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Friday, November 3, 2017

Big Coffee Fight Brewing Over Trade Secrets


Ronald DiFabio executed a Confidentiality Agreement when he started employment with Keurig Green Mountain Inc. in which he promised that he would not, at any time, directly or indirectly, use any Confidential Information or disclose to anyone outside of Keurig any such Confidential Information. DiFabio further agreed that if he ceased to be employed by Keurig at any time, he would immediately return any property belonging to Keurig.

After DiFabio left his employment with Keurig to join SharkNinja, he violated his obligations to Keurig under his Confidentiality Agreement by asking Keurig employees to email him Keurig internal organizational charts and proprietary information about the merchandising teams at several of Keurig’s retail customers, according to a Verified Complaint filed by Keurig in Massachusetts Federal District Court this week.(Link:https://drive.google.com/file/d/1SgbH71-_qj3sMXxPPeAF7F8A8Zg6Qm6J/view?usp=sharing) Also alleged is that before his resignation from Keurig in late 2016, DiFabio removed at least nine electronic files containing Keurig’s confidential business information and/or trade secrets from Keurig’s electronic systems, as well as hard copies. He then loaded them, or “migrated them” onto SharkNinja’s electronic systems.

Co-worker Steven Turner, who signed the identical Keurig Confidentiality Agreement, resigned from Keurig in 2017 to join DiFabio at SharkNinja. According to the same Federal Court Complaint, Turner violated his obligations to Keurig under his Confidentiality Agreement by emailing, to his personal email account, and a short time before his resignation, Keurig’s Confidential Information, including highly confidential business, marketing and sales plans prepared by Keurig relating to one of Keurig’s largest customers Bed Bath & Beyond, which included a power point presentation to the customer.

This week Keurig filed suit against both employees under the Defend Trade Secrets Act (“DTSA”) which provides a federal cause of action to the owner of a trade secret that is misappropriated and is related to a product or service used in (or intended for use in) interstate commerce. 18 U.S.C. §1836(b). The Complaint included a claim under the Computer Fraud and Abuse Act (“CFAA”) which provides a private right of action where a party knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value. 18 U.S.C. §1030(a)(4).

Common Sense Counsel: CFAA and the DTSA are significant weapons to combat employee trade secret theft. Be prepared to quickly take these steps now: 1) update all non-disclosure agreements, confidentiality agreements, employment agreements, consulting agreements, and independent contractor agreements to include new DTSA non-disclosure provisions to include the required notice signed by all employees; 2) documents containing trade secrets should be labeled as confidential, their distribution should be limited, they should be maintained in secure areas, and individuals who are privy to such secrets should be trained on the nature of that information and how to safeguard it; 3) access to computer files containing such information should be restricted and tracked; 4) those with access should be trained on the files’ confidentiality; and 5) because trade secrets litigation often involves violations of non-competition or non-solicitation agreements, be prepared to bring  such claims in tandem with the DTSA and CFAA violations.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com