Rivendell Forest Products v. Georgia-Pacific Corp.

[Editor’s Note: The facts recited here are drawn from not only the Tenth Circuit’s decision but also, for completeness, from the 1993 District of Colorado decision.] Rivendell Forest Products (Rivendell) (plaintiff), a reload wholesaler in the lumber industry, purchased lumber from Canadian mills and had it shipped to any one of around 10 lumber yards. Rivendell used a system (the Quote Screen system) to quote lumber prices, i.e., provide immediate final pricing, to its customers. The Quote Screen system pulled information from several databases to integrate various data such as size, type, and location of lumber; freight charges; customer credit information; real-time inventories on distribution facilities; and real-time delivery status on inventory in transit on order with the Canadian mills to instantly calculate a price quote responsive to a customer’s inquiry. Rivendell demonstrated that its Quote Screen system was the only one in the industry that provided immediate final pricing in this manner. This system, according to Rivendell, produced quotes 20 to 30 times faster and generated two to three times more sales over competitors, providing Rivendell a competitive advantage. Timothy Cornwell worked for Rivendell for about three years, during which he supervised employees using the Quote Screen system. Rivendell obtained from all of its employees, including Cornwell, an executed confidentiality agreement promising to keep the Quote Screen system confidential. Rivendell also advised its employees that Rivendell’s business practices were considered trade secrets. After Cornwell left Rivendell, Georgia-Pacific Corp. (GP) (defendant) hired him, and four months later, GP launched its Quick Quote system, which was functionally identical to Rivendell’s Quote Screen system, even though there was no evidence that GP had copied any of Rivendell’s source code. Before hiring Cornwell, GP did not have any integrated quoting system—instead, GP had only various elements scattered among its 100+ offices. Rivendell sued both GP and Cornwell in the United States District Court for the District of Colorado, asserting claims for trade-secret misappropriation, breach of contract, and tortious interference with a contract. The parties cross-moved for summary judgment. The district court held that Rivendell had failed its burden to establish any dispute of material fact on the issue of whether its Quote Screen system was protectable as a trade secret, because Rivendell had not accused GP of misappropriating anything other than unprotectable elements of the Quote Screen system. As a result, the district court granted GP’s motion and denied Rivendell’s motion. Rivendell appealed.