Trade secrets
JP Morgan Chase v. Argus Information & Advisory Services Inc.
Date: Sept. 30, 2024
Issue: Whether banks continue to have property rights in information created for business purposes after it is shared with regulators.
Case Summary: ABA filed a coalition amicus brief urging the District Court of Delaware to deny Argus Information & Advisory Services Inc., Verisk Analytics Inc. and Trans Union LLC’s (collectively Argus’s) motion to dismiss JP Morgan’s lawsuit, claiming Argus misused credit card data collected from banks on regulators’ behalf.
JP Morgan alleged Argus engaged in a decade-long scheme to secretly misappropriate the bank’s valuable trade secret data, which comprises of anonymized monthly account and portfolio credit card data for millions of users. According to JP Morgan, Argus obtained the bank’s trade secret information as a data aggregator for the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Reserve Bank of Philadelphia. JP Morgan claimed Argus covertly used, retained, and disclosed the bank’s trade secrets in commercial analytics business involving the nation’s largest financial institution. As a result of the alleged conduct, Argus agreed to pay $37 million to resolve the U.S. Department of Justice’s claims alleging it violated the False Claims Act.
JP Morgan sued Argus, alleging Argus misused credit card data obtained from banks under contracts with federal regulators over a decade-long period. Argus moved to dismiss, arguing JP Morgan failed to state a claim because Argus owned the trade secrets. Further, Argus claimed the disputed data is confidential supervisory information (CSI) that belongs to the regulators under both OCC and FRB regulations.
In its brief, ABA argued agency rules establish that banks continue to have property rights in information created for business purposes after it is shared with the regulators. ABA noted the Federal Reserve rules have never deprived banks of property rights in their data. ABA highlighted that the Federal Reserve’s regulation provides that CSI “does not include documents prepared by a supervised financial institution for its own business purposes and that are in its possession.” Accordingly, ABA maintained the Federal Reserve’s regulation carves out information prepared and possessed by a bank for its own business purposes from the scope of CSI, establishing that banks retain important rights in the data.
ABA also argued OCC rules have never deprived banks of property rights in their data. The OCC’s definition of CSI applies to records it creates or obtains in connection with supervisory responsibilities. In ABA’s view, this CSI designation, however, does not cover all information about a bank when in OCC’s control. The OCC distinguishes between internal OCC communications and supervisory materials, which are protected as CSI regardless of who possesses them, and a bank’s own books, records, and raw data, which are CSI, only in the hands of the OCC. ABA asserted that banks retain the right to use and disclose their business data even when regulators have reviewed or relied upon it.
Next, ABA argued the regulators’ possession of copies of bank data does not extinguish banks’ property rights to it. While regulators may classify copies of bank documents as CSI, this does not strip banks of their property interest in the information in those documents. Regulators can use CSI for specific purposes, such as advancing their supervisory function, but their agents do not have the authority to misappropriate and commercialize the data as Argus did. Additionally, ABA contended banks’ property rights in their confidential data and trade secrets are also protected by the Takings Clause of the Fifth Amendment as there has never been any expectation that sharing bank information with the regulators could lead to its commercialization.
Finally, ABA argued policy considerations require banks to maintain property rights in their trade secret data. Regulators have the authority to review broad aspects of a bank’s operations regularly. Given the comprehensive range of information subject to regulatory oversight, interpreting CSI to include all material a bank shares with the regulators would lead to impractical results. According to Argus’s interpretation, banks would need permission from regulators to disclose their own business data — even routine payroll or internal reports — or risk criminal penalties. This would create uncertainty in bank operations and strain their interactions with regulators. ABA also argued that Argus’ proposal would discourage open communication between banks and regulators.
Bottom Line: Trial is set for the Summer of 2026.
Document: Brief
