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Court Refuses to Block Employee From Taking New Job in the Face of Claims he Would Disclose Trade Secrets

Trade Secrets come in all shapes and sizes. They can be as complicated as the recipe for a favorite soft drink or can be as straight forward as a list of clients for a particular company. Whatever the trade secret, they are crucial, essential and sensitive pieces of information many company is willing to litigate over to protect. Companies go out of their way to protect such assets when they hire new employees. There are many ways to protect trade secrets. Non-compete, non-solicitation and/or non-disclose clauses within an employee agreement are just a few ways protection can be sought.

In Triumph Packing Group v. Ward, 834 F. Supp. 2d 796 (N.D. Ill. 2011), Triumph, a privately-owned manufacturer of packing supplier to large supplies of consumer goods, brought a suit against Mr. Ward, Chief Operating Officer of Triumph, who was fired in 2011. Upon employment with Triumph, Ward signed an employment agreement which included a non-compete clauses as well as a non-solicitation clause. After time spent at Triumph, it was discovered that Ward had been allegedly diverting resources from his employer to allegedly engage in business with a former customer of Triumph, as well as to allegedly fund new business endeavors with AGI, a global packing company who hired Ward as their Vice President. Through his employment with Triumph, Mr. Ward was able to allegedly obtain Triumph’s customer and pricing information. Triumph argued that Mr. Ward had obtained “lean manufacturing and efficient operations” which Triumph deduced to be trade secrets. Triumph argued that Mr. Ward would inevitably misappropriate Triumph’s trade secrets with his new businesses endeavors. Ward denied all of the claims.

Triumph claimed that Ward was privy to trade secret information which consisted of Triumphs (1) pricing and customer information, including the pricing model and customer-specific price points, and (2) Triumph’s “manufacturing process and improvements”. The Court struck down Triumph’s claims as without merit on the basis that Triumph did not give any reason for the Court not to determine that packing process was one that Ward could not have picked up over his years of packing experience.

The Court had a harder time making a determination regarding the “customer-specific manufacturing process”. Taking factors such as the time and energy as well as the value that Triumph put on the information, the Court found that there was a reasonable likelihood that the manufacturing process would be found to be a trade secret.

Regarding the threatened misappropriation, Triumph alleged that Ward would take the information deemed to be trade secrets over to his new business endeavor with AGI and inevitably misappropriate such trade secrets.  The Court took into consideration that AGI and Triumph were not direct competitors, as well as the fact that Ward would not be working in the same capacity at AGI as he did at Triumph. Both of these factors weigh heavily in the Court’s opinion to deny a preliminary injunction enjoining Ward from working for AGI.

After discussing alleged conduct of Wad that Triumph argued was inappropriate the Court held that entering a preliminary injunction allowing Ward to work for his new employer would be unwarranted.  The Court makes a point of not being swayed by negative rhetoric and attempts to make Ward look unethical. It notes claims that Ward did not deal openly or frankly toward Triumph are beside the point and do not change that his job duties would not be similar at AGI. Along with the conclusion that AGI is not a direct competitor of Triumph, the Court found that entering a preliminary injunction based on threatened misappropriation of trade secrets under the facts presented would be inappropriate.  Each of these types of cases turns on their own unique facts as the Court’s analysis here shows.The business litigation attorneys at DiTommaso Lubin Austermuehle near Chicago and Oak Brook represent business owners and professionals regarding non-competition agreements, covenants not to compete, trade secret, confidentiality agreement, restrictive covenants and other claims throughout the Chicagoland area, including Cook, DuPage, Lake, Kane, McHenry and Will Counties; and in the Mid-West region, including Indiana, Wisconsin and Iowa. You can contact us by calling our toll free number (877) 990-4990 for a consultation or contact us online by filling out the form at the side of this blog.