Cal Fishkin v. TABFG, LLC; NT PROP TRADING LLC; RICHARD PFEIL, Counter

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 08-3100
CAL FISHKIN; IGOR CHERNOMZAV; FRANCIS WISNIEWSKI,
v.
SUSQUEHANNA PARTNERS, G.P.;
SUSQUEHANNA INTERNATIONAL GROUP, LLP,
Defendants/Counter Claimants
v.
TABFG, LLC; NT PROP TRADING LLC; RICHARD PFEIL,
Counter Defendants
SUSQUEHANNA INTERNATIONAL GROUP, LLP,
Appellant.
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 2-03-cv-3766)
District Judge: Honorable Mary A. McLaughlin
Argued on June 11, 2009
Before: McKEE, HARDIMAN, and VAN ANTWERPEN, Circuit Judges

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(Filed: July 27, 2009)
M. Norman Goldberger, Esq. (Argued)
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street
51st Floor
Philadelphia, PA 19103
Matthew A. White, Esq.
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street
51st Floor
Philadelphia, PA 19103
Counsel for Appellant
David S. Ruskin, Esq. (Argued)
Horwood, Marcus & Berk
180 North LaSalle Street
Suite 3700
Chicago, IL 60601
Megan M. Mathias, Esq.
Horwood, Marcus & Berk
180 North LaSalle Street
Suite 3700
Chicago, IL 60601
Eric B. Meyer, Esq.
Dilworth Paxson, LLP
1500 Market Street, Suite 3500E
Philadelphia, PA 19102-2101
Counsel for Appellee NT Prop Trading LLC and Richard Pfeil
Kenneth A. Sweder, Esq. (Argued)
Sweder & Ross
131 Oliver Street
Boston, MA 02110
Paul J. Greco, Esq.
Conrad O’Brien Gellman & Rohn, P.C.

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1515 Market Street
16th Floor
Philadelphia, PA 19102
Counsel for Appellees Cal Fishkin, Igor Chernomzav, and TABFG, LLC
OPINION
VAN ANTWERPEN, Circuit Judge
This appeal stems from a dispute between Appellant Susquehanna International
Group, LLP (“SIG”), a securities trading firm, and two of its former employees, Cal
Fishkin and Igor Chernomzav, who left SIG and formed a competing securities trading
joint venture, TABFG, LLC (“TABFG”), in partnership with NT Prop Trading, LLC
(“NT Prop”). SIG now appeals from the District Court’s Order of February 12, 2007,
denying its motion for summary judgment regarding disgorgement of profits, and from
the District Court’s Order of June 17, 2008, denying its claim for misappropriation of
trade secrets. For the reasons that follow, we will affirm.
I.
Because we write solely for the parties, we will address only those facts necessary
to our opinion.
In the spring of 1999, Cal Fishkin and Igor Chernomzav began working for SIG as
securities traders, and each executed an employment contract containing restrictive
covenants. One such covenant, the “Non-Competition” clause, provided in part that,

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A “future” is a derivative, which is a security that derives its value from an1
underlying security or asset. Specifically, a future is a contract to buy or sell a particular
commodity at a specific price at a set time in the future. The futures at issue in this
litigation were contracts to buy or sell stocks in the DJIA or Standard & Poor’s (“S&P”)
500 Index—Dow Futures and S&P Futures, respectively—at a set price on a set date.
4
[f]or a period of nine (9) months following the later of the termination of
[Employee’s] employment or the third anniversary following Employee’s
entry into the training course, Employee shall not trade in any products in
which he or she was trading for [SIG] at any time during the three (3)
month period prior to the termination of Employee’s employment.
The noncompetition clause also barred Fishkin and Chernomzav from disclosing
confidential information about SIG’s business and restricted them from associating with
anyone employed at SIG during the nine months prior to their termination for a period of
five years. The employment agreement provided SIG with alternative remedies in the
event of a breach: (a) liquidated damages of $700,000 or $800,000, depending on the
when the breach occurred; or (b) injunctive relief and other remedies to which it was
entitled at law.
In August 1999, SIG assigned Francis Wisniewski to trade Dow Futures, which are
futures contracts in the Dow Jones Industrial Average (“DJIA”), in the trading pit at the1
Chicago Board of Trade. Following about a month of unsuccessful trading, Wisniewski
developed a formula for calculating the expected values of Dow Futures based on his
observation that successful traders of Dow Futures monitored trading data for the S&P
500 Index. Because all of the individual stocks in the DJIA are also included in the S&P
500 Index, Dow Futures and S&P Futures tend to move in the same direction, with S&P
Futures typically adjusting to market movements slightly before such adjustments are

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reflected in the price of Dow Futures. Accordingly, SIG’s Dow Fair Value formula
reflected the relationship between S&P Futures and Dow Futures. After developing this
formula, Wisniewski created a spreadsheet to make the formula’s calculations more
quickly. After two months of trading Dow Futures, SIG reassigned Wisniewski. He saved
the spreadsheet containing the Dow Fair Value formula.
In August 2001, SIG reassigned Wisniewski to the Dow Futures pit and, shortly
thereafter, assigned Fishkin to trade Dow Futures (and engage in related hedging
transactions) with Wisniewski. They used the Dow Fair Value formula that Wisniewski
previously developed and traded the product until March 2003; for the year 2002,
Wisniewski and Fishkin earned SIG net trading profits of approximately $30 million.
Fishkin grew dissatisfied with his compensation and, in June 2002, sought to
negotiate a new employment contract with SIG. SIG did not immediately respond to his
request. Later that year, Fishkin was approached by a non-SIG trader representing a group
that later became NT Prop about whether he would be interested in forming a new
company to trade Dow Futures. Fishkin indicated that he would be interested in
participating in the new trading group as of March 2003, when his contract with SIG
expired. Between December 2002 and April 2003, Fishkin met with NT Prop
representatives several times to discuss a trading venture; at one such meeting, NT Prop
representatives asked Fishkin about SIG’s profitability in trading Dow Futures. Fishkin
told them that confidentiality provisions precluded him from revealing such information,
but, when asked if he made more than $5 million at SIG, Fishkin replied by saying

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Igor Chernomzav worked for SIG as an options trader. He did not trade Dow2
Futures with Fishkin at SIG.
The complaint named Susquehanna International Group, LLP, and Susquehanna3
Partners, G.P. These entities are one and the same.
6
“you’ll be pleased.” In February 2003, Fishkin stopped trading for SIG and officially left
the company in March 2003 (along with Chernomzav) to start a competing business,2
TABFG, LLC. On March 31, 2003, articles of incorporation were filed for TABFG. In
late April 2003, TABFG and NT Prop entered into a joint venture to trade securities and
financial products on the Chicago Board of Trade (as well as other exchanges). TABFG
began trading on April 25, 2003; it traded for four and one-half months until September
16, 2003, when it was enjoined from doing so by the District Court.
On March 30, 2003, Fishkin and Chernomzav, along with Francis Wisniewski,
filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania, seeking
declaratory and injunctive relief to the effect that the noncompetition agreements in their
employment contracts with SIG were unenforceable. SIG filed a counterclaim seeking an3
injunction preventing Fishkin and Chernomzav from trading as well as damages for
breach of contract, misappropriation of trade secrets, conversion, tortious interference
with contract, and civil conspiracy. SIG also impleaded TABFG; NT Prop; and Richard
Pfeil, a principal of NT Prop, as third-party defendants. NT Prop and Pfeil removed the
case to the U.S. District Court for the Eastern District of Pennsylvania pursuant to 28

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On July 7, 2003, NT Prop and Pfeil filed a motion to dismiss, which was4
ultimately granted as to Pfeil and denied as to NT Prop. Fishkin v. Susquehanna Partners,
G.P., No. Civ. A. 03-3766, 2005 WL 1030199 (E.D. Pa. May 2, 2005).
On March 16, 2005, following the death of Judge Kelly, the case was transferred5
to Judge McLaughlin.
Fiskin, Chernomzav, and Wisniewski initially appealed this decision, but,6
pursuant to a motion by all parties, this Court dismissed the appeal on July 8, 2004
pursuant to Federal Rule of Appellate Procedure 42(b).
7
U.S.C. § 1332.4
SIG moved for a preliminary injunction to enforce Fishkin’s and Chernomzav’s
noncompetition agreements, and Judge James McGirr Kelly granted that motion on5
September 16, 2003. On February 3, 2006, SIG moved for summary judgment to make6
the injunctive relief permanent, and NT Prop filed a motion for summary judgment on
April 21, 2006. On May 31, 2006, the District Court denied NT Prop’s motion for
summary judgment and granted SIG’s motion, thereby making permanent the preliminary
injunctive relief enforcing the employment contract’s restrictive covenants against
Fishkin and Chernomzav.
On February 12, 2007, the District Court considered cross-motions for summary
judgment concerning the proper measure of damages resulting from Fishkin’s and
Chernromzav’s breach of their noncompetition covenants. SIG sought to measure the
amount of damages as the profits earned by Fishkin, Chernomzav, TABFG, and NT Prop;
the District Court rejected this theory of damages and denied SIG’s motion for summary
judgment in its entirety. Conversely, Fishkin, Chernomzav, and TABFG contended that

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In the District Court’s Memorandum and Order of February 12, 2007, it denied7
SIG’s motion for summary judgment in its entirety. In addition, the court also ruled that
SIG could only recover nominal damages for its breach of contract claim. Similarly, on
8
SIG could not prove the appropriate measure of damages—its own lost profits—and
sought the dismissal of SIG’s claims of breach of contract, tortious interference, and
conspiracy. The District Court granted their motion in part, finding that the proper
measure of damages for SIG’s claims was its lost profits and that SIG could not establish
that measure. Nevertheless, the District Court found that, because “there remain disputed
issues of fact as to whether SIG was harmed by Mr. Fishkin and Mr. Chernomzav’s
trading in breach of their non-competition agreements,” SIG was entitled to seek an
award of nominal damages. Accordingly, it denied the motion of Fishkin, Chernomzav,
and TABFG “to the extent it seeks to dismiss the claims at issue in these motions.”
The District Court conducted a bench trial on the remaining claims from April 23,
2007, through April 26, 2007. On June 17, 2008, the District Court denied SIG’s claim
for misappropriation of trade secrets as well as related claims that are not at issue in the
instant appeal. Fishkin v. Susquehanna Partners, G.P., 563 F. Supp. 2d 547 (E.D. Pa.
2008). SIG now appeals the District Court’s February 12, 2007, denial of its motion for
summary judgment and the June 17, 2008, denial of its claim for trade secret
misappropriation.
II.
The District Court properly exercised jurisdiction pursuant to 28 U.S.C. § 1332.
This Court has jurisdiction pursuant to 28 U.S.C. § 1291. “[O]ur review of a grant of7

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June 17, 2008, the District Court issued an order denying SIG’s counterclaims for
misappropriation of trade secrets, conversion, and conspiracy. At argument, the parties
agreed that the District Court has fully and finally disposed of the outstanding issues in
this case. We agree, and accordingly we can exercise jurisdiction over these matters
pursuant to § 1291.
The parties agree that the substantive contract law of Pennsylvania governs the8
issues raised in this dispute.
9
summary judgment is plenary, and in making that review we use the same standard as a
district court: whether there are genuine issues of material fact precluding entry of
summary judgment.” Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211
(3d Cir. 2009). As to SIG’s appeal of the District Court’s denial of its misappropriation of
trade secrets claim following a bench trial, this Court reviews the District Court’s factual
findings for clear error and exercises plenary review over its conclusions of law and its
interpretation of legal precepts. Am. Soc’y for Testing & Materials v. Corrpro Cos., 478
F.3d 557, 566 (3d Cir. 2007).
III.
A. Damages for Contractual Breach8
SIG appeals the District Court’s ruling that, because SIG could not establish its
lost profits resulting from Fishkin’s and Chernomzav’s breach of their employment
contracts, it was entitled only to nominal damages on its breach of contract claim. SIG
argues that the District Court erred in denying its motion for summary judgment and in
barring it from recovering restitution damages measured by the net trading profits made
by TABFG during the four and one half months of 2003 during which it actively traded at

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the Chicago Board of Trade.
Pennsylvania law recognizes three possible remedies for a breach of contract:
expectation damages, reliance damages, and restitution damages. Ferrer v. Trustees of
Univ. of Pa., 825 A.2d 591, 609 (Pa. 2002); see also ATACS Corp. v. Trans World
Commc’ns, Inc., 155 F.3d 659, 669 (3d Cir. 1998); Trosky v. Civil Serv. Commc’n, 652
A.2d 813, 817 (Pa. 1995); Restatement (Second) of Contracts § 344 (1981). Although the
preferred remedy for a contractual breach is the award of expectation damages,
“measured by ‘the losses caused and gains prevented by defendant’s breach,’” ATACS
Corp., 155 F.3d at 669 (quoting Am. Air Filter Co. v. McNichol, 527 F.2d 1297, 1299 (3d
Cir. 1975)), a party may also sue for reliance or restitution damages in limited instances.
“This is especially so where an injured party is entitled to recover for breach of contract,
but recovery based on traditional notions of expectation damages is clouded because of
the uncertainty in measuring the loss in value to the aggrieved contracting party.” Id.
Before the District Court, SIG conceded that it could not calculate its lost profits
resulting from the breach, thereby rendering inappropriate the preferred remedy of
expectation damages. Nevertheless, SIG argued that it was entitled to restitution damages,
which require a breaching party to “disgorge the benefit he has received by returning it to
the party that conferred it.” Trosky, 652 A.2d at 817 (quoting Restatement (Second) of
Contracts § 344). In particular, SIG asserts that it conferred benefits on Fishkin and
Chernomzav, in the form of training and opportunities to learn the market and develop
goodwill with other traders, and that the proper measure of restitution for those benefits

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Before the District Court, SIG raised an alternative theory of restitution damages9
in which it asserted that, if the District Court rejected its claim for disgorgement of
profits, it should be permitted to recover the cost of its training program. The District
Court denied SIG’s request, holding that “[e]ven this more limited restitution damage
theory is inappropriate under Pennsylvania law.” Fishkin v. Susquehanna Partners, G.P.,
No. 03-3766, 2007 WL 560703, at *6 (E.D. Pa. Feb. 12, 2007). SIG does not appeal this
determination.
11
would require the breaching parties to “disgorge” their net trading profits.9
The District Court concluded that this Court’s decision in American Air Filter, 527
F.2d at 1299-1301, barred SIG’s claim for disgorgement of TABFG and NT Prop’s
profits. In that case, American Air Filter sued its former employee, McNichol, and his
new employer for breach of a noncompetition agreement, seeking injunctive and
monetary relief. Id. at 1298-1300. The district court denied injunctive relief and entered
judgment on a jury verdict in favor of the defendants. On appeal, American Air Filter
sought to establish damages via (1) an accounting of profits made by McNichol’s new
employer, (2) McNichol’s commissions earned with his new employer, and (3) its own
decrease in profit in the territory served by the former employee after it left the company.
This Court rejected American Air Filter’s attempt to measure its damages by the profits of
the breaching party’s new employer, observing that “[t]he basic failing of the plaintiff’s
theory is that the defendant’s profits are not necessarily equivalent to the plaintiff’s
losses. . . . To compel defendant to disgorge these profits could give plaintiff a windfall
and penalize the defendant, neither of which serves the purpose of contract damages.” Id.
at 1300 & n.8 (“[A] defendant’s profits are not the measure of a contract plaintiff’s losses
. . . .”); see also U.S. Naval Inst. v. Charter Commc’ns, Inc., 936 F.2d 692, 696-97 (2d

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SIG also relies on a Colorado decision, EarthInfo, Inc. v. Hydrosphere Resource10
Consultants, Inc., 900 P.2d 113 (Colo. 1995). Because EarthInfo did not involve the
application of Pennsylvania law, we focus our analysis on the implications of ATACS.
12
Cir. 1991) (“While on occasion the defendant’s profits are used as the measure of
damages, this generally occurs when those profits tend to define the plaintiff’s loss, for an
award of the defendant’s profits where they greatly exceed the plaintiff’s loss and there
has been no tortious conduct on the part of the defendant would tend to be punitive, and
punitive awards are not part of the law of contract damages.” (citations omitted)).
SIG cites this Court’s decision in ATACS in support of its argument that the profits
of the breaching party can serve as the restitution interest for a breach of contract. In10
ATACS, this Court considered the district court’s award of nominal damages arising from
a primary contractor’s breach of a teaming agreement with a subcontractor where the
subcontractor’s lost profits could not be calculated with reasonable certainty. ATACS, 155
F.3d at 668. In exploring the applicability of restitution damages, this Court observed that
restitution damages are “rooted in common notions of equity” and that they would
“require the party in breach to disgorge the benefit received by returning it to the party
who conferred it.” Id. at 669. The ATACS Court vacated the district court’s award of
nominal damages and remanded for an evidentiary hearing to determine “‘the fair value
of [the subcontractor’s] contribution to [the prime contractor’s] agreement’ in order to
protect the subcontractor’s restitution interest.” Id. at 671 (alternation in original; quoting
reference omitted). Despite SIG’s reliance on ATACS in support of its argument that the
breaching party’s profits can serve as restitution damages, the ATACS Court did not

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consider a request for disgorgement of the breaching party’s profits. The ATACS
subcontractor did not seek the primary contractor’s profits on the contract; after
unsuccessfully pursuing expectation damages, it sought restitution of the value of the
services it rendered. Id. at 664-65, 668.
Thus, the ATACS Court’s recognition of the possible remedy of restitution
damages as measured by “‘the fair value of [the subcontractor’s contribution]’”
corresponds to Restatement (Second) of Contracts § 344’s characterization of a party’s
restitutionary interest as the “interest in having restored . . . any benefit that [it] has
conferred on the other party.” See Trosky, 652 A.2d at 817 (discussing § 344). Although
SIG asserts that the benefits it conferred on Fishkin and Chernomzav “reasonably
equate[] to the $3.5 million in profit they generated for themselves and their co-
venturers,” it has failed to demonstrate that the value of the benefit it conferred in the
form of training and opportunities corresponds to the breaching parties’ net trading
profits. As the District Court noted, “the ‘basic failing’ of SIG’s theory is that the
counterclaim defendant’s profits are not necessarily equivalent to SIG’s losses, whether
those losses are viewed as SIG’s lost profits or SIG’s restitution interest in the benefit of
its training.” Because SIG did not prove that the value of the benefit conferred equated to
net trading profits earned by the breaching parties, the District Court’s rejection of SIG’s
claim for restitution damages was proper.
We acknowledge that, in the securities trading industry, harm occasioned by the
breach of a noncompetition covenant can be uniquely difficult to calculate. Nevertheless,

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securities trading firms are not without a means to protect themselves against this
difficulty; they can include liquidated damages clauses in their employment agreements
that provide for the disgorgement of profits by the breaching party. See, e.g., Omicron
Sys., Inc. v. Weiner, 860 A.2d 554, 564-65 (Pa. Super. Ct. 2004) (enforcing liquidated
damages provision providing that, in the event of any breach of a restrictive covenant,
“the Company shall be entitled to obtain . . . preliminary and permanent injunctive relief
as well as damages and an equitable accounting of all earnings, profits and other benefits
arising from such violation”); Worldwide Auditing Servs., Inc. v. Richter, 587 A.2d 772,
777-78 (Pa. Super. Ct. 1991) (holding that a liquidated damages provision that provided
for disgorgement of profit attributable to breaching party’s violation of contractual
covenant was enforceable). The parties’ contract did include a liquidated damages
provision—drafted by SIG—that did not provide for disgorgement. Instead, the provision
gave SIG the choice to (a) accept liquidated damages of $700,000 or $800,000, or (b)
pursue an injunction and other available, legal remedies. SIG chose the latter.
Accordingly, we will affirm the District Court’s denial of SIG’s claim for
restitution damages.
B. Trade Secret Misappropriation
SIG also appeals the District Court’s Memorandum and Order dated June 17,
2008, denying trade secret protection for the knowledge that SIG’s Dow Futures trading

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The District Court also concluded that SIG’s Dow Fair Value concept, formula,11
and spreadsheet did not warrant trade secret protection because, although SIG took steps
to keep its method secret and the method was valuable for SIG, the Dow Fair Value
trading approach was known and used by other traders, SIG did not invest a tremendous
amount of time or money to develop the method, and other traders could duplicate SIG’s
approach fairly easily. Fishkin, 563 F. Supp. 2d at 583-84; see also Doeblers’ Pa.
Hybrids, Inc. v. Doebler, 442 F.3d 812, 829 (3d Cir. 2006) (setting forth six-factor test for
whether a trade secret exists). On appeal, SIG abandons its claim that the trading strategy
itself merited trade secret protection.
The parties agree that Pennsylvania law governs SIG’s trade secret12
misappropriation claim. Although Pennsylvania adopted the Uniform Trade Secrets Act,
12 Pa. Cons. Stat. Ann. § 5301 et seq., effective April 19, 2004, the Act does not apply to
misappropriation occurring before its effective date. Id. § 5301 hist. & stat. note. Because
the conduct at issue occurred before April 19, 2004, the Uniform Trade Secrets Act does
not apply; instead, Pennsylvania’s common law governing trade secrets applies. Doebler,
442 F.3d at 829 n.20.
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methodology was profitable. In particular, SIG asserts that, during Fishkin’s discussions11
with NT Prop representatives between December 2002 and April 2003, Fishkin was asked
about the profitability of SIG’s Dow Futures trading. Although Fishkin told NT Prop that
confidentiality provisions precluded him from revealing profitability information, when
asked whether he made more than $5 million trading for SIG, Fishkin responded by
saying “[y]ou’ll be pleased.” SIG contends that Fishkin’s disclosure contained an implied
assertion that its Dow Futures trading method was profitable to some degree greater than
$5 million and that the disclosure of the extent of SIG’s profitability motivated NT Prop’s
representatives to form a joint venture with TABFG to trade Dow Futures with Fishkin
and Chernomzav.
To prevail on a claim for trade secret protection in Pennsylvania, the party12
seeking protection must demonstrate:

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This was the definition of a trade secret used before the passage of the Uniform13
Trade Secrets Act. As detailed in note 12, supra, the relevant law for the purposes of this
litigation is the law of trade secrets in Pennsylvania before the adoption of the Uniform
Trade Secrets Act.
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(1) that the information constitutes a trade secret; (2) that it was of value to
the employer and important in the conduct of his business; (3) that by
reason of discovery or ownership the employer had the right to the use and
enjoyment of the secret; and (4) that the secret was communicated to the
defendant while employed in a position of trust and confidence under such
circumstances as to make it inequitable and unjust for him to disclose it to
others, or to make use of it himself, to the prejudice of his employer.
Doeblers’ Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 829 (3d Cir. 2006) (quoting SI
Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1255 (3d Cir. 1985)).
As the District Court noted, “[t]he threshold inquiry in a trade secret
misappropriation claim under Pennsylvania law is whether the information is a trade
secret.” Fishkin, 563 F. Supp. 2d at 581 (quoting Van Products Co. v. Gen. Welding &
Fabricating Co., 213 A.2d 769, 780 (Pa. 1965)); see also Tyson Metal Prods., Inc. v.
McCann, 546 A.2d 119, 121 (Pa. Super. Ct. 1988). Pennsylvania courts have adopted the
definition of a trade secret as set forth in Restatement of Torts § 757 cmt. b. See13
Doebler, 442 F.3d at 829. This provision states 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 him an opportunity to obtain an advantage over competitors who do not
know or use it.” Restatement of Torts § 757 cmt. b. Information is not entitled to trade
secret protection if it is generally known, or easily derived from available information, in
the relevant business community. Id.

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This Court has enumerated several factors to consider when determining whether
information constitutes a trade secret deserving of protection:
(1) the extent to which the information is known outside of the owner’s
business; (2) the extent to which it is known by employees and others
involved in the owner’s business; (3) the extent of measures taken by the
owner to guard the secrecy of the information; (4) the value of the
information to the owner and to his competitors; (5) the amount of effort or
money expended by the owner in developing the information; and (6) the
ease or difficulty with which the information could be properly acquired or
duplicated by others.
Doebler, 442 F.3d at 829 (citing SI Handling Sys., Inc., 753 F.2d at 1256); accord
Restatement of Torts § 757 cmt. b.
In some circumstances, courts have applied Pennsylvania law to permit trade
secret protection of information concerning a company’s profitability, such as that
company’s specific profit margins. SI Handling Sys., 753 F.2d at 1260 (concluding that
“range of data relating to materials, labor, overhead, and profit margin, among other
things” qualified for trade secret protection to extent it was not “readily obtainable by
anyone in the industry”); see also Den-Tal-Ez, Inc. v. Siemens Capital Corp., 566 A.2d
1214, 1230 (Pa. Super. Ct. 1989) (“[I]nformation like . . . inventory data and projections,
details unit costs and product-by-product profit margin data is protectible as trade
secrets.”).
Despite the recognition that some profitability information may warrant trade
secret protection, the District Court properly rejected SIG’s misappropriation claim. The
information for which SIG sought protection was not its specific profit margins or its

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precise profitability; it was the fact of its profitability coupled with a limited suggestion of
the extent of its profitability. In particular, Fishkin’s statement that NT Prop
representatives would be “pleased” with the profitability of SIG’s Dow Futures trading
method implied that SIG was profitable to some extent greater than $5 million.
As the District Court noted, the fact that Fishkin and Wisniewski were making
money for SIG was already known to other traders. Under the circumstances, Fishkin’s
statement, while implying a certain threshold of profitability, did not sufficiently convey
the extent of SIG’s profitability to merit trade secret protection. Indeed, at the same time
that Fishkin stated NT Prop would be pleased, he also declined to provide actual
profitability information. A suggestion about the extent of a company’s profitability,
without more, is of limited value to the competitor and could easily be interpreted as mere
puffery. Thus, Fishkin’s statement is akin to the knowledge of the “hotness” of a product,
which the Pennsylvania Supreme Court has rejected as a basis for trade secret protection.
See Van Prods. Co., 213 A.2d at 773, 775-76 (denying trade secret protection to a drying
machine manufacturer when its former employee joined a competitor and disclosed fact
that deliquescent desiccant air dryers were “hot product[s]”). Just as the Pennsylvania
Supreme Court held that the “hotness” of a particular product was ascertainable to
industry competitors in Van Products, other industry participants could observe and
determine that SIG’s trading in Dow Futures was profitable.
SIG points to more recent Pennsylvania case law in support of its claim for trade

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secret protection. Specifically, in Air Products & Chemicals, Inc. v. Johnson, 442 A.2d
1114 (Pa. Super. Ct. 1982), the Superior Court of Pennsylvania affirmed a trial court’s
issuance of an injunction preventing a former vice-president of Air Products from
participating in certain employment practices at Liquid Air, a competitor of Air Products.
The Air Products court found that “the identification of opportunities in the field as well
as the extremely complex technological problems and commercial plans which must be
made to exploit those opportunities” constituted information entitled to trade secret
protection. Id. at 1119. While at Air Products, the employee had gained knowledge
specific to the “on-site” business of industrial gas sales, including methods of delivery of
on-site gas and an analysis of market opportunities; Liquid Air was not aware of this
information. SIG contends that, like the information found protectible in Air Products,
the knowledge that its trading business was profitable to an extent greater than $5 million
was “extremely valuable to a competitor since it would cut the development risk involved
in a similar project.” See Air Products, 442 A.2d at 1117. Nevertheless, the justifications
for protecting the information at issue in Air Products—specifically the “considerable
expense” of Air Products’ research and the “extremely complex technological problems”
involved—are not implicated by SIG’s claim for protection in the knowledge of the
profitability of its Dow Futures trading method. Accordingly, the District Court’s denial
of SIG’s claim of a trade secret in the fact and extent of the profitability of its Dow Fair
Value trading method was proper.
C. Sanctions

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On May 7, 2009, Appellees Fishkin, Chernomzav, and TABFG filed a Motion for
Sanctions against SIG for filing a frivolous appeal in violation of Federal Rule of
Appellate Procedure 38. Rule 38 provides that “[i]f a court of appeals determines that an
appeal is frivolous, it may, after a separately filed motion or notice from the court and
reasonable opportunity to respond, award just damages and single or double costs to the
appellee.”
This Court applies an objective standard to determine if an appeal is frivolous, or
wholly without merit. Quiroga v. Hasbro, Inc., 943 F.2d 346, 347 (3d Cir. 1991). “‘The
test is whether, following a thorough analysis of the record and careful research of the
law, a reasonable attorney would conclude that the appeal is frivolous.’” Id. (quoting
Hilmon Co. v. Hyatt Int’l, 899 F.2d 250, 253 (3d Cir. 1990)); see also Nagle v. Alspach, 8
F.3d 141, 145 (3d Cir. 1993) (“[W]e move with caution and will not label an appeal
frivolous unless it lacks colorable support or is wholly without merit.”). Appellees’
motion should be denied, as it does not constitute part of “that narrow category of
appeals” that Rule 38 is meant to discourage. Sun Ship, Inc. v. Matson Navigation Co.,
785 F.2d 59, 62 (3d Cir. 1986).
IV. Conclusion
Based on the foregoing, we will affirm the District Court’s denial of SIG’s
disgorgement theory of damages and its denial of SIG’s claim of trade secret
misappropriation. Further, we will deny Appellees’ motion for sanctions pursuant to Rule
38.

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