Ecolab Inc. sued a former marketing manager, Preston Alexander, alleging he used stolen trade secrets to set up a rival business in violation of the federal Defend Trade Secrets Act and related claims. Ecolab seeks the immediate return of its confidential information and damages for contract breach and trade secret misappropriation.
Why it Matters:
Ecolab’s lawsuit offers several lessons for companies and individuals about the importance of protecting intellectual property rights like trade secrets and what may happen when those rights are violated.
Ecolab and the new competing company, called One Degree Medical, both sell products and systems for managing the temperature of patients and body tissue during surgery. Ecolab asserts Alexander emailed himself confidential files containing Ecolab’s detailed product sales and information the day before he ended his employment. Later, Ecolab began losing business. One former customer, Charleston Area Medical Center, began purchasing fluid products from One Degree Medical.
Ecolab’s files were misappropriated when Alexander emailed them to his personal email account and contained information on Charleston. This information included Charleston’s (i) sales history with Ecolab; (ii) products it bought; (iii) how many products were bought; (iv) the price paid for those products; and (v) when the purchases were made.
Ecolab argues Alexander had no legitimate business purpose accessing the confidential files that he emailed to himself. And that those files were also protected under Alexander’s employment agreement, which contained restrictions on competition and trade secret protections.
This lawsuit is pending in the Northern District of Georgia, Ecolab Inc. v. Alexander et al., case number 1:20-cv-04687.
What should you take away from the case:
Ecolab raises issues companies and departing employees often confront in trade secret litigation. For a company, it is critical to take appropriate measures to identify its intellectual property and how best to protect it. And because of the unique nature of trade secrets, your company must show it implemented meaningful protections to maintain the confidential and secret nature of the trade secret information before it was wrongfully used.
For individuals, it is equally critical to understand what you can and cannot do after ending your employment. This means understanding your non-compete restrictions, as well as other contractual restrictions on using company information or soliciting your former employer’s customers.
Additionally, when litigation stemming from the misappropriation of business information arises, the investigation and preservation of digital evidence are paramount to both plaintiffs and defendants. These “digital fingerprints,” or lack thereof, will make or break a trade secret lawsuit.
Our recent experience in successfully defending against federal and Michigan trade secret claims bears this out. Specifically, the plaintiff cried foul after losing a contract to our client. Like Ecolab, the plaintiff and its big law firm attorneys sued for trade secret misappropriation. But after discovery, the federal judge adopted our argument and found “… even if the materials in the Dropbox account do amount to trade secrets, no reasonable jury could find that these materials were misappropriated by the Defendants.” Order from Qualite Sports Lighting, LLC v. Ortega et al., Case No 17-cv-00607. Simply put, trade secret plaintiffs and their attorneys can’t lose focus on the fundamentals of a misappropriation case: is the information trade secret, and was it misappropriated?
Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or litigating trade secret claims. Since 2001, Mr. Shinn has represented companies and individuals involved with these types of claims under federal and Michigan employment laws.