Caramel Crisp LLC, the owner of Garrett Popcorn Shops ("Garrett"), the renowned Chicago-based purveyor of deliciously flavored popcorn, recently filed suit in federal court in Chicago against its former director of research and development, Aisha Putnam, alleging that she misappropriated the company's trade secrets, including its recipes for Garret's famous popcorn, after she was fired. Putnam was hired in 2014 and was eventually promoted to the role of Director of Research and Development, where she had access to some of Garrett's most confidential information and trade secrets. In that role, she was required to sign a confidentiality and non-compete agreement, which, among other things, required her to return all of Garrett's confidential information upon the termination of her employment.
Garrett's complaint highlights the impressive efforts it goes through to maintain the confidentiality of its trade secrets. Garrett alleges that each computer terminal containing confidential information has user specific credentials to prevent unauthorized access to those computers. File cabinets are locked and attendance at meetings where trade secrets are revealed is limited to only select employees. For more critical data, Garrett utilizes computers and USB storage devices with built in biometrics, including thumbprint scanners.
On March 7, 2019, Garrett terminated Putnam's employment, although Garrett alleges that she knew about the forthcoming termination several days earlier. Garrett alleges that when she learned about the termination, Putnam began downloading "virtually all of [Garrett's] trade secrets and confidential information in her possession to a personal USB drive, which she took home[.]" After her termination, Garrett conducted a forensic review of Putnam's work computer and determined that on March 5, 2019, she began deleting all of the data on her computer. The investigation also revealed that prior to her departure, Putnam sent five emails, containing 43 attachments, to her personal email account. Those documents included some of Garrett's most confidential information, including recipes, pricing, supplier information, and market research. Putnam also allegedly downloaded approximately 5,400 files, some of which allegedly came from devices that could only be accessed by Garrett's CEO, Vice President, and Lead Chef.
After learning of Putnam's alleged misappropriation, Garrett's representatives contacted her to request that she certify that she had deleted all Garrett information in her possession and to permit a forensic review of her personal electronic devices. Although Putnam certified that she had deleted all of the confidential information, she refused to allow the forensic review of her personal devices. On April 22, 2019, Garrett sued Putnam for violations of the Defend Trade Secrets Act, the Illinois Trade Secrets Act, and for breach of contract. Garrett also moved for a temporary restraining order to prohibit Putnam from accessing or using Garrett's confidential information and to require Putnam to allow an independent forensic review of her personal devices, email, and cloud storage accounts. On April 25, 2019, based on an agreement between the parties, the court entered an order restricting Putnam's access and use of Garrett's information and requiring Putnam to submit her devices to a forensic review.
This case offers two helpful reminders to employers that seek to protect their valuable trade secrets. First, in determining whether something qualifies as a "trade secret," one factor considered by courts are the reasonableness of the efforts to maintain the confidentiality of the trade secrets. Although the use of biometric scanners may not be necessary in all cases to preserve a trade secret, Garrett's ability to recount its impressive security measures will no doubt enhance the likelihood of the court finding the information to be worthy of trade secret protections. Second, whenever an employee with access to trade secrets leaves their employment (either voluntarily or involuntarily), employers should consider whether to conduct a forensic review of their computers and other storage devices to determine whether the employee took any confidential information on his or her way out the door. It is vital that an employer discover potential misappropriation as soon as possible, not only to prevent dissemination of the information, but also to promptly bring legal claims, if necessary.
According to one passerby told of the allegations by abc7 in Chicago: "It was stolen? Lock [her] up." That might be a bit harsh, but Ms. Putnam certainly is in for trouble if the allegations are true. And, of course, under the right circumstances, criminal penalties are available for trade secret misappropriation under the Economic Espionage Act and state law.
We will keep you posted as the case progresses. Get out your popcorn!
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