Do you have a decent employment agreement regarding confidential information? You might take a lesson from this Anheuser-Busch case and get one to protect your trade secrets.
This case all stems from that kerfuffle a few years back regarding the variation between stated and actual alcohol by volume content in Anheuser-Busch beers. Anheuser-Busch went after the defendant in this lawsuit presumably believing he had something to do with the disclosure of the tolerance/variation levels. The case was already the subject of a 9th Circuit opinion where the former employee won his argument that California’s anti-SLAPP statute applied, but the 9th Circuit also noted that the brewer could still “be able to establish a claim that [the employee] breach his contract and misappropriated trade secrets” and remanded the case for a determination as to whether AB established that there “is a probability that [it] will prevail on the claim.” AB won that determination and the employee appealed again and the 9th Circuit has gone AB’s way.
The recent 9th Circuit opinion allows AB’s claims to proceed. According to the 9th Circuit opinion, Anheuser-Busch claimed a former employee breached a confidentiality agreement by obtaining and disclosing what the opinion called “a proprietary document related to the company’s brewing process.” You can read the 9th Circuit opinion here. No reference at all to the underlying facts that gave rise to all this, and the now, going-on-six-year dispute.
But, fear not dear reader, the complaint in the district court case contains the detail necessary to understand the lesson – which is to have a good employee agreement regarding confidential information in place with each employee.
The employee, now an attorney, worked for AB and signed this Employee Agreement regarding intellectual property. The complaint alleges that in 2012 the employee began preparing to leave the company and engaged in “a series of acts designed to misappropriate Anheuser-Busch’s confidential, proprietary and /or trade secret information.” After he’d left, AB asked him to return any documentation he’d allegedly taken and to sign a certification under oath that no confidential information was disclosed. The employee agreement specifically allowed for this type of certification. According to the complaint, and the opinion from the 9th Circuit, the employee refused and Anheuser sued.
Thanks to a well drafted Employee Agreement, the 9th Circuit has upheld Anheuser-Busch’s rights to pursue this action over its trade secrets and under the employment agreement as a breach of contract claim. “A reasonable factfinder could conclude that [the employee’s] refusal to certify non-disclosure was a breach of the confidentiality agreements.”
The takeaway: getting key employees with access to trade secret information to agree to keep that information confidential is a key component in your trade secret protection strategy and will be important later if you find yourself in need of protecting those trade secrets from disclosure.