McGuireWoods Trio Discusses Lessons From NBA Star’s Trade Secret Victory in Law360

August 9, 2022

An NBA superstar’s legal triumph over his former marketing agency shows why courts may not buy the argument that public endorsement deals or sports branding ideas are legally protected trade secrets, three McGuireWoods attorneys wrote in an Aug. 3, 2022, article for Law360.

In the article, “Sports Marketing Trade Secret Lessons From NBA Case,” McGuireWoods Houston partner Yasser Madriz and associates Miles Indest and Ryan Frankel analyzed a July 15 decision dismissing a suit Prime Sports Marketing had filed against its former client, New Orleans Pelicans star Zion Williamson, alleging misappropriation of trade secrets.

After Williamson successfully voided his contract with Prime Sports, the agency alleged that its ideas for marketing the athlete’s brand were trade secrets. Several courts have recognized marketing strategies as potential trade secrets, the authors noted, but Prime Sports’ concepts were so generally known and readily ascertainable that a federal judge dismissed all its claims and “essentially scolded” Prime Sports for making general and sweeping allegations of trade secrets.

Williamson’s emphatic victory presents a cautionary tale for companies, the authors explained. At least in the sports world, general concepts publicly discussed or commonly used by other athletes are unlikely to reach trade secret status.

“This case also shows that when companies like Prime Sports Marketing overreach in alleging what information constitutes a trade secret, courts will not hesitate to criticize the potential misuse of intellectual property rights,” the authors wrote. “Instead, companies should consider performing trade secret audits, where experts ensure the companies’ trade secrets are properly identified, protected and valued — long before litigation becomes necessary.”