Overview:
Secret Wu-Tang Clan album ruled a trade secret. How might creators seek to protect unreleased works under trade secrets laws, and how might consumer survey research be utilized to enforce new protection strategies?
The Rarest Album in the World
Between 2007 and 2013, Wu-Tang Clan secretly recorded Once Upon a Time in Shaolin as a statement piece on the devaluation of music in the digital era. One physical copy of the album was produced and the purchase price included contractual stipulations preventing it from being commercially exploited until 2103.
In 2015, a pharmaceutical executive named Martin Shkreli purchased the album for $2 million. Shkreli was later convicted of securities fraud, and the U.S. government seized the album through a forfeiture order and sold it. It was eventually acquired by PleasrDAO, a group that collects non-fungible tokens, a type of digital art, that it believes are culturally significant. After Shkreli was released from prison, he admitted to making unauthorized copies and even live-streaming portions of the album to nearly 5,000 listeners. PleasrDAO sued, alleging violations under the Defend Trade Secrets Act (DTSA).
The Court’s Reasoning
PleasrDAO alleged the album could qualify as a trade secret, arguing that the album has never been commercially released and remains largely unknown to the public, the band actively restricted access and use, the album’s worth derives from its exclusivity and secrecy, and the album is difficult to reproduce or acquire.
Judge Pamela Chen of the Eastern District of New York declined to dismiss the trade secrets claim. Prior cases attempting to legally classify music as trade secrets, involving unreleased Prince and Janet Jackson recordings, were viewed as valuable for their potential public release, not their secrecy. Judge Chen acknowledged this is “uncharted territory,” but allowed the trade secret claim to proceed. The Court also upheld PleasrDAO’s claim for recovery of the physical album.
IP Implications
Many people consider the ruling a new frontier in intellectual property protection, creating the possibility that artistic works, when tightly controlled, can be treated as trade secrets. This case may hold implications for how creators structure intellectual property strategies. If trade secrets may be used as an alternative to copyright, creators may seek to protect unreleased works as trade secrets, if secrecy itself is the core source of the works’ value. We may see business models that include limited releases and controlled access, or other cases arising with trade secret claims.
Where Consumer Surveys Fit In
In the U.S., when courts evaluate issues of consumer perception, such as the likelihood of confusion between two trademarks or whether advertising made misleading statements, the parties often turn to consumer surveys.
IMS Legal Strategies designs and conducts reliable consumer research for use in trade secret, trademark, and false advertising cases, as well as supporting that research with expert testimony. We help courts and juries understand how consumers perceive advertising statements, origins of products, and other intellectual property issues. While the Wu-Tang Clan case may be an outlier, it offers a roadmap for how exclusivity and secrecy can transform artistic works into protectable trade secrets.
If your business is facing a complex IP dispute that could use reliable measures of consumer perception, our experts can help. Contact IMS Legal Strategies.