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Thursday, October 17, 2013

Hiring the Secret Sauce Employee



By Tommy Eden
  



Adrian Hembree was a vice president of New York Pizzeria Inc., as well as a franchise owner, when his employment with the company was terminated. According to its website, New York Pizzeria has 32 restaurants in the United States and the Middle East.
New York Pizzeria eventually bought out Hembree’s franchise and took ownership of the restaurant.  However, it recently filed suit in Texas Federal Court alleging claims of trade secret misappropriation, violation of several Federal and Texas statutes by Hembree and a host of competitors; some who were prior New York Pizzeria franchisees. According to the Complaint, the defendants schemed to develop their own franchise operation that was a virtual copycat of New York Pizzeria Inc.’s successful model. Hembree had access to confidential, proprietary information, including recipes, plate specifications, supplier and ingredient lists, and training and restaurant operations manuals; all of which he had acknowledged in the franchise documents as trade secrets of New York Pizzeria.

The Complaint also claims that Hembree, without authority, accessed New York Pizzeria’s online portal with company issued usernames and passwords and “obtained New York Pizzeria’s special recipes and other proprietary information.” The case is New York Pizzeria Inc. v. Syal.

Common Sense Counsel:
Allegations of misappropriation of trade secrets or other intellectual property expose companies and individuals to serious criminal and civil liability. The employee of your competitor who brings the secret sauce recipe to your business can sometimes leave you nothing but a bad taste.
There are several actions a company can take to avoid being accused of Trade Secret violations and to protect their own secrets: 1) request information from new hires about any non-competes and confidentiality agreements; 2) protect your own secrets with use of him effective nondisclosure and confidentiality agreements; 3) when you have a protectable interest, consider use of non-compete and non-solicitation agreements as permitted by state laws; 4) inform employees that the company does not engage in or approve of any sort of trade secrets misappropriation; 4) limit the accessibility of confidential, proprietary and trade secret information to those employees who require such information in order to perform their jobs; 5) Prior to an employee’s departure from the company, collect company laptops, cell phones, flash drives and other devices, and check that electronic documents have been returned or deleted from any cloud-storage application; 6) remind departing employees in writing of previously signed agreements regarding confidential, proprietary and trade secret information; and 7) get a signed statement acknowledging that the departing employee has not retained or forwarded any document, writing, email, voicemail or text message containing confidential or proprietary information.
Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com