Magazine article Folio: the Magazine for Magazine Management

Court Case Clarifies Rules on Guarding Trade Secrets

Magazine article Folio: the Magazine for Magazine Management

Court Case Clarifies Rules on Guarding Trade Secrets

Article excerpt

During the wary mating dance that commences when a magazine is offered for sale, publishers can get the willies. After all, they're revealing sensitive and confidential information to outsiders, even to competitors.

"When you're talking to anyone, there's always the chance he or she can use the stuff against you," says Peter Craig, president of the Los Angeles-based Magazine Consulting Group. But there are some steps publishers can take. And a recent court verdict provides some comfort to sellers--while making buyers more wary.

In April, an Arkansas jury awarded $8 million in damages to Little Rock-based Falcon Publications, publisher of a video-store magazine, Take One. Falcon had accused Connell Communications, an International Data Group subsidiary that already published Video Choice, of stealing trade secrets obtained in negotiations to buy Take One and using them to start its own title, Video Event.

Connell argued that the information Falcon claimed as trade secrets -- involving marketing plans and customer lists -- was actually publicly available. Falcon was well aware of Connell's intention to get into the video-store field, and Falcon had refused its "substantial" offer for the title. (In early May, Connell's attorneys asked the court to set aside the verdict, grant a new trial or reduce the $8 million award.)

In general, such cases rarely come to court, say mergers and acquisitions experts. For one thing, it's often hard to prove someone actually used information revealed in negotiations. For another, publishers may have fewer trade secrets than they think. …

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