Property, intangible

a blog about ownership of intellectual property rights and its licensing

How to Make Money on Dow Futures

Most trade secret cases, in evaluating whether there is a trade secret or not, are looking at the degree to which secrecy was maintained, or analyzing whether the particular subject matter is of a type that may be protected through trade secret. Fishkin v. Susquehanna Partners G.P. (a declaratory judgment action) is a more unusual case where a claimed trade secret was learned through observation.


An employee of DJ defendant Susquehanna International Group (SIG), Wisniewski, worked in the the Dow pit on the floor of the Chicago Board of Trade. The court described the development of the trade secret this way:

45. Around September 1999, after he had been trading unsuccessfully in the Dow pit for a month using an arbitrage fair value strategy, Wisniewski began observing what other, successful traders in the pit were doing. He observed other traders looking up at the electronic wall board near the Dow Futures pit and watching the values for the S&P Index. He noticed that when the values for the S&P Futures were going up, these traders were buying, and when the values went down, they sold. He also noticed that when the value of the S&P Future went up a dollar, the value of the Dow Future would go up nine dollars, an amount proportional to the different underlying cash values of the two indexes. He also observed that these traders appeared to be making money.

46. Based on what he observed these other traders doing, Wisniewski wrote out the formula for Dow Fair Value, set out in Figure 9. He based this formula on what he deduced the traders whom he had been observing were using as the basis for their trades. Wisniewski did not believe his formula was anything novel or unique, and drafting it did not take him much time. He viewed it as a simple algebraic expression of the concept that he observed other traders using. This concept was that, when the S&P Futures were trading over (or under) their banking fair value the Dow Futures should trade over (or under) their banking fair value in the same proportional amount.

Wisniewski taught the system to Fishkin when they were employed together at SIG. They started out doing the calculations in their heads but ultimately used the system on handheld computers after seeing other traders using handheld computers in the pit. Both Wisniewski and Fishkin contemplated leaving SIG and so sued SIG seeking to invalidate restrictive covenants in their employment contracts; SIG counterclaimed against Fishkin, but not Wisniewski, for misappropriation of trade secret. Wisniewski ultimately stayed at SIG.

SIG claimed the formula as a trade secret, as well as using an Excel spreadsheet on a handheld computer to execute it. The court didn’t buy either argument, even though SIG had maintained the secrecy by taking such steps as displaying dummy values on the handheld computers in case other traders looked at the screens. The formula wasn’t a trade secret because it was learned through observation and other traders were using it; the use of handheld computers was learned from others also.


So despite the fact that secrecy was maintained, and Fishkin took the information (albeit in his head) with him, no misappropriation of trade secret.


It’s also a good case to read as a road map for the types of claims that can arise in the common situation where an employee who had a nondisclosure/noncompete leaves. Tortious interference, breach of contract, conversion, trade secret, they’re all in there.


Fishkin v. Susquehanna Partners, G.P., 563 F. Supp. 2d 547 (E.D. Pa. 2008).


© 2008 Pamela Chestek

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