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Broker Genius, Inc. v. Zalta
Citation: 280 F. Supp. 3d 495Docket: 17-cv-2099 (SHS)
Court: District Court, S.D. New York; December 3, 2017; Federal District Court
Broker Genius, Inc. has initiated legal proceedings against former licensees Nathan Zalta, Michael Shamah, and their company NRZ Entertainment LLC, alleging improper use of their AutoPricer v.3 software to develop a competing product called TickPricer. The claims include misappropriation of trade secrets, copyright infringement, breach of contract, unjust enrichment, and tortious interference with business relations. Broker Genius later added software developer Joseph Bassil and his company Gontham, LLC, to the lawsuit for their involvement in the creation of TickPricer. Broker Genius is seeking a preliminary injunction to prevent the original defendants from using or distributing TickPricer, focusing on trade secret misappropriation under New York law and the Defend Trade Secrets Act of 2016. However, the court found that Broker Genius had not demonstrated a likelihood of success on the merits of its claims, as it routinely disclosed the alleged trade secrets to licensees without requiring confidentiality for user-facing elements of the software. Consequently, the motion for a preliminary injunction was denied. The procedural history includes an initial request for a temporary restraining order, which the court denied in part, although it did issue a TRO preventing the defendants from accessing or disclosing Broker Genius's proprietary information. A detailed hearing was conducted over three days in June to assess the motion for a preliminary injunction. Broker Genius is noted for its significant investment in developing the AutoPricer software, which automates ticket pricing in the multi-billion dollar secondary ticket market. The company was founded in 2013 by Shmuel 'Sam' Sherman, who has a background as a ticket broker. Sherman founded Broker Genius to create software enabling brokers to implement their manual pricing strategies through a dynamic user interface. He identified the necessity for brokers to not only automate pricing but also analyze the market to price their inventory effectively against competitors. At its inception in 2013, no existing software provided these functionalities. Broker Genius spent significant time developing its product, incorporating customer feedback and refining its user interface, resulting in multiple iterations over two years, with the first version released in September 2013 and AutoPricer v.3 launched in July 2015, following an investment of over $4 million. To protect its innovations, Broker Genius filed a patent application published on January 22, 2015 (Pub. No. US 2015/0025918 A1), which details a system for automating the ticket management process, including market trend forecasting and ticket pricing. This system allows brokers to manage their electronic tickets from a single interface, automatically adjust prices based on user inputs, and upload ticket listings to various exchanges in real time. AutoPricer v.3 embodies this functionality. Broker Genius claims that AutoPricer v.3 incorporates fourteen trade secrets allegedly misappropriated by the defendants to develop TickPricer. These trade secrets include the software's application architecture, user experience and interface, and techniques for optimizing pricing calculations and scalability. Dr. Koskinen, an expert for Broker Genius, defined software architecture as the overall organization of a computer system and likened it to the organization of a car's systems. Plaintiff asserts that the architecture of AutoPricer v.3 is linked to the 'Dynamic Automatic Ticket Pricing System' (SC001), described by Dr. Koskinen as the platform for the software. The architecture includes not only the user interface but also the foundational structure of the pricing application and its integration with brokers’ point-of-sale (POS) ticket inventory systems. Broker Genius claims that its trade secrets extend beyond backend structures to include the user-facing UX/UI (SC003), which encompasses design elements, user workflows, and user impressions. The UX/UI features multiple widgets: the 'events list widget' (SC004) for filtering event listings, the 'inventory list widget' (SC005) for managing ticket inventories, the 'pricing widget' (SC006) for setting pricing rules based on competitors, and the 'groups widget' (SC012) for bulk pricing rules. These widgets work together to enhance software functionality. Additionally, Broker Genius claims trade secrets related to scalability solutions for dynamic pricing software, which ensures the software can handle increasing user demands. Dr. Koskinen explained that scalability involves algorithms that adjust pricing frequency based on event urgency. AutoPricer v.3 employs varied cycling speeds for different event tiers, prioritizing urgent changes while managing concurrent price calculations to avoid data conflicts. This architecture supports a growing user base by efficiently processing inputs and calculations. Broker Genius employs multiple strategies to protect its trade secrets. Employees are required to sign a confidentiality provision in the Employee Handbook, which categorizes company intellectual property, including technology and products, as proprietary. Additionally, employment agreements include nondisclosure clauses. Upon termination, employees immediately lose access to confidential information. An independent audit by Codete confirmed no significant security flaws in Broker Genius's backend architecture. While Broker Genius has publicly shared past versions of its AutoPricer product, it restricts access to the user interface of AutoPricer v.3, promoting it through broad marketing tactics, such as cartoon videos instead of detailed demonstrations. Sales presentations focus only on general concepts without revealing the software's architecture or user experience intricacies. Despite these marketing precautions, users of AutoPricer v.3 have ongoing access to its UX/UI through direct interaction and extensive training provided by Broker Genius. This training includes a 30-day trial period, user guides, tutorial videos, and ongoing updates about new features. Broker Genius also shares operational details like price update frequencies with customers. Access to these trade secrets is granted only to customers who agree to usage restrictions and create password-protected accounts, affirming their acceptance of the company's terms of use. Terms of Use for AutoPricer v.3 apply to all users during a 30-day trial. Upon acceptance of these terms, users are entitled to unlimited training sessions. The Terms explicitly prohibit modification, adaptation, sublicensing, reverse engineering, or creating derivative works from the Site or Apps. Approximately 60% of Broker Genius customers, who use AutoPricer on a month-to-month basis, are governed solely by these Terms. For customers entering longer-term contracts, a Service Agreement must be signed, which includes similar prohibitions against reverse engineering, copying, or distributing the Software. This Agreement also acknowledges Broker Genius’s ownership of the source code as proprietary trade secrets and includes a merger clause stating it supersedes prior communications, with obligations surviving termination. NRZ Entertainment, LLC, owned by Nathan Zalta and Michael Shamah, became aware of Broker Genius in May 2015 and initiated contact for a demonstration of AutoPricer v.3. Shamah signed NRZ for a 30-day trial of the full-service subscription and accepted the Terms of Use during account creation. NRZ authorized Broker Genius to manage its ticket pricing under this model, but after expressing initial dissatisfaction, they undertook a second trial in November 2015. Following this, NRZ switched to a self-service subscription at the end of December 2015, utilizing AutoPricer v.3 for their ticket pricing. They subsequently signed a one-year license agreement on February 22, 2016, with training sessions provided by Broker Genius throughout their engagement. Zachary Ellman, Vice President of Sales at Broker Genius, conducted an extensive six-hour training session for NRZ on the AutoPricer v.3 software shortly after NRZ’s trial service began. Ellman maintained ongoing discussions with NRZ during their trial and subscription period, indicating that Broker Genius typically offers continuous support, although the level of training provided to NRZ was notably higher than usual. Concurrently, NRZ was developing its own ticket pricing software, TickPricer, while using AutoPricer v.3. Although there is no evidence that NRZ accessed Broker Genius’s source code, they closely modeled TickPricer after AutoPricer v.3 and relied on their knowledge of Broker Genius’s product for development. Shamah, a key figure at NRZ, stated that the decision to create TickPricer stemmed from dissatisfaction with Broker Genius's execution of a promising concept. By June 2016, NRZ experienced financial losses due to bugs in AutoPricer v.3, which led to improper ticket pricing against its own inventory, effectively causing NRZ to compete with itself. To develop TickPricer, Zalta, another NRZ executive, contacted a developer named Saqib and sent him a detailed PDF containing annotated screenshots of AutoPricer v.3, explaining various interface elements and intended functionalities. Although Saqib was not hired immediately, Zalta later posted a job on Up-Work.com looking for a software developer. Joseph Bassil responded to this posting, and Zalta subsequently sent him a comprehensive nine-page PDF titled "Pricing Tool Directions," which similarly contained annotated screenshots from AutoPricer v.3, outlining the project requirements and expectations for implementation. The document sent by Zalta to Bassil comprised nine pages, including four pages of annotated screenshots of the AutoPricer v.3 user interface, detailing required features for the pricing software Bassil was to develop. It also included two pages of annotated screenshots of the SkyBox POS API and two pages from a StubHub event page. Notably, there were no explicit references to Broker Genius or its products; Zalta referred to AutoPricer v.3 as an unnamed "sample pricing software." Zalta took steps to obscure Broker Genius's client support number from the last screenshot to conceal its source. He claimed to provide the PDF to assist Bassil, who lacked experience in the ticket broker industry, by indicating that necessary information would come from SkyBox and StubHub. However, the court found Zalta's testimony unconvincing, suggesting he intended for Bassil to replicate AutoPricer's functionalities. Bassil was hired by NRZ on August 16, 2016, shortly after responding to Zalta's job offer. He developed TickPricer in four months, despite it being a part-time project, and delivered a functioning version by late December 2016. NRZ compensated him $6,000 initially and continued to pay between $500 and $1,000 weekly for ongoing maintenance. During testimony, Bassil, Zalta, and Shamah denied relying on NRZ's knowledge of AutoPricer v.3 for TickPricer’s development. Bassil attributed the ease and cost-effectiveness of his work to a pre-existing application framework, a generic user interface, and prior experience with a similar product. Bassil claimed he did not pay much attention to the PDF Zalta provided since he found no need to reference it, except for the SkyBox POS images to determine necessary data points. Both Zalta and Bassil denied that Bassil used AutoPricer v.3 or that Zalta demonstrated its functionality to him. However, the court deemed this testimony implausible given the annotated screenshots and the extensive communication between Zalta and Bassil throughout TickPricer's development, which included discussions about potentially granting Bassil access to AutoPricer v.3. On August 16, 2016, Zalta awarded the bid to Bassil and inquired about the next steps, offering to discuss the software's features. The following day, Zalta suggested a Skype call to share screens, to which Bassil agreed. Both parties later testified they could not recall if they shared screens but indicated that any discussion would have focused on the POS software, not AutoPricer v.3. One month later, on September 14, Bassil requested access to the current repricing tool, AutoPricer v.3, to create a familiar software for Zalta. However, Zalta did not respond, preferring Bassil to develop a unique tool and expressing concerns about potential conflicts with Broker Genius agreements. Zalta was cautious due to NRZ still being a Broker Genius client while developing TickPricer. In October 2016, after receiving a non-functional version of TickPricer from Bassil, Zalta modified it using elements from AutoPricer and returned it. On December 8, 2016, Zalta received information from NRZ regarding AutoPricer’s pricing cycles and forwarded it to Bassil the same day. Following the operational launch of TickPricer in December 2016, NRZ canceled its AutoPricer license a month early, yet continued to receive updates about Broker Genius software. Concurrently, Elliott Shamah, a part-time ticket broker and relative of a defendant, became a Broker Genius client and forwarded a pricing sheet to NRZ on January 19, 2017. In March 2017, Elliott Shamah communicated with his brother Michael Shamah at NRZ, forwarding emails from Broker Genius regarding feature updates and a marketing initiative, expressing that Broker Genius was "definitely starting to feel the pressure." Michael denied that Elliott worked for NRZ or was asked to share Broker Genius information but acknowledged that Elliott may have believed he was assisting NRZ. The TickPricer software developed for NRZ replicates many features of Broker Genius's AutoPricer, with Dr. Koskinen stating there is a "substantial overlap" in software architecture and user experience. In contrast, the defendants' expert, Mr. Stephen Gray, claimed the two software architectures are significantly different based on source code inspection. However, Dr. Koskinen argued that differences in coding do not necessarily reflect functional differences. Mr. Gray did not consider user experience when forming his opinions and failed to address whether Broker Genius's identified trade secrets were present in TickPricer. Evidence presented in court indicated that despite minor organizational differences, AutoPricer and TickPricer share significant operational similarities, particularly in how they manage inventory, set pricing rules, and interact with ticket exchanges. Both programs utilize a similar method of publishing pricing updates, categorized by event timing, despite differing speeds for this process. Defendants marketed TickPricer, a software developed not only for their own ticket brokering but also to compete directly with Broker Genius's AutoPricer. Evidence confirms that NRZ started marketing TickPricer in March 2017, reaching out to potential users and signing up approximately twelve to thirteen customers, many of whom were previously with Broker Genius. NRZ incentivized these brokers by offering to reduce their current Broker Genius rates by 5% and falsely claimed that TickPricer was an extension of Broker Genius. During the ongoing litigation, NRZ has suspended charging fees to existing users and is not accepting new clients, although it has the capacity to onboard around thirty new users, potentially generating $250,000 in revenue. Broker Genius reported significant growth, increasing from 13 to 170 users over two years, but indicated that this growth is threatened by TickPricer, leading to customer losses and necessitating up to a 25% rate reduction to retain clients. Additionally, NRZ has produced a promotional video for TickPricer that disclosed multiple components originally found in AutoPricer without confidentiality restrictions. Broker Genius's CEO expressed concern that their business could face considerable harm if NRZ is not restrained, suggesting a significant risk of going out of business within months. The excerpt concludes with a legal standard for granting a preliminary injunction, emphasizing the necessity for the movant to clearly demonstrate their case, as injunctions are considered extreme judicial remedies. A party seeking a preliminary injunction in the Second Circuit must demonstrate four key elements: (1) a likelihood of success on the merits or sufficiently serious questions that make the case a fair ground for litigation, alongside a balance of hardships favoring the plaintiff; (2) a likelihood of irreparable injury without the injunction; (3) a favorable balance of hardships; and (4) that the public interest would not be negatively affected by the injunction. To establish a likelihood of success on the merits, a plaintiff must show a probability of prevailing that is greater than fifty percent. Broker Genius is focusing its request for a preliminary injunction on claims of misappropriation of trade secrets, rather than on copyright infringement or other claims. Under New York law, to prevail on a misappropriation claim, the plaintiff must prove possession of a trade secret and that the defendants used it in violation of an agreement or through improper means. The Defend Trade Secrets Act (DTSA) also requires proof of unconsented disclosure or use of a trade secret obtained through improper means. The DTSA defines "improper means" to include misrepresentation and breach of a duty to maintain secrecy, but excludes reverse engineering and independent derivation. Although Broker Genius may likely demonstrate that the defendants improperly used its information in breach of an agreement, it is unlikely to succeed in proving that the information qualifies as trade secrets. Misappropriation can be established by showing that trade secrets were used in breach of an agreement. In *Schroeder v. Pinterest, Inc.*, the court found strong evidence suggesting that Broker Genius is likely to prove that NRZ and its principals improperly utilized information claimed as trade secrets, specifically regarding the software architecture and UX/UI of AutoPricer v.3. The Service Agreement explicitly prohibited NRZ from distributing, copying, or reverse engineering the software. Evidence presented at the preliminary injunction hearing revealed that Zalta, an NRZ principal, admitted to distributing screenshots and annotated insights about AutoPricer v.3 to software developers while the agreement was in effect, thereby breaching the contractual obligations. Broker Genius is expected to demonstrate that NRZ not only breached the Service Agreement by allowing unauthorized distribution of AutoPricer v.3 but also potentially copied and reverse-engineered the software to create a similar product, TickPricer. The court noted that in trade secret misappropriation cases, direct evidence is rare, and copying can be inferred from a defendant's access to the trade secrets and substantial similarities between the original and the alleged copy. Given that NRZ’s principals had routine access to AutoPricer v.3’s functionalities and the significant similarities between AutoPricer v.3 and TickPricer, an inference of copying is warranted. The ruling emphasizes that exact replication is not necessary to establish liability for trade secret misappropriation. A preliminary injunction was granted in Fabkom due to evidence suggesting the defendant likely copied the plaintiff's software, as indicated by the guidance provided to developers being closely aligned with the structure of the plaintiff’s program. Notably, Zalta sent Bassil a document titled “Pricing Tool Directions,” which served as a template for developing NRZ's pricing tool, contradicting Zalta's claim of merely educating Bassil. The court found Bassil’s assertion that he did not closely consider the AutoPricer v.3 screenshots to be questionable, especially as he sought access to Zalta's pricing tool shortly after. Zalta’s goal was to create a familiar software for his client, further casting doubt on his insistence that he wanted Bassil to develop a unique tool, given his actions indicated an interest in replicating or enhancing AutoPricer. Despite these findings, Broker Genius could not succeed on its trade secrets claim, as the information it claimed as trade secrets failed to meet the legal definition established in New York, which defines a trade secret as a formula, pattern, device, or compilation of information that provides a competitive advantage. This definition limits trade secrets to a subset of commercially valuable information. New York courts evaluate whether information qualifies as a trade secret based on six factors: (1) knowledge of the information outside the business; (2) knowledge among employees and business associates; (3) measures taken to protect the secrecy; (4) the information's value to the business and competitors; (5) resources invested in its development; and (6) the difficulty of acquiring or duplicating the information. The central consideration is the secrecy of the information. A trade secret must possess a "substantial element of secrecy," which involves both the exclusivity of knowledge and the implementation of precautionary measures to limit access. Absolute secrecy is not necessary, but public disclosure or sharing with those not bound to confidentiality extinguishes property rights in the secret. In the case of Broker Genius, the claimed trade secrets related to the AutoPricer software are valuable and have incurred approximately $4 million in development costs. The defendants challenge the trade secret claims, arguing that Broker Genius has not specified the trade secrets clearly and that some components are known outside the business, as well as questioning the adequacy of measures taken to maintain secrecy. Trade secrets must be identified with sufficient specificity, as vague information cannot be protected. While New York and the Second Circuit do not mandate a particular level of specificity, cases such as *Big Vision Private Ltd. v. E.I. DuPont De Nemours Co.* indicate that courts require enough detail for defendants to understand what constitutes trade secret information. Broker Genius has categorized its alleged trade secrets into three groups: software architecture, UX/UI, and methods for scalability in automatic ticket pricing software. The court finds that Broker Genius has sufficiently described its use of tiered cycling speeds for scalability, qualifying it for protection if secrecy is maintained. Broker Genius also identifies specific UI components as trade secrets, where confidentiality must be ensured through legal agreements. Although there are few cases recognizing a software's UI as a trade secret, confidentiality obligations can support such claims. The architectural aspects of software, despite their broad nature, can also qualify for trade secret protection under established circuit precedents. The excerpt addresses the issues surrounding the protection of software architecture as a potential trade secret. It references the case Fabkom, Inc. v. R.W. Smith Assocs. Inc., highlighting that the source code and organization of software are typically not known outside the business. Defendants' expert, Stephen Gray, argued that the software architecture of AutoPricer v.3 does not qualify as a trade secret due to its use of common widgets and functions recognized in the ticket broker industry. However, the excerpt emphasizes that novelty is not a requirement for trade secret protection, referencing legal precedents like Softel, Inc. v. Dragon Medical Sciences and Kewanee Oil Co. v. Bicron Corp. It asserts that the unique combination of common functions in AutoPricer v.3 may still be protectable as a trade secret, as illustrated by Integrated Cash Management Services v. Digital Transactions, Inc., which recognized that a combination of publicly known components can form a protectable secret if arranged uniquely for competitive advantage. The excerpt notes that Broker Genius's AutoPricer was the sole tool available for managing ticket inventory and pricing until the development of Tick-Pricer. Although Gray identified other ticket pricing applications, he failed to clarify their functional similarities with AutoPricer v.3. Additionally, the plaintiff's expert, Dr. Koskinen, pointed out significant differences between AutoPricer v.3 and competing software. Finally, it discusses the necessity for Broker Genius to implement measures to maintain the confidentiality of their software architecture, referencing Delta Filter Corp. v. Morin, which underscores that trade secrets must be safeguarded through precautionary measures against unauthorized access. Broker Genius must demonstrate that it has taken reasonable measures to protect the secrecy of its software, AutoPricer v.3, due to its accessibility and the company's open discussions about its architecture and scalability. Evidence presented indicates Broker Genius has not adequately protected its trade secrets, as it has disclosed information to customers without notifying them of its confidential nature or requiring confidentiality agreements. Although some measures are in place—such as restricting access via passwords, limiting public exposure on the company website, and requiring employees to sign non-disclosure agreements—these efforts are insufficient. Additionally, if trade secrets are disclosed in a patent application, the plaintiff cannot claim misappropriation. The ’918 Patent Application, while detailing AutoPricer’s functionality, does not fully disclose all claimed secrets or their unique combinations, leaving some aspects still protected. The imprecision of the application’s descriptions prevents others from replicating the user experience. Thus, Broker Genius is unlikely to successfully claim protection under trade secret law due to its pattern of regular disclosures. A predecessor software product similar to AutoPricer v.3 did not adequately disclose its architecture, scalability solutions, or complete user experience/interface (UX/UI). Although promotional materials provided some user interface insights, they failed to illustrate the interactions among the software's complex widgets and did not encompass the full architecture or scalability solutions of Broker Genius. The defendants could not demonstrate that the promotional content contained sufficient technical detail to qualify as a disclosure of the product's architecture. Broker Genius did not fully reveal its trade secrets during product demonstrations, which were brief (three to eight minutes) and did not require audience members to agree to confidentiality terms. The demonstrations aimed to encourage potential customers to sign up for a trial period to receive comprehensive training on the software. To qualify as trade secrets, information must be sufficiently secretive to deter acquisition through improper means. Given the complexity of AutoPricer v.3, audience members would struggle to grasp its features from such short demonstrations. Despite some limited disclosures, Broker Genius maintained its property rights to its trade secrets; however, these disclosures suggest that Broker Genius may not have viewed the software's architecture or interface as trade secrets before litigation began. Additionally, Broker Genius's patent application for its ticket pricing technology indicates a strategic choice to pursue patent protection over trade secret protection for its software architecture. Broker Genius’s sales representatives provided demonstrations of AutoPricer features relevant to brokers without adhering to a restrictive script, indicating that they did not consider any part of the software confidential. This approach undermines Broker Genius's claim that its software components, such as architecture and scalability solutions, qualify as trade secrets. The company grants extensive access to its software, including training, manuals, videos, and updates, which facilitates user understanding of the software and its functionalities. Consequently, defendants were able to replicate significant aspects of AutoPricer v.3 quickly and inexpensively, without having unique access to the software beyond what was provided to all customers. Broker Genius does not orally inform users about the confidentiality of the software during training and fails to mark training materials or software with confidentiality notices. The only notification regarding the confidentiality of trade secrets comes from the Terms of Use and the Service Agreement. The Terms of Use, presented in a clickwrap agreement requiring users to express assent, are enforceable due to providing conspicuous notice of the terms. The court finds the hyperlink to the Terms of Use sufficiently visible and the assent mechanism unambiguous. However, for users to fully understand that trade secrets include readily observable information, Broker Genius could have taken further steps to highlight the software's confidential nature. Broker Genius's efforts to protect trade secrets related to its AutoPricer v.3 software were deemed insufficient due to the self-revealing nature of the information and the lack of appropriate confidentiality measures. The court highlighted that merely relying on a clickwrap agreement for confidentiality was inadequate, especially since users were not reminded of the Terms of Use upon accessing the software. Instead, users had to visit Broker Genius's website to find the Terms, which were only accepted by the individual who set up the corporate account, leaving other employees unaware of their existence. The absence of a confidentiality provision in the Terms of Use was particularly noted, as it failed to meet the necessary requirements for protecting trade secrets. Legal precedents emphasized that disclosing trade secrets to individuals not obligated to maintain their confidentiality extinguishes the owner's property rights. Additionally, court cases illustrated that licensing agreements must explicitly require confidentiality to preserve the secrecy of trade secrets; otherwise, the information could lose its protected status. Consequently, Broker Genius's approach to confidentiality was found lacking in protecting its proprietary information. The Terms of Use for the Site or Apps prohibit users from reproducing, modifying, displaying, publicly performing, distributing, or creating derivative works from the AutoPricer v.3 interface. However, these restrictions do not establish confidentiality regarding the software's functions, structure, or appearance, as claimed by the plaintiff. The language used in the Terms of Use aligns with the Copyright Act of 1976, which describes the exclusive rights of a copyright owner, rather than imposing confidentiality obligations. The distinction between copyright restrictions and trade secret protections is crucial; trade secrets require a degree of secrecy that copyright does not. This difference underlines the legal principle that federal copyright law does not override state law pertaining to trade secret misappropriation. Moreover, comparisons with other legal agreements show that the Terms of Use lack explicit confidentiality clauses found in licensing agreements that effectively protect trade secrets. For instance, agreements in previous cases included clear nondisclosure obligations, while the Terms of Use do not. This absence highlights the inadequacy of the plaintiff's claims regarding confidentiality, contrasting with the Service Agreement that includes specific provisions acknowledging secrecy. The source code, structure, and algorithms of the Software are classified as proprietary trade secrets of Broker Genius or its licensors. However, Broker Genius's assertion that the defendants misappropriated trade secrets is undermined by evidence that Broker Genius routinely shares this information with its users under a Terms of Use agreement that lacks confidentiality provisions. As a result, Broker Genius cannot demonstrate that the information qualifies as trade secrets, nor can it show a likelihood of success on its claims or that serious questions exist regarding their merits. Consequently, the court denies Broker Genius's motion for a preliminary injunction, affirming that elements of a software program disclosed to users cannot be considered protectable trade secrets. Broker Genius also acknowledges that there is no evidence the defendants accessed or misappropriated the AutoPricer v.3 source code. Additionally, Broker Genius's own marketing efforts, including public displays of its prior software, further weaken its claims. The Court's ruling underscores the importance of confidentiality in maintaining trade secret status. An account was created in Shamah's name on May 12, 2015, and it is uncontested that a Broker Genius account requires user assent to the Terms of Use. Notable distinctions exist between the functionalities of AutoPricer v.3 and TickPricer, including differences in user interface and pricing display. The DTSA defines "misappropriation" as the improper disclosure or use of a trade secret acquired through a breach of a duty to maintain secrecy. Broker Genius is unable to demonstrate a likelihood of success on its DTSA claim, as evidence shows defendants, NRZ and the individual defendants, were customers at the time they acquired the relevant information. While the merits of Broker Genius's breach of contract claim remain undecided, defendants argue they did not misappropriate trade secrets due to their status as "good faith" clients. However, evidence suggests they were developing a competing product while still using Broker Genius's software and obtained further information post-termination of their license. The court emphasizes that the key issue is improper use of trade secrets, not improper acquisition. Reverse engineering is permitted under trade secret law, provided it does not violate contractual prohibitions. Zalta's credibility is questioned due to his inconsistent explanation for sharing a PDF of annotated screenshots of AutoPricer v.3 with another developer, which primarily details AutoPricer’s features without referencing competitors. The DTSA's definition of trade secrets aligns closely with that of New York courts, encompassing a broad range of information types. To qualify as a trade secret under 18 U.S.C. 1839(3)(A, B), information must meet two criteria: it must be kept secret through reasonable measures by its owner and must have independent economic value due to its secrecy. Dr. Koskinen's definition of the "domain model" as an abstract concept involving software entities lacks clarity, as neither Broker Genius nor Dr. Koskinen provided specific definitions of these entities or distinguished them from the broader software architecture of AutoPricer v.3. Legal precedent indicates that elements visible in user interfaces, such as data-entry screen designs, are generally not considered trade secrets since they are readily ascertainable. Mr. Gray's opinions on industry practices are based primarily on discussions with defendants, which the Court finds unconvincing. Broker Genius' argument that patent publication nullifies trade secret protections only if misappropriators relied on that disclosure misinterprets legal standards. The case Franke v. Wiltschek illustrates that the lack of reliance on a patent does not negate the importance of maintaining trade secret confidentiality, and independent development of a process does not serve as a defense against trade secret misappropriation claims. Defendants contest Ellman's claims regarding the nature of product demonstrations, asserting that witnesses Ramin Malekian and Michael Shamah experienced detailed presentations of Broker Genius’s software features. However, evidence indicates that these comprehensive demonstrations occurred only after the witnesses or their representatives had accepted the Terms of Use by creating accounts with Broker Genius. Zachary Ellman noted that the training provided on AutoPricer v.3 was extensive but acknowledged that other clients received similar training durations. The document discusses the standards for protecting trade secrets, emphasizing that mere oral designations of confidentiality are inadequate for legal protection if there are no confidentiality agreements in place. It cites multiple cases demonstrating that effective trade secret protection requires formal agreements or confidentiality provisions in contracts, as illustrated by various rulings where courts granted injunctions or upheld trade secret claims based on such agreements. Notable cases include Warehouse Solutions v. Integrated Logistics, LivePerson, Mobius Medical Systems, and Monovis, which highlight the necessity of contractual obligations to maintain the secrecy of proprietary information.