Will Your Trades Secrets Be Safe if You Lose a Member of Your Senior Team?

 By Eric B. Meyer

Chris Botticella used to work for Bimbo Bakeries USA, the Pennsylvania-based maker of Thomas’ English Muffins, among other products. As vice president of operations, Botticella had access to Bimbo’s code books containing the formulas and processes for Bimbo’s products. Most notably, Botticella was one of seven people at Bimbo who knew how to independently recreate those unique little nooks and crannies in Thomas’ English Muffins, according to the 3rd U.S. Circuit Court of Appeals case Bimbo Bakeries USA Inc. v. Botticella.

Last year, after copying Bimbo’s trade secrets, Botticella accepted a job with one of Bimbo’s biggest competitors. When Bimbo found out, it sought an injunction to prevent Botticella from competing with Bimbo. One problem: Botticella never signed a non-competition agreement with Bimbo, according to the opinion.

The 3rd US Circuit Court of Appeals resolved that problem and held that Bimbo could temporarily stop Botticella from going to work for a competitor — even though Chris had never signed a non-competition agreement. The court blocked Botticella from working because Bimbo was able to demonstrate a “substantial likelihood” that he would disclose Bimbo’s trade secrets to his new employer.

Despite Botticella’s preposterous argument that he had “blocked out of his head” many of Bimbo’s trade secrets, the court found ample evidence that he had acted suspiciously in his final weeks at Bimbo, justifying the harsh remedy.

Are non-compete agreements still necessary?

Absolutely. While the Bimbo case showed that courts are willing to protect sensitive company information from misuse, restrictive covenants provide the only path to ensure that all of your company’s trade secrets — not just the “nooks and crannies” — are adequately protected from disclosure. When reviewing your company’s agreements, keep three things in mind:

• The Bimbo case is unusual. Generally, courts do not enjoin employees without non-competition agreements from working for a competitor.
• If you do not want your employees to compete with you, have them sign a non-competition agreement when their employment begins. Only some states will enforce a non-competition agreement signed after employment starts. 
• Make sure the non-competition agreement is reasonable in both geography and scope. Some courts will revise overly broad agreements, but others will disregard them altogether.
  
  Just remember, Botticella is the exception, not the rule. Maybe next time he’ll hire the Men in Black or the Inception folks to erase his mind.
  

Eric B. Meyer is a member of the Labor and Employment Group at Dilworth Paxson LLP. Readers can contact Meyer via e-mail and follow him on Twitter.

This posting is for informational purposes and should not be construed or interpreted as either legal advice on any matter or as in any way creating an attorney/client relationship

Comments

[legitimate paid surveys]

For me, I'm not afraid to lose a senior member. There might be a threat, but 'm not threatened, there's a contract.

[surveys online]

As for me, it's still going to be safe. We've got contract. Hopefully, before you hire them, you have had them signed in a contract with your policy.