March Madness: Trade Secrets Claims Block Billion Dollar Bracket

For those of us who revel in this time of year as amateur “bracketologists,” last year’s promise of the billion dollar bracket brought an added lottery-like level of fun to the NCAA basketball tournament.  Even though the odds of winning were (as stated by the rules) 1 in 9 quintillion, people believed that there COULD be that one winning bracket – that is, until Memphis beat George Washington University and everyone’s perfect bracket hopes died.

This year, however, it was action in the courtroom—not the basketball court—that dashed the hopes of would-be billion dollar bracket makers.  In a lawsuit filed last March, SCA Promotions, a Texas based company that insures these types of contests, claims that Yahoo had agreed that, in exchange for SCA paying the $1 billion prize in the highly unlikely chance that someone picked the perfect bracket, Yahoo would pay SCA $11 million for incurring that risk.  After Yahoo cancelled the contract on January 27, 2014, it failed to pay the 50% cancellation fee, prompting SCA’s lawsuit.

Yahoo counterclaimed, stating that the billion dollar bracket was in fact a trade secret (part of a “unique promotional concept”), and SCA breached this confidentiality when it approached Warren Buffett and Berkshire Hathaway about the concept.  In its counterclaims, Yahoo alleges that it “painstakingly developed and created” the Billion Dollar Bracket concept, and that SCA, in sharing this information with Berkshire Hathaway and Buffett, broke the confidentiality provision in the agreement between the two parties and disclosed Yahoo’s trade secrets in doing so.

Of course, there are sometimes more than two sides to every story.  According to this Wall Street Journal article, Warren Buffett and SCA’s president play bridge together and they allegedly thought of the billion dollar bracket concept over lunch.  They approached Yahoo about hosting the event, but due to a failure to agree on when to cap the number of participants, Buffett walked away.  SCA then struck its own deal with Yahoo, which later failed.  Meanwhile, Buffett ran into Quicken Loans founder and Cleveland Cavaliers owner Dan Gilbert at an event, and decided to sponsor the bracket challenge together with a participant cap of 15 million.

None of the parties are speaking to the press, but recent accounts indicate that SCA is now seeking Marissa Meyer’s deposition to establish that the head of Yahoo knew that the billion dollar bracket concept was neither a trade secret nor kept confidential, so stay tuned – March might be getting even madder.