Two rival Hispanic bakeries in Portland are caught up in a trade secrets skirmish over recipes that two former employees took to another bakery. Notice the emphasis on former employees.
“These recipes and baking methods constituted valuable trade secrets not publicly known and … the cakes and pastries made from them were and are in great demand by the Hispanic community in the greater Portland-Vancouver metropolitan area.”
There may be hope for the Plaintiff in this case as it appears that his trade secrets protection plan was in place because the complaint attaches confidentiality agreements signed by the former employees. Bravo.
TradingMarkets.com is reporting that Agilent Technologies, Inc. is suing Advanced Materials Technology Inc. in Delaware for breach of confidentiality agreements, misappropriation of trade secrets, and breach of fiduciary duties relating to its high-performance liquid chromatography or HPLC technology, whatever that is. Agilent alleges that three employees of Advanced, formerly of Agilent, took Agilent trade secrets and confidential information and used it for the benefit of Advanced in developing its Halo HPLC. The story is here.
Do you notice a trend with these cases? Bonus points if you said that most of them relate to former employees leaving for another company and using their former company’s trade secrets and confidential information to compete unfairly.
These cases all have one thing in common–they will turn on the strength of the plaintiff’s trade secrets protection plan. A strong plan that is effectively implemented will generally allow recovery, while on the other hand, companies with no plans, or companies who don’t effectively implement their protection plans will generally be denied recovery.
We will follow this case as it develops to analyze the strength of Agilent’s trade secrets protection plan and its implementation.
Florida’s Herald Tribune is reporting that Alpha Mining Systems, a manufacturer of industrial mining tires, has won a $19.7 million verdict against former employee Sam Vance. You can find the story here.
According to the story, “in early 2005, Vance began working for China-based competitor Guizhou Tire Co. while still employed with Alpha. He would take Guizhou tire orders on his wife’s cell phone and through his personal e-mail account to avoid detection.”
He also handed over pricing and profit margin information and customer lists to Guizhou, which paid him a commission on every tire sold, records show.”
Beginning in August 2005, Vance went to work for Dubai, United Arab Emirates-based Al Dobowi Group, an upstart mining company.”
Vance gave Dobowi all of Alpha’s trade secrets, from pricing information to its customer list to the design blueprints for Alpha’s specialty tires, court records say.”
The damage to Alpha was extensive as court records show that “Del-Nat Tire Corp. and American Tire Corp. were buying a combined average of $1.9 million per month from Alpha until April 2005, when they stopped buying anything.”
From April 1, 2005, to Jan. 15, 2008, Alpha lost more than $10 million from Del-Nat alone, the court found.”
It’s a theme on this blog that I will keep repeating: the biggest threat to your trade secrets are your own employees. A comprehensive trade secrets protection plan is imperative for any company that depends on trade secrets for a competitive advantage. You must begin thinking about this critically before your company has its own Sam Vance and unlike Alpha, because you didn’t protect your trade secrets adequately, you are prevented from recovering any damages due to the misappropriation.
The $19.7 million award is one of the largest trade secret judgments in Florida history. But, how likely is it that Alpha will recover? Since, Vance didn’t show up to any court appearance, he’s probably living the high life somewhere outside the U.S. Hopefully, they’ll be able to find him and make him pay the piper for his misdeeds.
I found an interesting article over at Business Week that was written last year by Lisa Fleming, an attorney in Boston, Mass. The article has valuable and pertinent information for any small business owner concerned about trade secret theft–and if you’re a small business owner not concerned about trade secret theft, then you should definitely read the article. I guarantee that you will be concerned after reading the article–at least, you should be.
For smaller employers, there are a number of reasons why the effects of trade secret theft can be so devastating. Often, small firms are think tanks for new technology. Their main competitive advantage is their flexibility and their ability to turn out a new product or a twist on an existing product that gives them an important slice of the market. When an employee leaves for a competing firm or to start her own business, and takes with her valuable confidential information, that can wipe out the small firm’s sales.
The first company to develop a key technology in an industry like telecommunications, for instance, gets a huge competitive and financial edge, even if it’s relatively short-lived. Losing that edge because of intellectual property theft can have disastrous effects, especially on a smaller company. Losing a key trade secret can mean that a company loses its dominance in a key market, loses millions in sales, and ultimately even fails entirely.
and, speaking about where businesses can get advice for trade secret protection:
Employers can draw upon their human-resources personnel or consultants in this area. They should also have attorneys who are savvy about this part of the law review their plans and legal documents, to maximize their protection. It’s an area fraught with expensive litigation, so it’s important to make sure up-front that your written agreements and company policies are as strong and as specific as they can be, so they’ll stand up in court. (emphasis mine)
That last paragraph touches on an issue that I will continue to stress–it is much less expensive to lay the proper groundwork up front for a trade secrets protection plan than it is to litigate later. While litigation may be inevitable in some cases, when your trade secret protection plans are properly established and properly followed, a settlement early in the process stands a much greater chance; and that will ultimately save you money.
For more information, on this topic click on my Free Report entitled “5 Biggest Mistakes Businesses Make Protecting Trade Secrets.”
The Trade Secrets Vault, hosted by Jon Cavicchi, has graciously posted a link to my Free Report entitled “5 Biggest Mistakes Businesses Make Protecting Trade Secrets.” It’s a must read for any business owner interested in protecting trade secrets. Thanks Jon. And thanks for the link to my press release announcing the launch of this site as well.