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August 13, 2021 | From the blogSports

Baseball Pitching Signs as Trade Secrets? Texas Court to Make the Call

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Former Blue Jays pitcher Michael Bolsinger has not played Major League Baseball since a tough outing against the Houston Astros on Aug. 4, 2017.  Coming in as relief in the fourth inning, Bolsinger gave up four hits, four runs, three walks to the Astros, who eventually went on to win the 2017 World Series.  It was later revealed that the Astros were stealing pitch signs and relaying that information to Astros’ hitters.  Using a television feed from the center field camera, a member of the Astros’ organization saw the sign, determined the incoming pitch, and relayed it to someone in the Astros’ dugout, who banged on a trashcan in a pattern to alert the batter of the pitch.  With the benefit of knowing the incoming pitch, a hitter has a significant advantage. 

Believing that the Astros’ cheating “cost him his job,” Bolsinger sued the Astros alleging that their cheating violated the Texas Uniform Trade Secrets Act (TUTSA).  Bolsinger alleges that the signs used to call his pitches are protected trade secrets, which were willful and intentionally misappropriated because a significant percentage of his pitches to the Astros were precipitated by trashcan banging to signal the incoming pitch.  Thus, an interesting issue in this case is whether a plaintiff can claim trade secret protection when some aspects were displayed in a public setting.  The Texas Court has not made any decisions yet, but there are arguments to be made on both sides.

What Are the Requirements to Show a Violation of TUTSA?

Under TUTSA, a “trade secret” is defined as:

“all forms and types of information, including business, scientific, technical, economic, or engineering information, and any formula, design, prototype, pattern, plan, compilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or suppliers, whether tangible or intangible and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if:

  • the owner of the trade secret has taken reasonable measures under the circumstances to keep the information secret; and
  • the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

To assert a claim under TUTSA, a plaintiff must show 1) the existence of a trade secret, 2) that the trade secret was acquired by the defendant through a breach of a confidential relationship or discovered by improper means, and 3) that the trade secret was used without the plaintiff’s approval or authorization. 

As the name implies, TUTSA is based on the Uniform Trade Secrets Act.  As a point of comparison, New York does not have any statutes covering trade secrets and is one of only two states that have not adopted the Uniform Trade Secrets Act.  Instead, trade secret protection in New York is derived from the common law, and there are similarities to TUTSA.  For example, in New York, a trade secret is defined as a formula, process, device, or compilation which one uses in his business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.  Such information must be in continuous use in the operation of the business rather than used as a single occurrence.  To demonstrate misappropriation of a trade secret, New York requires that the person must have acquired the trade secret through a relationship of trust (such as employment), or through fraud or other improper means, such as theft, bribery, espionage, or hacking.  Misappropriation may also be found where the person obtained the information from another party but was aware of facts that indicated the information was acquired improperly by the other party.

In his complaint, Bolsinger claims that the catcher’s signs were a trade secret and had independent economic value from not being known by the opposing team.  A key issue in the case, however, is whether there were reasonable measures under the circumstances to keep the information secret.  Bolsinger further alleges that reasonable measures customary in the baseball industry were taken, despite the fact that the public can see the signs.

Astros Play Defense

Several defenses have been or are likely to be raised by the Astros.  As noted above, the Astros will likely defend by claiming that the signs were not a trade secret because they are publicly displayed, including to competitors.  Further, they may assert that using television cameras does not constitute an improper means of obtaining the trade secret.  There are also standing and causation issues.  Bolsinger may have to prove that the Astros actually misappropriated the signals, and that he – and not the Blue Jays – owned the signals.  Even if the claim survives these defenses, there is also a question whether Bolsinger can establish that the sign-stealing caused his alleged injury and damages.  Considering his lackluster pitching record, an issue will be whether the alleged misappropriation caused Bolsinger’s MLB exit and damages.

Will Bolsinger Get a Win Here?

It is not clear how the court will rule.  However, regardless of the decision, the court may provide helpful guidance on what constitutes “reasonable measures” to protect a trade secret in Texas.  It is not unusual for a trade secret owner to reveal some confidential information (but still seek to maintain their trade secrets) in the context of business negotiations.  Competitors looking to take advantage of such revealed information could, for example, impersonate a potential customer to obtain pricing and sales data or other sensitive information that are willingly provided.  The Texas court could clarify what actions are required to ensure trade secret protection in these situations.

Another important takeaway is for parties to always consult an attorney regarding the best way to safeguard and/or utilize possible trade secrets to avoid liability.

Photo by NeONBRAND on Unsplash

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