On August 21, 2023, New York Knicks, LLC of the New York Knicks organization filed a legal complaint in U.S. District Court, Southern District of New York against a former Knicks employee, Ikechukwu Azotam, and against Maple Leaf Sports & Entertainment Ltd. of the Toronto Raptors organization as well as several named and unnamed employees of the Raptors.
The Knicks' complaint against Azotam and the Raptors
The complaint alleges that Azotam, while still employed by the Knicks, provided to or otherwise made available proprietary information of the Knicks to employees of the Raptors.
Azotam was employed by the Knicks from October 2020 until August 2023, initially as an assistant video coordinator and then as a director of video/analytics/player development assistant. The complaint states that the Raptors began recruiting Azotam in June 2023 and in late July 2023, Azotam informed the Knicks that he had received an offer of employment from the Raptors.
The complaint alleges that in and around late July 2023, Azotam began "secretly forwarding proprietary information from his Knicks email account" to his personal email account to provide to employees of the Raptors, the proprietary information including scouting reports, play frequency reports, prep books, a link to third‑party licensed software, as well as edited game film, bespoke film compilations, notes, and commentary that were obtained by Azotam through the third‑party licensed software.
There are a variety of grounds of action in the complaint including violation(s) of federal legislation, breach of contract, interference with contractual relations, as well as a number of grounds relating to trade secrets. Specifically, the complaint alleges violation(s) of the Defend Trade Secrets Act[1] (the "DTSA") and common law trade secret protections.
The Knicks are seeking a number of possible remedies include a permanent injunction and damages.
Understanding the relevant trade secrets protections
Trade secrets may be broadly described to include any information that provides a business an advantage or commercial value derived from its secrecy. While trade secrets in North America are governed by a combination of federal legislation, provincial/state legislation, and common law, a trade secret generally requires at least that the information in question has commercial value, the information in question is secret, and reasonable measures have been taken by a business to keep the information secret.
A trade secret may take a variety of forms such as a process, a formula, a strategy, or a technique, and in the present case, may include scouting reports, play frequency reports, prep books, as well as information from the third‑party software including video and notes.
The DTSA is U.S. federal legislation relating to the misappropriation of proprietary information. The DTSA provides uniform definition for a number of key terms including "trade secret" and "misappropriation," wherein "trade secret" is defined as:
"All forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information."[2] [emphasis added]
In the State of New York, trade secrets are further governed by common law, wherein courts there have adopted the definition of "trade secret" from section 757 of the Restatement of Torts[3] namely that "[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives [the business] an opportunity to obtain an advantage over competitors who do not know or use it."
The following factors are provided for consideration[4]:
- "The extent to which the information is known outside of [its] business.
- The extent to which it is known by employees and others involved in [its] business.
- The extent of measures taken by [the business] to guard the secrecy of the information.
- The value of the information to [the business] and to [its] competitors.
- The amount of effort or money expended by [the business] in developing the information.
- The ease or difficulty with which the information could be properly acquired or duplicated by others." [emphasis added]
Determining what qualifies as trade secrets in professional sports
One of the key issues to be determined in the present case is whether, and to what extent, the information qualifies as trade secrets.
While the scouting reports, play frequency reports, prep books, video, and notes may certainly fall within eligible categories of subject matter of a trade secret, the context in which this information exists and is used will need to be considered by the court.
In the NBA, as is the case in many professional sports, video footage, scouting reports, plays, advanced analytics data, and the like are generated based on observation of sporting events that are generally viewable to different teams, broadcasting stations, and other persons including the public. Further, proprietary information, such as analysis, directly generated from such observation may be independently generated or duplicated by more than one party in a manner that may make at least some of the information ineligible for trade secret protection.
Specifically, in the present case, it may become important whether the information in question can be readily duplicated or ascertained by another person through proper means in determining whether the information qualifies as a trade secret.
Takeaway thoughts: A reminder to employers
The present case serves as a good reminder that when retaining employees from a competitor, to be aware of what contractual obligations, such as confidentiality and non‑competition, may apply as well as what knowledge and information, including the source(s) thereof, the employee may be bringing with them to avoid possible legal complications.
[1] 18 U.S.C. §1836 et seq.
[3] American Law Institute, Restatement of the Law, Second, Torts 2D, So. Paul, Minn, American Law Institute Publishers, 1965,