Wednesday, March 11, 2009

Entrepreneur's Trade Secret Claim Ends Up In the Dumpster (Take It Away v. The Home Depot)

If you're anything like me, at least once every so often you have a fleeting thought that you've stumbled onto a great entrepreneurial idea sure to let your family coast into retirement much earlier than expected. At least in my case, by dinner time I've forgotten what the idea was that got me so energized.

Some folks are more resolute.

Case-in-point: William Vaccaro, Michael Walsh and Royal Murphy. Their idea, hatched in 1996, was conceived by Vaccaro while driving by a lumber yard. The gist of the idea was beyond simple: to rent dumpsters or waste bins to customers from home improvement retail locations. Vaccaro freely admitted the simplicity of his idea, stating it came to him in a matter of minutes.

For the next several years, Take It Away, Inc. (which has produced exactly $0 in revenue) embarked upon what can only be described as an aggressive sales pitch to Home Depot, one of America's ubiquitous retailers. To put it mildly, Home Depot was not enthused at the idea of partnering with Take It Away. Over the course of many years, Take It Away approached a number of managers at Home Depot trying to sell them on the idea. At one point early on, the parties even signed a non-disclosure agreement regarding Take It Away's "waste disposal business."

But after that, Home Depot showed little interest. That said, representatives from the supply store did discuss the possibility of leasing Take It Away space in retail stores to conduct dumpster rentals. However, Take It Away never made any proposals concerning this concept and apparently insisted on a middle-man or brokerage arrangement where it take 90% of any revenue from dumpster rentals and remit 10% to Home Depot.

About a year or so after discussions finally concluded, Home Depot entered into four agreements with other firms for the establishment of "dumpster rental referral programs." The concept was based on the leasing idea Home Depot apparently suggested to Take It Away - basically, to set up space in the store and pay Home Depot a referral fee - and which was rejected or just not pursued at all.

Take It Away, with no history of sales let alone profitability, then sued for damages of $60 million based on a trade secrets misappropriation claim. Not surprisingly, the district court granted summary judgment in Home Depot's favor.

Take It Away's claim stood little chance of success for many reasons. To begin with, Take It Away never protected the information in a commercially reasonable manner; the waste removal proposals were sent to Home Depot employees who refused to sign non-disclosure agreements and the original business proposal was sent to Home Depot before the retailer even signed the first confidentiality agreement back in 1997.

Ultimately, however, the transparent simplicity of the idea doomed Take It Away. Vaccaro testified the concept came to him in a matter of minutes, and the idea was little more than a general marketing idea. Once implemented, the idea could be reverse-engineered by anyone who went to the store and learned that waste removal services could be rented on-site. Virtually nothing could protect the concept once implemented.

Take It Away has filed a notice of appeal to the First Circuit.


Court: United States District Court for the District of Massachusetts
Opinion Date: 2/6/09
Cite: Take It Away, Inc. v. The Home Depot, Inc., 2009 U.S. Dist. LEXIS 14279 (D. Mass. Feb. 6, 2009)
Favors: N/A
Law: Massachusetts

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