Monday, May 22, 2006, 5/22/2006 08:43:00 AM

Trade Secrets & the Chicken Man (PACER Req'd)

A recent from the Eastern District of Tennessee, Vincit Enterprises, Inc. v. Zimmerman, 2006 WL 1319515 (E.D.Tenn. May 12, 2006), provides an interesting insight into the differences between employment contract claims and trade secrets claims based on the same conduct. Defendant was a former employee of plaintiff, a company engaged in chemical and poultry equipment sales. He had entered into an employment contract with plaintiff which acknowledged the company's trade secrets and prohibited him from using them after termination of employment. The contract also contained a non-solicitation covenant.

After defendant gave notice of his retirement, he was seen in the company of a competitor, Duchem, Inc., at the premises of Tyson Foods, a customer whose account he had serviced while employed by plaintiff. Based on those allegations -- which defendant contended showed only simple contact, not solicitation -- the court refused to dismiss the breach of contract claim. The court said those allegations, taken together, were "sufficient to support an inferential allegation that [defendant] solicited Tyson Foods."

The trade secrets claim did not fare so well. The court held that recitals of the value of the trade secrets in the contract were insufficient to allege the "independent economic value" required under the Tennessee trade secrets statute. Also lacking were allegations that the alleged trade secrets were the subject of reasonable efforts to maintain their secrecy. Finally, the allegations regarding Tyson Foods contacts were not sufficient to show misappropriation of trade secrets.

In addition, the court dismissed claims for common law misappropriation of trade secrets, intentional interference with business relationships, and unfair competition on the grounds that those claims were preempted by the Tennessee Uniform Trade Secrets Act.


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