Retailer Gets Caught in the Middle of a CBD Fight

In Brief:  Misappropriation of a trade secret requires more than just being in the supply chain. 

Here’s What Happened:

Healthcare Resources Management Group, LLC (“HRMG”) had a joint venture relationship with EcoNatura All Healthy World LLC (“EcoNatura”) to manufacture and sell CBD cooling cream products. Medterra CBD, LLC (“Medterra”) would buy the cream from HRMG, and white label it under its own branding. HRMG and EcoNatura ended their relationship. Medterra started buying directly from EcoNatura.

HRMG sued Medterra for trade secret misappropriation both under the federal Defend Trade Secrets Act (“DTSA”) and  Florida’s trade secret act, and for unfair competition.

Medterra brought a motion for summary judgment. Medterra argued that: (1) HRMG did not identify a protectable trade secret; (2) Medterra did not misappropriate any trade secret information; and (3) HRMG did not show damages as a result of Medterra’s alleged misappropriation.

The court granted Medterra’s motion.

The basis for HRMG’s misappropriation argument was that Medterra knew HRMG had a trade secret in the CBD cream yet utilized the formula for its own profit. However, the court found that, even assuming that HRMG had a protectable trade secret, it failed to establish any of the elements of misappropriation. HRMG only shared formula information with EcoNatura. EcoNatura had shared a partial ingredient list with Medterra for labeling purposes. EcoNatura only disclosed the percentage of one of the ingredients. Medterra didn’t know the cream was an alleged trade secret. Medterra didn’t know anything about the manufacturing process. Medterra was simply a retailer who didn’t manufacture any competing products. Therefore, Medterra didn’t acquire, disclose, or use any of HRMG’s trade secrets.

Why You Should Know This:  HRMG had a hard hill to climb. HRMG went after a pretty ‘innocent’ party. Medterra had no hand in developing or manufacturing the formula. It merely bought it and then sold it. 

On a side note, the court had a lot to say about HRMG’s response to Medterra’s motion. Apparently, HRMG failed to support its assertion that facts were in dispute. It just kept referring back and forth between statements. It didn’t properly reference the exhibits. And that’s just the highlights. So HRMG may have lost the motion due to the failure to present a clean and supported group of disputed facts.

Case Information:  Healthcare Resources Management Group, LLC v. Econatura All Healthy World LLC et al., Case No. 2:20-cv-81501 (D.Ct. S.D. Fla. 2021).