Twitter may have a hard time proving Meta steals trade secrets

Twitter's accusations that Meta stole trade secrets to build its Threads could be the first legal battle between the two major social media conglomerates, but experts say Twitter will have to overcome a high hurdle if it decides to sue.

In a letter sent on Wednesday, Twitter alleges that Meta used their trade secrets to develop its new social networking app, Threads, and asked Meta to stop using that information. Twitter says Meta has hired dozens of former Twitter employees, many of whom "improperly withheld" equipment and documents from the company, and Twitter alleges that Meta "intentionally" entrusted them to work on Threads.

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A Twitter spokesperson did not immediately respond to a request for comment. Meta spokesman Andy Stone said in a Threads post on July 6 that no one on the site's engineering team was a former Twitter employee.

Legal experts say while many companies have accused rivals of hiring former employees and having a similar product of stealing trade secrets, cases like these are difficult to prove.

To win, a company needs to prove its competitor used information of economic value and that the company made "reasonable efforts" to keep it secret, according to Polk Wagner, a law professor at the University of Pennsylvania. However, the question of what constitutes "reasonable effort" can be daunting, he said.

"The courts can make it very clear that you can't just wave your hand and say something is a trade secret. On the other hand, you don't have to lock everything so that no one can use that information," Wagner said.

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Meta launched Threads on July 5, which could be the first real threat to Twitter, the social network that has upset many users and advertisers since billionaire Elon Musk bought the microblogging site last year.

Threads shares some similarities with Twitter, as do many other social networking sites that have popped up over the past few months like Bluesky or Mastodon. One factor the court considers is that the company has explicitly informed employees that the specific information in dispute is a trade secret.

Sharon Sandeen, a professor at the Mitchell Hamline School of Law in St. Paul, Minnesota, says companies have lost trade secret lawsuits when they claim that employees are subject to massive agreements that define all company information as confidential.

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The court has said that employees have no way of knowing from that general language what is confidential and what is not, she said. Companies often only sue over trade secrets only to discover that their policies aren't as strong as they thought they were, experts say.

Professor Sandeen also points to a well-known legal battle between Waymo, an autonomous driving technology company owned by Alphabet (GOOGL.O), and Uber Technologies (UBER.N). The case began with allegations of thousands of stolen documents and then ended with a dispute over only a handful of documents.

Uber settled the case the night before the trial by compensating Waymo $245 million worth of its own stock. In trade secret cases, going to court is rare, where settlement through a new settlement is common, Wagner said.

Marvin Fry

Update 24 July 2023