StubHub trade secrets lawsuit rumbles on

An intellectual property lawsuit that accuses StubHub of stealing trade secrets in order to develop its own mobile apps is to be allowed to continue, a California judge has ruled.

The suit, filed in late 2015 by tech holding company Calendar Research, alleged that StubHub employees Michael Hunter Gray, Lisa Dusseault and Lasha Efremidze – the co-founders of a start-up called Calaborate – planned to misuse proprietary data to develop mobile applications for StubHub, including a group-scheduling platform similar to existing Calaborate app called Klutch.

The three, it is alleged, came close to selling Calaborate and Klutch to StubHub, but the deal fell through and the company became insolvent. Gray, Dusseault and Efremidze then worked for StubHub as independent contractors, while all Calaborate assets were ultimately acquired by Calendar. Calendar accuses them the trio of downloading proprietary information that belonged to Calaborate (and therefore Calendar), which they allegedly planned to use to create a similar app for StubHub and its parent company, eBay.

While StubHub won a judgment on 7 August that cleared it of using Calaborate/Calendar’s source code in its own apps, Calendar is to be allowed to push forward with other claims under the Defend Trade Secrets Act (DTSA) of 2016 – including allegations it misappropriated the Klutch source code “in different ways than using the code in its own application” – ruled US district judge for central California Stephen Wilson.

Calendar is allowed to push forward with other claims, including that it misappropriated the Klutch source code “in different ways”

The case has echoes of Wantickets’ 2016–18 lawsuit against Eventbrite, which accused former Wantickets employees Diego Carlin and Barak Schurr of misusing confidential information to direct business from Wantickets to Eventbrite after a deal for the latter to acquire the former fell through.

Calendar’s counsel, Douglas Curran of Pierce Bainbridge, tells Law360 that StubHub and its lawyers “tried to convince the court to sidestep the remaining trade secrets claims, [but] that tactic didn’t work.”

“The evidence we’ve already uncovered shows that StubHub and eBay knew about the scheme to steal our client’s trade secrets, and they actively participated in and encouraged it,” says Curran. “Now, StubHub has to turn over its own documents so we can figure out who exactly knew what, and when exactly they knew it. StubHub and other companies like it need to understand that they can’t take intellectual property from startups without paying for it.”

StubHub’s lawyer, meanwhile, welcomes the judge’s ruling that Calendar “‘must define trade secrets with greater specificity’” if it hopes ultimately to win the case. David M. Grable, of Quinn Emanuel Urquhart & Sullivan, also points to the statement by Wilson that “plaintiff’s ‘vagueness as to the nature of the non-code trade secrets would not create a triable claim under the DTSA.’”

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