A California federal district court recently granted a temporary restraining order ("TRO") against a former employee for misappropriating proprietary and confidential information in violation of the Defend Trade Secrets Act ("DTSA"), the California Uniform Trade Secrets Act ("CUTSA"), and company confidentiality and non-disclosure agreements. Bemis Co., Inc. v. Summers, No. 219CV00344TLNKJN, 2019 WL 1004853, at *1 (E.D. Cal. Feb. 28, 2019).
Background
Plaintiff Bemis Company, Inc. ("Bemis") sued a former employee for trade secret misappropriation and breach of contract. Bemis is one of the largest global suppliers of flexible and rigid packaging products, including snack food bags, candy wrappers, cheese packaging, hot dog packaging, medicine packaging, and much more.
The former employee was a technical service representative responsible for performing customer audits and film trials, as well as client trainings. In his position, the former employee had access to trade secret and confidential information for Bemis' customers, including the make, model, and performance statistics of Bemis' equipment and the packaging operations and metrics of that equipment. To have access to and work with this information, the former employee was required to sign confidentiality and non-disclosure agreements.
In January 2019, the former employee resigned from Bemis, stating that he was planning to go into real estate sales with his wife. After his resignation, however, Bemis discovered that the former employee began working for a competitor, Winpak. Bemis conducted a forensic analysis of the former employee's computer and email accounts and discovered that from December 2018 through his resignation in January 2019, the former employee had copied significant amounts of confidential information from his Bemis computer onto a personal storage device. This information included audit files, training materials, specifications detailing Bemis capabilities, and customer presentations.
On February 26, 2019, Bemis filed a complaint alleging breach of contract and trade secret misappropriation in violation of the DTSA and the CUTSA. Bemis also filed the motion for a TRO, requesting the Court to enjoin the former employee from using, disclosing, or retaining Bemis' confidential information.
TRO
In evaluating Bemis' trade secret misappropriation claims under the DTSA and CUTSA, the Court found that Bemis owned a trade secret, that the former employee likely acquired this trade secret and that the use of the trade secret would damage Bemis by causing it to lose business, business advantage, and good will. Accordingly, the Court held that Bemis met its burden of showing a likelihood of success on the merits claims under federal and California trade secrets law.
As to the breach of contract claim, the Court found that the former employee entered into presumptively valid agreements in which he agreed to (1) refrain from disclosing any trade secrets and other confidential materials and (2) to return any of Bemis' property upon the termination of his employment with Bemis. The Court stated that, at minimum, there was evidence that the former employee breached the signed agreement and that these breaches would damage Bemis. Thus, the Court found that Bemis had established a likelihood of success on the merits of its breach of contract claim.
Although a likelihood of success on the merits is often cited as the most important inquiry in granting a TRO, the Court continued its analysis and determined that the other factors favored Bemis on the trade secret and contract claims, as well. Specifically, the Court found that Bemis had shown that it would suffer irreparable harm due to lost business, loss of business advantage, and loss of goodwill, which could not be remedied with a monetary award. The Court also found that the balance of hardships tipped "sharply" in Bemis' favor and that injunctive relief would support the strong public interest in favor of protecting trade secrets.
Takeaways
Bemis represents a victory for employers in the defense of protecting proprietary and confidential information and serves as a reminder for employers to ensure that they have proper confidentiality and non-disclosure agreements in place. Additionally, this case shows the importance of conducting a forensic analysis when a former employee moves to a competitor.
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