Federal Court Issues Summary Judgment In Favor Of Retail Defendant In Alleged Trade Secret Misappropriation Of A CBD Cream Formula

• Published date: 03 December 2021
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Robert Milligan and Meghan McBerry

A federal district court recently issued summary judgment in favor of a retail defendant in a trade secret misappropriation case involving the alleged misappropriation of a CBD cream formula. On September 3, 2020, Healthcare Resources Management Group, LLC ("HRMG") filed suit in the Southern District of Florida against several parties, including hemp products retailer Medterra CBD, LLC ("Medterra"), alleging that Medterra misappropriated its proprietary trade secret formula for a CBD cooling cream by selling a product similar to HRMG's cream. On May 14, 2021, Medterra filed an amended motion for summary judgment against HRMG, arguing that HRMG's claims for trade secret misappropriation could not stand, as the partial list of HRMG's ingredients disclosed to it did not constitute a protectable trade secret formula, nor did Medterra "use" or "disclose" any secret formula owned or controlled by HRMG. The court agreed with Medterra, granting its summary judgment motion in full on October 27, 2021. This case serves as an important reminder that trade secret misappropriation claims require proof that a trade secret was either wrongfully acquired, used, or disclosed by the alleged wrongdoer'mere similarity of products is insufficient to succeed on a claim absent these additional elements.

Factual & Procedural Background

The case underlying Medterra's motion for summary judgment is Healthcare Resources Management Group, LLC v. EcoNatura All Healthy World, LLC, et al., in which HRMG sued various defendants, including Medterra, for trade secret misappropriation related to its CBD cooling cream. Specifically, HRMG alleged that Medterra misappropriated its proprietary CBD cream formula which, according to HRMG's complaint, "consists not only of the combination of specific ingredients; it also includes the relative percentages of each individual ingredient and the manner in which the specific amount of each ingredient gets blended with the remaining ingredients to form a finished product."

The relationship between the parties is as follows: Medterra is a hemp-product retailer, which would purchase EcoNatura All Healthy World, LLC's ("EcoNatura") CBD cream from HRMG and resell the product to Medterra's customers. When Medterra and EcoNatura ended their business relationship with HRMG, Medterra began purchasing the CBD cream from EcoNatura directly. HRMG offered to sell Medterra its own CBD cream, but Medterra declined the offer. Notably, at no point did Medterra...