Exclusive: TuneCore vs. CD Baby Settlement Appears Possible Following Court-Issued ‘Temporary Restraints’ Against CD Baby

Yesterday, we exclusively reported on a high-stakes lawsuit filed by TuneCore against CD Baby. Now, a new order concerning a settlement motion is providing additional insight as to the trade-secrets dispute’s direction. This development in the courtroom confrontation, which only entered the media spotlight with our exclusive, emerged in a just-added court docket update dated February 27th. Pertaining to the presiding judge’s order on a settlement motion, as noted, the entry didn’t have a document attachment at the time of writing.

Consequently, it’s unclear precisely what the order entails – though based upon the available evidence, the odds of a near-term resolution in the legal battle appear somewhat remote. As we covered in detail, Believe’s TuneCore alleges that a marketing exec credentialed a personal email address before being terminated, thereby gaining “backdoor access” to the company’s database and all manner of proprietary information post-employment.

After departing TuneCore – which, according to the complaint, had even agreed “to a limited waiver of certain non-competition provisions…to enable” the professional to sign on with Downtown-owned CD Baby in the first place – the higher-up in question, Faryal Khan-Thompson, allegedly utilized the unauthorized access to view and download an array of sensitive company documents. (The credentials she’d used to view various internal resources pre-termination had, of course, been disabled at the time of her exit, per TuneCore.)

As described by TuneCore, which is suing Khan-Thompson as well as CD Baby itself, these documents include but aren’t limited to notes from confidential meetings, a 2023-24 “product strategy roadmap,” a breakdown of longer-term product plans, and a description of international strategic objectives for 2022-25.Predictably, TuneCore, having discovered the alleged trade-secret theft after “suspicious activity on its system” spurred a late-October investigation, is far from thrilled that many especially significant operational specifics could have ended up in the hands of a competitor.

Khan-Thompson, who didn’t respond to a request for comment in time for publishing, joined CD Baby as SVP of marketing and community engagement in June of 2023 and exited the role this month, according to her LinkedIn profile.

Beyond the decidedly serious nature of the allegations, possibly weighing against the prospect of an imminent full-scale settlement are the injunction orders that Judge Ann Donnelly recently signed.

Until May 1st, CD Baby is barred from using or otherwise disseminating any of the confidential information at issue, according to the first order, with negotiations ongoing as to a “forensic examination” of the defendant distributor’s network. Should this examination take place and turn up evidence of TuneCore’s proprietary information, arrangements would have to be made for “the return or forensic removal” thereof, the legal text shows.

Khan-Thompson, for her part, is already facing a forensic examination of her “electronic accounts and devices” and, among other things, can no longer access TuneCore’s network, per the second of the orders.