High Court Upholds Confidentiality Agreement!

There is a recent court decision by the 9th Court Circuit of Appeals that actually found on behalf of an EMPLOYER! This is a very important decision that upheld an employer being able to protect the confidentiality of trade secretes against employees who think they can leave and take confidential information with them.

A dispute “brewing” since 2013 came to a “head” on March 20, 2019 when the Ninth Circuit Court of Appeals upheld the lower court’s decision that Anheuser-Busch could prosecute its civil claim against a former employee accused of taking recipes and other trade secret information and providing that information to lawyers to support a different class action lawsuit against Anheuser-Busch.

Anheuser-Busch required its employees to enter into agreements to protect its confidential information, return all confidential information at termination of employment, not disclose the confidential information and, following termination, upon request, certify that the employee had not disclosed or used any confidential information.  In 2013, a former employee convinced one of his former co-workers to send him an email containing a page of information containing Anheuser-Busch’s recipe and other information, and then sent that information to the plaintiff’s lawyers in a class action case that was filed immediately thereafter.

The former employee filed an “Anti-SLAPP” motion to try to defeat the claim against him by his former employer.  An Anti-SLAPP lawsuit is supposed to prevent meritless litigation designed to chill first amendment rights.  If a defendant establishes that the challenged case arises from protected activity, the plaintiff, here Anheuser-Busch, must meet the challenge of demonstrating a probability of prevailing on the merits.  In 2015, the Ninth Circuit, in this same case concluded that the lawsuit was based on the employee’s actions in furtherance of protected activity.  So, the lower court conducted a lengthy analysis to conclude that Anheuser-Busch demonstrated that its recipes and methodologies were subject to trade secret protection, used reasonable means to protect its secrets, that the former employee misappropriated the trade secret information and breached his contractual obligations to Anheuser-Busch.  And, on this “round” to the Ninth Circuit, it agreed that Anheuser-Busch demonstrated a likelihood of success.

On a final note, be sure that you have consulted with counsel to ensure you have updated your employment confidentiality agreements and practices to protect against the theft of your confidential information, techniques, methods and other trade secret information that differentiates your brand from others.

 

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