Win At All Costs?: A Glimpse Into Trade Secrets In The Sports And Entertainment Industry

It is one of those magical times during the year when sports fanatics can enjoy three major American sports all at the same time: the MLB playoffs are in full swing; the NFL season has finally kicked off; and the NHL saw the puck drop for the first regular season game a couple weeks ago. But between the throngs of fans cheering (or booing) their teams, we at TSW wanted to take a moment to reflect on the sophisticated trade secrets disputes that are at the heart of the sports and entertainment industry.

In recent years, the sports industry has seen trade secrets disputes in areas such as:

• NFL Scouting Grades: In the 2012 case of National Football Scouting, Inc. v. Rang, National Football Scouting, Inc. alleged a sports writer published the scouting grades for 18 college football players who were turning pro. While the sports writer argued the scouting grades were based on subjective opinions rather than facts, the U.S. District Court for the Western District of Washington disagreed.  Instead, the court found that assigning specific grades to prospects constituted information with an independent economic value and therefore, the grades were protectable trade secrets.
• Client Lists: In the 2005 case of Steinberg Moorad & Dunn, Inc. v. Dunn, a prominent sports agency alleged a former partner and five other employees started a competing firm and eventually wooed away almost professional athletes by using their former employer’s client lists. However, the Ninth Circuit held the client lists were not protectable trade secrets because the information was readily accessible to any agent in the industry.  In fact, the NFL Players Association publishes a list of which players are signed to which agents on its website.
• Athletic Apparel: In 2014, Nike sued three former designers who left Nike and began consulting with rival Adidas, alleging the employees had misappropriated trade secrets. These designs included models for team uniforms, basketball shoes, and products for the 2016 European Championships.

Legendary Green Bay Packers coach Vince Lombardi once quipped, “Winning isn’t everything, it’s the only thing.”  An athlete’s intense desire to win may result in a few stolen signs or deflated footballs, but for companies involved in the sports sector, it is more than just about winning the game.  For those companies, winning trade secrets disputes and protecting proprietary information may be the difference between becoming reigning champ or early retirement.