Can standard pricing information qualify as a trade secret in Utah? General Water Technologies v. Van Zweden Explained

The Utah Court of Appeals addressed whether standard pricing information can receive trade secret protection in General Water Technologies v. Van Zweden, providing important guidance for Utah practitioners on what constitutes protectable trade secrets under the Utah Uniform Trade Secrets Act (UUTSA).

Background and Facts

General Water Technologies sued former employees Van Zweden and Rotzler, who left for competitor Med Water Systems, claiming misappropriation of two trade secrets: (1) the design of a water filtration system and (2) pricing information. After Mayo Clinic switched from General Water to Med Water at significantly lower prices, General Water alleged its former employees used confidential information to undercut bids. A jury found both employees liable for misappropriating both alleged trade secrets.

Key Legal Issues

The court addressed whether sufficient evidence supported finding that both alleged trade secrets met the UUTSA’s requirements: (1) independent economic value from not being generally known or readily ascertainable, and (2) reasonable efforts to maintain secrecy. The defendants challenged the sufficiency of evidence for both elements regarding both trade secrets.

Court’s Analysis and Holding

The court affirmed as to the design secret but reversed regarding the pricing secret. For the design secret, evidence showed General Water spent two years developing a unique compilation of known components arranged to minimize size and maximize reliability. Even though individual components were publicly available, the specific arrangement constituted a protectable compilation. The court rejected arguments that selling machines made the design readily ascertainable through reverse engineering, noting the difficulty competitors would face accessing machines in medical facilities.

However, the pricing secret failed under CDC Restoration precedent. General Water’s pricing consisted of standard calculations—adding component costs, shipping, labor, and travel expenses—with no evidence of unique methodologies or substantial development investment. The pricing was “standard” across all customers, and the billing specialist could not explain unique factors distinguishing it from ordinary industry pricing practices.

Practice Implications

This decision reinforces that compilations of known information can receive trade secret protection if the specific arrangement provides competitive advantage and is not readily ascertainable. However, standard business pricing based on ordinary cost calculations will not qualify absent evidence of unique development processes, substantial investment, or innovative methodologies that distinguish the pricing from standard industry practices.