Case 4:20-cv-00299-ALM Document 161 Filed 03/13/23 Page 1 of 38 PageID #: 2423
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`Civil Action No. 4:20-CV-299
`Judge Mazzant
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`BARZ ADVENTURES INC. d/b/a BAR-Z
`MOBILE DEVELOPMENT,
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`Plaintiff,
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`v.
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`TIMOTHY PATRICK and APP STAR,
`LLC,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Pending before the Court is Plaintiff’s Motion for Summary Judgment (Dkt. #143). Having
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`considered the motion and the relevant pleadings, the Court finds that the motion should be
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`GRANTED in part and DENIED in part.
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`BACKGROUND
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`This case arises out of a former employer-employee relationship whereby Defendant
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`Timothy Patrick (“Patrick”) used to work for Plaintiff BarZ Adventures Inc. d/b/a Bar-Z Mobile
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`Development (“Bar-Z”). Bar-Z is a company based in Austin, TX that is in the business of creating
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`mobile applications, designed to run on a mobile device and perform certain functions, such as
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`games, ticket purchasing, or mapping, depending on the client (Dkt. #120 at p. 3). Bar-Z has a
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`civic division, zCivic, that is tasked with developing applications that support municipalities, parks
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`and attractions, main street organization, tourism, and nonprofit organizations (Dkt. #120 at p. 3).
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`In March of 2017, Bar-Z hired Patrick as the Director of Sales (Dkt. #143 at p. 5).
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`As part of his employment, Patrick signed an Employment, Confidential Information and
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`Invention Assignment Agreement (“Employment Agreement”) with Bar-Z (Dkt. #120 at p. 4).
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`The Employment Agreement included a confidentiality and non-compete provision that mandated
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`Patrick to keep Bar-Z’s information confidential and restricted Patrick from competing with Bar-
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`Z for the twelve (12) months after his employment concluded (Dkt. #120 at p. 4; Dkt. #143, Exhibit
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`1 at pp. 9–10).
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`During his time at Bar-Z, Patrick assisted the company to work on certain mobile
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`applications for various chambers of commerce (Dkt. #143 at p. 6). These applications contained
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`information, using a “block architecture” format, about various hotspots in the local community
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`as well as other local businesses for residents or tourists to locate (Dkt. #143 at p. 6).1 Bar-Z would
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`also sell advertisements on these chamber applications to receive a profit (Dkt. #143 at p. 6). Bar-
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`Z released a number of applications with this format, including “I Love Granbury,” “Passport 2
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`Midland,” “Our Odessa,” and “SWLA Connection” (Dkt. #143 at p. 9). Part of Patrick’s role in
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`this department was to create certain marketing materials for the applications and a list of potential
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`chambers of commerce that could be future clients with Bar-Z (Dkt. #143, Exhibit 1 at pp. 4, 6).
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`An employee of Bar-Z heard Patrick express his frustration about the company from time to time,
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`and in doing so, Patrick would state that he could leave Bar-Z and do exactly what Bar-Z was
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`doing on his own. When the employee would remind him that he signed a non-compete, Patrick
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`responded that “non-compete agreements are not enforceable in Texas” (Dkt. #143, Exhibit 34
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`¶ 3).
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`In September of 2018, Bar-Z ultimately terminated Patrick for cause (Dkt. #120 at p. 6).
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`Patrick signed a Termination Certification, acknowledging his termination as well as the
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`provisions from his Employment Agreement that place a duty on Patrick to not compete and not
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`1 Bar-Z defines its block architecture as “a particular screen on the app [that] is divided into segments or blocks” (Dkt.
`#120 at p. 6). Exhibits 1-J and 10 show examples of this “block architecture” format (Dkt. #143, Exhibit 1 at p. 45;
`Dkt. #143, Exhibit 10 at p. 2).
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`disclose Bar-Z’s confidential information once he left (Dkt. #120 at p. 6). Following his
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`termination, Patrick was eventually “homeless” and without a car, until he acquired a new job
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`(Dkt. #143, Exhibit 2).
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`Bar-Z was informed of Patrick’s employment with Defendant App Star, LLC (“App Star”)
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`in July of 2019 (Dkt. #120 at p. 6). Patrick worked with App Star as their Director of Sales (Dkt.
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`#143, Exhibit 11). Bar-Z was also informed that Patrick had been working with App Star to create
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`mobile applications just like the ones he had worked on while working at Bar-Z. These
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`applications included “Colleyville Now,” “Princeton Now,” and “Celina Connected” (Dkt. #81 at
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`p. 2; Dkt. #120 at p. 6). After discovering this information, Bar-Z President Lee Little (“Little”)
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`reminded Patrick of his contractual obligations and informed App Star’s CEO Eugene Rice
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`(“Rice”) of the same (Dkt. #120 at p. 6). Neither response indicated to Little that either Patrick or
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`Rice intended to comply with Patrick’s obligations under the Employment Agreement, as both
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`individuals essentially told Little in separate conversations “what are you going to do about it?”
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`(Dkt. #143, Exhibit 1 at p. 7). Bar-Z subsequently filed suit.
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`On June 1, 2021, Bar-Z filed its Fifth Amended Complaint against the two remaining
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`defendants, Patrick and App Star, for their conduct regarding the use of Bar-Z’s trade secrets, in
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`breach of the Employment Agreement that Patrick signed (Dkt. #120). There are other defendants
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`listed in the amended complaint, including Colleyville Chamber of Commerce and Rice, but they
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`have since been dismissed by this Court or the Court has ordered default judgment against them
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`(Dkt. #103; Dkt. #146). Neither Patrick nor App Star have responded to the Fifth Amended
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`Complaint, just as they did not respond to the Fourth Amended Complaint. The last answers that
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`Patrick and App Star filed were back on October 14, 2020, in response to Bar-Z’s Third Amended
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`Complaint, where Patrick and App Star filed twelve (12) and eleven (11) affirmative defenses,
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`Case 4:20-cv-00299-ALM Document 161 Filed 03/13/23 Page 4 of 38 PageID #: 2426
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`respectively (Dkt. #66; Dkt. #68). Additionally, Patrick and App-Star each filed several
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`counterclaims against Bar-Z (Dkt. #66; Dkt. #68). On October 23, 2020, Bar-Z responded to these
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`counterclaims with its own affirmative defenses (Dkt. #78; Dkt. #81).
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`On March 3, 2022, Bar-Z filed the pending motion for summary judgment on all claims
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`(Dkt. #143). The Court finds that each of Bar-Z’s claims have been conclusively proven, and that
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`Patrick and App Star’s affirmative defenses and counterclaims have no merit. For the reasons
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`discussed below, Bar-Z is entitled to judgment as a matter of law for its claims against both Patrick
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`and App Star.
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`LEGAL STANDARD
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`The purpose of summary judgment is to isolate and dispose of factually unsupported claims
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`or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). Summary judgment is proper
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`under Rule 56(a) of the Federal Rules of Civil Procedure “if the movant shows that there is no
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`genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
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`FED. R. CIV. P. 56(a). A dispute about a material fact is genuine when “the evidence is such that
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`a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby Inc.,
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`477 U.S. 242, 248 (1986). Substantive law identifies which facts are material. Id. The trial court
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`“must resolve all reasonable doubts in favor of the party opposing the motion for summary
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`judgment.” Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).
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`The party seeking summary judgment bears the initial burden of informing the court of its
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`motion and identifying “depositions, documents, electronically stored information, affidavits or
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`declarations, stipulations (including those made for purposes of the motion only), admissions,
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`interrogatory answers, or other materials” that demonstrate the absence of a genuine issue of
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`material fact. FED. R. CIV. P. 56(c)(1)(A); Celotex, 477 U.S. at 323. If the movant bears the burden
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`of proof on a claim or defense for which it is moving for summary judgment, it must come forward
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`with evidence that establishes “beyond peradventure all of the essential elements of the claim or
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`defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant
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`bears the burden of proof, the movant may discharge the burden by showing that there is an absence
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`of evidence to support the nonmovant’s case. Celotex, 477 U.S. at 325; Byers v. Dall. Morning
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`News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).
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`A nonmovant's failure to respond to a motion for summary judgment does not entitle the
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`movant to a default judgment. Retzlaff v. de la Vina, 606 F. Supp. 2d 654, 656 (W.D. Tex. 2009)
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`(citing Eversley v. MBank Dallas, 843 F.2d 172, 174 (5th Cir. 1988)). Rather, the Court may
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`accept the movant's evidence as undisputed, and then conduct an analysis whether the summary
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`judgment evidence establishes a prima facie showing of the movant's entitlement to judgment. Id.
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`The Court must consider all the evidence but “refrain from making any credibility determinations
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`or weighing the evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir.
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`2007).
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`ANALYSIS
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`The Court will begin this analysis by outlining all the pending claims, affirmative defenses,
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`and counterclaims that are outstanding in this case.
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`To start, Bar-Z alleges violations of the Texas Uniform Trade Secrets Act, the Federal
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`Defend Trade Secrets Act, a breach of two different sections of Patrick’s Employment Agreement,
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`and a breach of fiduciary duty against Patrick. Patrick raises the following twelve affirmative
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`defenses: (1) preemption; (2) scope of copyright protection; (3) no copyright infringement; (4)
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`lack of registration; (5) failure to mitigate; (6) unclean hands; (7) lack of standing; (8) contributory
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`negligence; (9) estoppel; (10) Bar-Z’s own breach of the contract; (11) arbitration; and (12)
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`unenforceability and unconscionability (Dkt. #68 at pp. 7–9). Additionally, Patrick filed
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`counterclaims against Bar-Z for a breach of contract, defamation, violations of the Texas Uniform
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`Trade Secrets Act and Federal Defend Trade Secrets Act, as well as requesting a declaratory
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`judgment that no copyright infringement existed (Dkt. #68 at pp. 11–14). Bar-Z responded to the
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`counterclaims by raising affirmative defenses of its own, including the use of privileged
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`statements, the equitable doctrine of estoppel and unclean hands, excuse from performance due to
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`a material breach in the contract, good faith claims, and a truth defense (Dkt. #78 at pp. 5–8).
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`Bar-Z also alleges violations of the Texas Uniform Trade Secrets Act, the Federal Defend
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`Trade Secrets Act, tortious interference with the Employment Agreement, and a breach of
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`fiduciary duty against App Star. App Star responded with the following eleven affirmative
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`defenses: (1) preemption; (2) scope of copyright protection; (3) no copyright infringement; (4)
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`lack of registration; (5) failure to mitigate; (6) unclean hands; (7) lack of standing; (8) contributory
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`negligence; (9) estoppel; (10) Bar-Z’s own breach of the contract; and (11) unenforceability (Dkt.
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`#66 at pp. 6–8). App Star then filed counterclaims against Bar-Z, which included tortious
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`interference, violations of the Digital Millenium Copyright Act under 17 U.S.C. § 512(f),
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`violations of the Texas Uniform Trade Secrets Act and Federal Defend Trade Secrets Act, as well
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`as requesting declaratory judgment (Dkt. #66 at pp. 10–15). Bar-Z responded to the counterclaims
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`by raising the affirmative defenses of privilege, estoppel and unclean hands, and justification (Dkt.
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`#81 at pp. 5–7).
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`The nature of Bar-Z’s arguments is that the undisputed evidence shows that there is no
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`genuine issue of material fact that App Star and Patrick knowingly worked together to take the
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`trade secrets that Patrick had acquired from Bar-Z and use it to their advantage. Both App Star
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`and Patrick did not respond to these claims, but the fact that neither defendant responded does not
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`go as far as Bar-Z would like it to go, arguing that “Rule 56(c) [m]andates [s]ummary [j]udgment
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`[i]f [d]efendants [d]o [n]ot [r]espond” (Dkt. #143 at p. 12). Bar-Z cites to the Little v. Liquid Air
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`Corp. case for support of its argument. 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). In Little,
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`the Fifth Circuit urged that a court should not assume that the nonmoving party could or would
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`prove the necessary facts in the absence of any proof. However, judgment shall be rendered at the
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`summary judgment stage only if all the evidence on file shows there is no genuine issue as to any
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`material fact. Id. The case does not stand for the rule that the movant is absolved of its burden at
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`the summary judgment stage just because there is no response. The Court will treat Patrick and
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`App Star’s lack of a response to mean that the evidence is undisputed, but from there, it will
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`conduct a standard summary judgment analysis.
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`Additionally, the Court recognizes that Patrick and App Star did not respond to the most
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`recent amended complaint that Bar-Z filed. Traditionally, when a party fails to raise an affirmative
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`defense in the answer, the defense is waived. See LSREF2 Baron, L.L.C. v. Tauch, 751 F.3d 394,
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`398 (5th Cir. 2014) (citing Morris v. Homco Int’l, Inc., 853 F.2d 337, 342–43 (5th Cir. 1988)).
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`However, Patrick and App Star responded to previous complaints and raised the affirmative
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`defenses discussed above. The Fifth Circuit is clear that it does not take a formalistic approach to
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`determine whether an affirmative defense was waived. Pasco ex rel. Pasco v. Knoblauch, 566
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`F.3d 572, 577 (5th Cir. 2009).2
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`Accordingly, the Court will now address each of the claims, counterclaims, and affirmative
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`defenses that are mentioned above.
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`2 Although the Court is not aware of any Fifth Circuit case law on the issue, the Court recognizes that some courts
`have held that when an amended complaint does not change the theory or scope of the case, a defendant does not
`waive its affirmative defenses by not filing an answer to that later complaint. See KST Data, Inc. v. DXC Tech. Co.,
`980 F.3d 709, 715 (9th Cir. 2020). The Court does find that it is likely Patrick and App Star waived their affirmative
`defenses in this case, but because it would likely conclude that the amended complaints did not change the theory or
`scope of the case, it will conduct a full analysis as if the affirmative defenses were not waived.
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`I. Bar-Z’s Claims against Patrick
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`Bar-Z has raised several claims against Patrick, specifically, (1)
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`trade secret
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`misappropriation, (2) breach of contract, and (3) a breach of fiduciary duty. As to the trade secret
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`misappropriation, Bar-Z has alleged violations of both the Texas Uniform Trade Secret Act and
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`the federal equivalent, the Federal Defend Trade Secrets Act. The Court finds that Bar-Z satisfied
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`its burden as to both the state and federal statutes. The Court will address both in turn.
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` Texas Uniform Trade Secrets Act
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`Under the Texas Uniform Trade Secrets Act, trade secrets misappropriation is established
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`by proving three elements: “(a) a trade secret existed; (b) the trade secret was acquired through a
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`breach of confidential relationship or discovered by improper means; and (c) use of the trade secret
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`without authorization from the plaintiff.” Hoover Panel Sys., Inc. v. HAT Contract, Inc., 819 F.
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`App’x 190, 198 (5th Cir. 2020) (citing Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th
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`Cir. 2013)). Bar-Z must prove that no genuine issue of material fact exists for all three elements
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`to show that it is entitled to relief for a violation of the Texas Uniform Trade Secrets Act at the
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`summary judgment stage.
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`A trade secret is defined as “all forms and types of information, including business,
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`scientific, technical, economic, or engineering information, and any formula, design, prototype,
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`pattern, plan, complication, program device, program, code, device, method, technique, process,
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`procedure, financial data, or list of actual or potential customers or suppliers . . .” Giddy Holdings,
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`Inc. v. Kim, No. 1:20-CV-434, 2022 WL 1518925, at *6 (W.D. Tex. March 9, 2022) (citing TEX.
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`PRAC. & REM. CODE § 134A.002(6)). Bar-Z alleges that Patrick acquired several of its trade
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`secrets and brought them to App Star. These materials will be discussed in two groups. First,
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`there is Bar-Z’s unique user interface (“UI”) for its applications, which is the means by which a
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`user interacts with the application and its specific design; the content management software
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`database (“CMS”), meaning the tool that allows for modifications of the applications; the
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`application programming interface (“API”), meaning the application’s ability to communicate
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`with various third-parties; and the source code of the applications, which is the “human-readable
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`program language” created by the programmer (collectively, the “Application Functionalities”)
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`(Dkt. #143 at p. 14). The second group of alleged trade secrets include Bar-Z’s “Sales Playbook,”
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`which is a group of materials including call scripts, email templates, pricing information, and
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`marketing letters all compiled together to market their application to clients; as well as a sales
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`pipeline list that included potential clients and certain information on those clients (collectively,
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`“Marketing Materials”) (Dkt. #143 at pp. 14, 18).
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`The decision of whether a trade secret existed is a question of fact that must be decided by
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`a judge or jury as a factfinder. Wellogix, 716 F.3d at 874. In making the determination, courts
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`will weigh six factors to determine if a trade secret exists:
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`(1) the extent to which the information is known outside of his business; (2) the
`extent to which it is known by employees and others involved in his business; (3)
`the extent of the measures taken by him to guard the secrecy of the information; (4)
`the value of the information to him and to his competitors; (5) the amount of effort
`or money expended by him in developing the information; (6) the ease or difficulty
`with which the information could be properly acquired or duplicated by others.
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`In re Bass, 113 S.W.3d 735, 739–40 (Tex. 2003) (citing RESTATEMENT (FIRST) OF TORTS § 757
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`cmt. B (1939); RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 39 reporter’s n. cmt. d (1995)).
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`Trade secrets have been found in a wide variety of cases in Texas, from a Taco Cabana’s
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`architectural plans and kitchen equipment layout to seismic data and its interpretations. Id.; Taco
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`Cabana Intern. v. Two Pesos, Inc., 932 F.2d 1113, 1123, (5th Cir. 1991). Generally, when money
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`and time are invested in the development of a procedure or device that is made for a particular
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`industry, and that certain procedure or device is not generally known, trade secret protection exists.
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`T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 22 (Tex. App.—Houston
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`[1st Dist.] 1998, pet. dism’d). Additionally, when a business puts in effort to keep certain materials
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`secretive, especially from competitors, the materials may be classified as trade secrets. See id.
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`Examples of these materials include customer lists, pricing information, marketing strategies, and
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`client information. Id.; American Precision Vibrator Co. v. National Air Vibrator Co., 764 S.W.2d
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`274, 278 (Tex. App.—Houston [1st Dist.] 1988, no writ); Murrco Agency, Inc. v. Ryan, 800
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`S.W.2d 600, 604 (Tex. App.—Dallas 1990, no writ).
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`Here, the Court finds that all of Bar-Z’s alleged trade secrets should be properly classified
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`as trade secrets. As for the Application Functionalities, the second, third, fourth, fifth, and sixth
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`factors all rule in favor of Bar-Z. As for the second and third factors, Little stated that every
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`developer and employee that deals with any of its applications are required to sign a non-disclosure
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`and confidentiality agreement (Dkt. #143, Exhibit 1 at p. 5). The chambers of commerce that
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`purchase these applications are also obligated not to disclose any Confidential Information (Dkt.
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`#143, Exhibit 1 at pp. 5–6). See Metallurgical Industries Inc. v. Fourtek, Inc., 790 F.2d 1195,
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`1200 (5th Cir. 1986) (finding no surrender of secrecy where disclosures were not public
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`announcements and secrets were only given to the businesses that plaintiff was expecting to
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`receive a profit from). Little also mentions that the Application Functionalities are restricted
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`within the Bar-Z company itself, as specific log-in credentials are required to access the
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`information (Dkt. #143, Exhibit 1 at p. 6). One example of this restriction is that for the CMS
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`database, only eight (8) employees may access this information (Dkt. #143, Exhibit 1 at p. 6).
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`The fourth factor discusses the value of the information. These applications were relatively
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`new and were specifically targeted at a niche market—chambers of commerce. App Star coming
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`in as a competitor and swooping in to address the need for a product that Bar-Z created surely
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`classifies the information as “valuable” to both Bar-Z and its competitors. Additionally, the fact
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`that Rice was adamant that App Star “need[ed] to duplicate the features” and his displeasure with
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`the company’s application developers because the applications they created were “supposed to be
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`like the other apps that we sent,” shows the importance of the Application Functionalities to Bar-
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`Z’s competitors (Dkt. #143, Exhibit 14 at p. 2; Dkt. #143, Exhibit 23, at p. 2).
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`As for the fifth factor, Bar-Z spent a great deal of time and money on these Application
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`Functionalities, citing 175 total builds for the i0S version of the chamber applications and 61 total
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`builds for the Android version (Dkt. #143, Exhibit 1 at p. 5). The cost for the developers on these
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`applications also leans in Bar-Z’s favor, as the amount spent exceeded $1.8 million (Dkt. #143,
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`Exhibit 1 at p. 5).
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`As for the final factor, the fact that part of a design comes from the public domain does not
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`necessarily disqualify it from becoming a trade secret. See Imperial Chem. Indus. Ltd. v. Nat’l
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`Distillers & Chem. Corp., 342 F.2d 737, 739 (2d Cir. 1965) (citing Ferroline Corp. v. General
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`Aniline & Film Corp., 207 F.2d 912, 921 (7th Cir. 1953)). Although the applications are in the
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`public domain and can be easily duplicated in terms of their appearance, Bar-Z raises an argument
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`regarding the relevant terms and conditions from the Apple App Store. When downloading one
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`of Bar-Z’s chamber applications, you are required to agree to a license that prohibits a user from
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`downloading the application in order to “reverse engineer, disassemble, attempt to derive the
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`source code of, modify, or create derivative works” of the application (Dkt. #143, Exhibit 30 at p.
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`9). As for the source code specifically, courts have treated this as a trade secret, despite the
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`application’s distribution to the public. See Beardmore v. Jacobsen, 131 F. Supp. 3d 656, 675
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`(S.D. Tex. 2015) (citing Aspen Tech., Inc. v. M3 Tech., Inc., 569 Fed. App’x 259, 267–68 (5th Cir.
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`2014)).
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`A party proving that a trade secret exists “should not be required to satisfy all six factors
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`because trade secrets do not fit neatly into each factor every time.” Tewari De-OX Systems, Inc.
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`v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 611 (5th Cir. 2011). Therefore, the Court finds
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`that the Application Functionalities qualify as trade secrets.
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`As for the Marketing Materials, the Court comes to the same conclusion. Bar-Z intended
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`to make money on these chamber of commerce applications based on an economic model using
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`advertisement revenue. After Bar-Z agreed on this model, the marketing team was tasked with
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`creating materials to reach out to advertisers and creating documents that can be distributed to
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`clients as sort of a template. The marketing team spent years creating these Marketing Materials
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`and editing them to get to the final version that exists today (Dkt. #143, Exhibit 1 at p. 6).
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`Competitors can save time and money with access to this information. The same is true regarding
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`the list of potential customers. See Alliantgroup, L.P v. Feingold, 803 F. Supp. 2d 610, 625 (S.D.
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`Tex. 2011) (discussing the analysis for whether a customer list may be protected as a trade secret).
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`One of the potential customers identified on Bar-Z’s pipeline list ultimately became a client with
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`App Star after Patrick left, meaning App Star was able to gain clientele and circumvent the
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`resources that Bar-Z used because of the information that Patrick provided to them (Dkt. #143 at
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`p. 7). Texas courts have treated materials similar to the Marketing Materials as trade secrets, if
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`there is a component of secrecy. See Rugen v. Interactive Bus. Sys., Inc., 864 S.W.2d 548, 552
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`(Tex. App.—Dallas 1993, no writ) (pricing information); Miller Paper Co. v. Roberts Paper Co.,
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`901 S.W.2d 593, 601–02 (Tex. App.—Amarillo 1995, no writ) (classifying “the book” that
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`included former customer names and information about those customers as a trade secret); Bertotti
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`v. C.E. Shepherd Co., Inc., 752 S.W.2d 648, 654 (Tex. App.—Houston [14th Dist.] 1988, no writ)
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`(marketing strategies, pricing, and customer lists). The Court finds that because Bar-Z took steps
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`to ensure the Marketing Materials were not shared outside of the company, the secrecy component
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`is met, and the Court finds that the Marketing Materials are valid trade secrets.
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`The Court finds that both categories of information, the Marketing Materials and
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`Application Functionalities, were properly protected from competitors to avoid a situation like the
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`exact one that occurred here. As a result, the Court finds that based on the relevant factors and the
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`applicable law, Bar-Z has conclusively established that a trade secret existed in this case.
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`The next question is whether the trade secrets were acquired through a breach of
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`confidential relationship or discovered by improper means. The Court will first address whether
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`this second element is satisfied with the Marketing Materials. Bar-Z has provided ample evidence
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`to show this element has been conclusively established. A confidential relationship existed
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`between Bar-Z and Patrick, which is shown through the multiple agreements signed by Patrick
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`that prohibited Patrick from sharing Bar-Z’s confidential information. App Star acquired Bar-Z’s
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`Marketing Materials, as evidenced by the phone script that Bar-Z used for its Passport 2 Midland
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`application found on Rice’s cell phone (Dkt. #143 at p. 10; Dkt #143, Exhibit 6) and the almost
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`identical marketing letter that App Star used compared to the one that Bar-Z used (compare Dkt.
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`#143, Exhibit 19 with Dkt. #143, Exhibit 1 at p. 22–23). Bar-Z has provided evidence that shows
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`Patrick had worked on the call script and marketing letter while he was at Bar-Z and that he texted
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`Rice saying that he sent “Trish the marketing letter and the script for Princeton” (Dkt. #143, Exhibit
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`20 at p. 2). This comes months after Rice asked Patrick if he was able to get “that box” from
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`Patrick’s car that had “any of the things that [he] was looking for that [he] thought [was] on [his]
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`computer” (Dkt. #143, Exhibit 3 at p. 2). Additionally, Bar-Z kept its pricing information on a
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`trifold that detailed all of Bar-Z’s flexible sizes and available packages. This fact provides
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`necessary context for another text message to Rice from Patrick saying, “I found the trifold,” which
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`was ultimately given to Rice (Dkt. #143, Exhibit 7 at p. 2). Finally, Patrick was actively involved
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`in creating the pipeline list and deciding who would be qualified to be on Bar-Z’s official list (Dkt.
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`#143, Exhibit 1 at p. 6). One of those chambers, Colleyville Chambers, ended up working with
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`App Star after Patrick made the transition. All in all, the Marketing Materials were acquired and
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`in the possession of App Star, and the evidence shows that this was done through means that were
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`explicitly prohibited of Patrick in his contracts with Bar-Z. The second element is conclusively
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`established for the Marketing Materials.
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`The second element for the Application Functionalities is more difficult to prove, given the
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`lack of physical items like the Marketing Materials. However, Bar-Z has shown that the UI of
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`Bar-Z’s applications satisfies the second element. The applications that Bar-Z created and the
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`ones that App Star ultimately released are almost identical in design (Dkt. #66 at p. 11).
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`Additionally, the fact that one of App Star’s applications has the name of one of the functionalities
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`that Bar-Z used as a link, specifically “Grangbury [sic] Chamber of Commerce” and “City of
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`Granbury” on an application for the city of Princeton only further proves that App Star acquired
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`Bar-Z’s trade secrets (Dkt. #151, Exhibit 2 at p. 96). How App Star acquired this information is
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`key. Patrick drew the initial layout of the applications that Bar-Z used on a piece of paper for Rice,
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`and time and time again Rice told developers that the layout of the applications they were creating
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`were not close enough to the “other applications” (Dkt. #143, Exhibit 10). This is evidence that
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`App Star acquired the information through the breach of the confidential relationship between Bar-
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`Z and Patrick. There is additional evidence that App Star’s developer received Bar-Z’s trade
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`secrets by downloading the applications from the Apple App Store, when a customer is expressly
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`prohibited from downloading the application for that sole reason. This is evidence that App Star
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`acquired the information through improper means. Both the use of improper means and through
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`a breach of confidential relationship are independent reasons that prove that App Star received the
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`information about Bar-Z’s UI through expressly prohibited channels. Bar-Z has shown that there
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`is no genuine issue of material fact as to its UI being misappropriated.
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`
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`The rest of the Application Functionalities are even more difficult to prove without expert
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`testimony presented before the Court. The difference in these other features is that there is not
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`clear evidence that App Star had access to all the resources that Bar-Z alleges that it did. For
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`example, there is no evidence on the record that indicates to the Court that App Star’s applications
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`uses the same CMS or API that Bar-Z’s applications use. The way that an App Star application is
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`modified is evidence that is currently not on the record. The same is true regarding how the
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`applications communicate with third-party applications. Based on the evidence that is before the
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`Court it cannot be said that the App Star acquired this information. While it may be true that the
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`use of reverse engineering could potentially allow for App Star to possess Bar-Z’s original CMS
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`or API, that is a fact question that cannot be decided at this point in the proceedings. See Pepper
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`v. Int’l Gaming Sys., LLC, 312 F. Supp. 2d 853, 862 (N.D. Mi