Don’t pitch million-dollar ideas without nondisclosure agreements [Carr v. AutoNation]

Pitching a million-dollar idea? Don’t do it without a nondisclosure agreement.

Or else you’ve lost your right to protect your idea as a trade secret — and maybe your million dollars along with it.

Just ask James Carr, who’s found out the hard way. He pitched his million-dollar idea to AutoNation. He sent AutoNation an unsoliciated letter, gave AutoNation his business plan, and he even answered Autonation’s follow-up questions. All without an NDA. Though Carr did make it clear that he contemplated being compensated for his idea.

But that’s not enough, said a federal court out in Sacramento. The California Uniform Trade Secrets Act requires that he take reasonable measures to protect his trade secrets. And Carr’s pitching his whole business plan to a stranger fails that requirement. In fact, it failed so hard that the court dismissed the trade secret claim at the outset.

Even though Carr doesn’t have a trade secret claim, the court found he still had an implied contract claim. Which is better than nothing. But it’s not as great as having a trade secret claim because of the stronger remedies (e.g., $$$) that goes along with it.