestic Security, Procedural Matters