Christmas Edition: Trade Secrets Litigation Delayed To Save Christmas?

by Orrick - Trade Secrets Group
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http://blogs.orrick.com/trade-secrets-watch/files/2013/12/23Dec13Resized-200x150.jpgOn Christmas, Santa and his elves have their work cut out for them and sometimes even they can use help to get their jobs done.  During the holiday season, a variety of businesses assist Santa & Co. to import and distribute Christmas merchandise and other seasonal goods to retail stores in time for the holidays.  Unfortunately, those companies can be as susceptible to a trade secrets dispute as anyone else, and one year just such a dispute threatened to put a damper on Christmas.

Lib Com Ltd. and its subsidiaries Ivy Mar and Liberty Bell Christmas were in the business of importing and distributing Christmas goods to major retailers throughout the United States.  One of their long-time employees was a salesman by the name of Richard Crandle.  Crandle began working for the plaintiffs as a salesman in 1975 and eventually rose all the way to the position of Executive Vice President.  After nearly two decades with the company, Crandle quit in March 1994 and took a position as the CEO of a competitor, C.R. Seasons, Ltd.  A number of other Lib Com/Ivy Mar employees and sales reps also joined the competition.

In February 1995, Lib Com and its subsidiaries filed suit, accusing Crandle and others of misappropriating “highly confidential information and trade secrets from the plaintiff companies, such as the identity, preferences and ordering patterns of plaintiffs’ customers,” among other claims.  But when the plaintiffs sought a preliminary injunction to stop the use of the allegedly misappropriated materials, the court said they waited too long and denied the request.  The plaintiffs’ excuse for their delay?  They didn’t want to ruin Christmas, saying “they delayed bringing this motion because they feared [a defendant supplier with whom plaintiffs were then doing business] would not ship goods to [plaintiffs’] customers during the Christmas season.”  The court didn’t buy the Christmas excuse and eventually dismissed the trade secrets claims on October 7, 1998, in an unpublished decision, finding the materials in question did not actually qualify for trade secret protection.  For instance, the identities of large retailers were publicly known and their buying preferences easily determined by simply calling them up and asking.

And what’s the lesson from this holiday tale?  File a lawsuit during the holidays?  Not quite, but if your helpers take off for a competitor, it’s certainly best to try to get them on the naughty list sooner rather than later – or else you might be the one in need of some holiday cheer.

The case was Ivy Mar Co., Inc. v. C.R. Seasons Ltd., Case No. 95-CV-0508 (E.D.N.Y.).

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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