Articles Posted in Trade Secrets

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As consumers have started to recognize the unhealthy effects of consuming corn syrup, more and more food and beverage manufacturers have removed or limited its use in their products. While beer has never been considered a health food, the battle over corn syrup appears to have made its way to the world of beer, starting with Anheuser-Busch’s Superbowl commercial showing an order of corn syrup being delivered by mistake to the castle of the fictional medieval king of Bud Light. The king then leads a quest to remedy the mistake by personally taking the corn syrup to the fictional king of MillerCoors.

MillerCoors, a brewer based out of Chicago, responded, first with its own ad campaign, then with a lawsuit alleging false advertising.

The legal battle between the two beer giants recently took another turn when Anheuser-Busch sued MillerCoors for allegedly stealing trade secrets. According to the lawsuit, an employee of an Anheuser-Busch brewery allegedly shared recipes with an employee of MillerCoors.

That employee is no longer working for Anheuser-Busch, although if the allegations are true, they might be able to get a job with MillerCoors. Continue reading ›

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When two founders of a company sued the company that had come into possession of the founders’ patents and intellectual property rights, the district court dismissed their suit for lack of personal jurisdiction. The appellate court affirmed on appeal, finding that the plaintiffs’ lawyer contrived to create personal jurisdiction by ordering a single item from the defendant company be shipped into the state of Illinois, even though the defendant company did not do business in or specifically target the Illinois market. The appellate panel also noted that the conduct that allegedly created personal jurisdiction had happened after the plaintiffs filed suit and was therefore clearly contrived.

Tai Matlin and James Waring, and other business partners co-founded a company called Gray Matter Holdings, LLC in 1997. Matlin and Waring developed certain products for Gray Matter, including an inflatable beach mat known as the “Snap-2-It” and a radio-controlled hang glider called the “Aggressor.” In 1999, facing failure of the company, Matlin and Waring entered into a Withdrawal Agreement with Gray Matter wherein they sold their partnership shares and forfeited their salaries. The agreement also assigned Matlin and Waring’s intellectual property to Gray Matter but entitled them to royalty payments. In the following years, Matlin and Waring frequently brought Gray Matter to arbitration to enforce royalty payments.

In 2002, Gray Matter filed an assignment of the products’ intellectual property rights with the United States Patent and Trademark Office. Matlin and Waring allege that Gray Matter filed the assignment without their knowledge and that the company forged Waring’s signature on the paperwork. The following year, Gray Matter sold assets to Swimways, including the patent rights to Matlin and Waring’s products. A 2014 arbitration between Gray Matter and Matlin and Waring determined that Gray Matter did not assign the Withdrawal Agreement to Swimways upon the sale of the products and that the plaintiffs were owed no further royalties. In 2016, Spin Master acquired Swimways and intellectual property rights. Continue reading ›

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A small producer of musical instruments sued Guitar Center, alleging that Guitar Center violated its trademark on the name for a line of woodwind instruments. The plaintiff made a mistake in its suit, however, and named several subsidiary corporations of Guitar Center as additional defendants. After a trial, a jury was asked to determine whether each of the organizations were liable for infringing conduct. The jury, however, found that only the sales that occurred at Guitar Center branded stores were infringing, which amounted to a tiny fraction of the total sales across Guitar Center and all of its subsidiary brands. A district court found that the judgment could not be amended, and the appellate court agreed. The appellate court stated that the judgment was rationally supported by the evidence at trial and the plaintiff gave it no reason to think that the verdict would have been different if it had correctly identified the other stores as subsidiaries of Guitar Center.

Guitar Center makes and sells musical instruments. In 2010, it created a new brand of woodwind and brass instruments produced by Eastman, “Ventus.” Barrington Music Products owns the trademark “Vento,” which it uses in relation to the instruments it sells. Barrington began using the mark in commerce in May of 2009 and achieved gross sales just shy of $700,000. Barrington filed for registration of its “Vento” trademark in January 2010. In March 2011, Guitar Center began selling flutes, trumpets, alto saxophones, tenor saxophones, and clarinets using the “Ventus” mark, with gross sales totaling about $5 million.

Barrington eventually sued Music & Arts Centers, Guitar Center Stores, Inc., Woodwind & Brasswind Inc., and Eastman Music Company for trademark infringement. Evidence at trial demonstrated that the bulk of sales occurred at Music & Arts Centers, totaling $4.9 million, with only $3,228 in sales coming from Guitar Center. The jury found that only the sales made by Guitar Center stores were infringing and awarded Barrington the total amount of those sales — $3,228. After the judgment was entered, Barrington filed a motion pursuant to Rule 59(e) asking the district court to amend the damages award. Barrington had discovered that the only distinct corporate entity was Guitar Centers, Inc., while Music & Arts and Woodwind were each divisions of Guitar Center. Barrington moved to amend the judgment to include the total volume of all sales. The district court denied the motion, and Barrington appealed. Continue reading ›

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download-300x150download-1-300x150Super Lawyers named Chicago and Oak Brook shareholder oppression attorney Peter Lubin a Super Lawyer in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Patrick Austermuehle of the Firm was named a Rising Star again and has a great deal of experience as a Chicago Defamation Libel and Slander Lawyer.  Peter Lubin and Patrick Austermuehle have achieved this honor for many years which is only given to 5% of Illinois’ attorneys each year.

Lubin Austermuehle’s Oak Brook and Chicago business dispute lawyers have over thirty years experience in litigating defamation, breach of fiduciary duty and shareholder oppression lawsuits.  Our Chicago non-compete agreement and trade secret theft lawyers prosecute and defend many types of unfair business practices and emergency business lawsuits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.



Lubin Austermuehle’s Wheaton, Schaumburg, and Evanston business litigation attorneys have more than two and half decades of experience helping business clients unravel the complexities of Illinois and out-of-state business laws. Our Chicago business, commercial, class-action, and consumer litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Naperville and Aurora, we serve clients throughout Illinois and the Midwest.

Continue reading ›

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You might think of making popcorn as a fairly simple process: you pop the popcorn, coat it in your flavor of choice, package it and sell it. But the fact is that snack food manufacturers invest an incredible amount of time, money, and resources into crafting recipes that are perfectly addictive, then test and retest those recipes before they start putting them on shelves.

Garrett Popcorn Shops says it guards the secret to its popcorn recipes so closely that only three employees are given access to the recipes and they have to prove their identity with a fingerprint scan before they can access the recipes.

Aisha Putnam was one of the three employees with access to Garrett Popcorn Shops’ incredibly valuable recipes in the four years she worked as the company’s director of research and development. She was fired in early March of this year, but she got a heads up that she was going to be fired and so she allegedly stole more than 5,400 files using a USB drive and her personal email. The files allegedly contained everything that had ever been shared with her and/or stored on her computer: from the company’s top secret recipes and production processes to pricing information, supplier information, distribution agreements, and market research. Continue reading ›

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New Washington Law Makes Sweeping Changes to Non-Compete Agreement Law 

Non-compete law in the state of Washington underwent sweeping changes last week with the signing into law of HB1450 (“Washington Non-Compete Act”) which targets the use of restrictive covenants within the state. The new law regulates the use and scope of non-competition agreements with both employees and independent contractors and restricts the use of non-poaching agreements in franchise agreements as well as policies against moonlighting. The new law takes effect on January 1, 2020.

Under the new law, a non-competition covenant will be void and unenforceable unless the following criteria are met:

  1. If the covenant is entered into at the commencement of employment, it must be disclosed in writing to the employee by no later than the date of the employee’s acceptance of the offer of employment;
  1. If the covenant is entered into at the outset of employment but will not take effect until a later date due to a foreseeable change in the employee’s compensation, the agreement must specifically disclose that it may be enforceable at a future time;
  1. If the covenant is entered into after the commencement of employment, it must be supported by additional consideration;
  1. The worker’s annual earnings must exceed $100,000 (in the case of an employee) or $250,000 (in the case of an independent contractor)based upon the income reflected in Box 1 of an employee’s IRS Form W-2 or an independent contractor’s IRS Form 1099; and
  1. The post-separation duration of the non-compete must last no longer than 18 months unless the employer can show by clear and convincing evidence that a longer duration is necessary to protect its business or goodwill.

The new law defines the term “non-competition covenant” to expressly carve out certain types of restrictive covenants such as employee and customer non-solicitation covenants, confidentiality/non-disclosure covenants, and covenants relating to the purchase or sale of a business or franchise. Continue reading ›

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Where an employee was free to take the knowledge he had accumulated over his nearly 30-year long career into his next job as a consultant, representing buyers of the products of his former employer.

Archer Daniels Midland is one of the largest manufacturers of corn-based sweeteners in the United States. In its most recent fiscal year, the sweeteners division of ADM realized a profit of $600 million. ADM sells its sweeteners to a few hundred buyers in the United States, including Sensory Effects, Inc. and PMP, Inc.

ADM categorizes buyers in one of two categories: toll contract or flat rate. Toll contract buyers contract to buy a fixed quantity of sweetener from ADM during a year, with the price fluctuating in response to the price of corn. Toll contracts may be entered into at any time of the year. Flat rate contracts can be entered into only during ADM’s annual contracting season, which lasts 30 to 60 days, beginning in the late summer. Under a flat rate agreement, the buyer agrees to pay a fixed price for a full year’s supply of sweetener.

Lane Sinele worked for ADM from January 1990 until his retirement in August 2018. At his retirement, Sinele was the manager of national accounts for ADM’s sweetener division. Sinele represented ADM, soliciting, procuring, and servicing buyers of sweeteners. Sinele handled the accounts for both Sensory Effects and PMP. As part of his employment, Sinele signed two non-disclosure agreements, though he did not sign either non-compete or non-solicitation agreements. During his career, Sinele had access to ADM’s Tableau system, which contained proprietary information about freight systems, factories, customer orders, manufacturing costs, and margins. Continue reading ›

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A complaint alleging breach of a non-disclosure agreement and misappropriation of trade secrets was successfully dismissed for lack of jurisdiction where the defendant was not alleged to have sold a competing product within the state in which the action was filed.

Brad Diedrich worked from May 2003 through September 2017 for Mitek Corporation, an Illinois manufacturer of audio equipment. Diedrich worked as a Senior Engineering Manager for most of his time at the company. Through his work, Diedrich learned trade secrets and confidential information at Mitek. In 2016, Diedrich signed a non-disclosure agreement. The agreement also contained non-competition and non-solicitation clauses.

In April 2017, Diedrich went with Mitek’s President and CEO, John Ivey, to a Hong Kong electronics fair. At the fair, one of Mitek’s business partners, EVR, proposed to sell Mitek a digital signal processing amplifier. Ivey asked the company to send information regarding the proposal to Diedrich, but Diedrich failed to follow up on the proposal. Soon after, EVR agreed to work with a division of MTX to develop the new product. After executing a confidentiality agreement, EVR sent a prototype to MTX, which Diedrich viewed and examined. Continue reading ›

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A maker of medical devices was denied on its motion to dismiss a complaint alleging breach of a confidentiality agreement and breach of the Defend Trade Secrets Act. The court found that the plaintiff had sufficiently alleged facts showing that the defendant misappropriated confidential information to bring a rival product to market, and that the misappropriation potentially occurred after the DTSA was enacted, even though the initial disclosures occurred several years prior to the statute’s effective date. The Court’s decision did not resolve the case on the merits; it simply found that claims which could withstand a motion to dismiss had been alleged. The matter was later resolved by a Stipulated Judgment entering judgments in favor of the Defendants and against the Plaintiff.

Invado is a pharmaceutical company that developed two oral treatment products, NeutraSal and NeutraCaine. In 2014, Invado held discussions with Forward Science, an Illinois company, about the possibility of Forward Science becoming an independent sales agent for Invado. The two parties later signed a confidentiality agreement, in which Forward Science agreed to use any confidential information Invado provided only for the purpose of exploring a business relationship with Invado. After the agreement was signed, Invado disclosed proprietary information to Forward Science regarding its business models, and its processes for manufacturing, distribution, and pricing. The parties ultimately did not form a business relationship.

A year later, the president of Forward Science made a medical device filing with the Food and Drug Administration for a new oral treatment product. The filling stated that Invado’s products were predicate devices for its new product, SalivaMAX. In 2017, Forward Science announced a new oral pain relief product, SalivaCAINE. Prior to 2015, Forward Science did not manufacture or sell products in the same market as Invado. Continue reading ›

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When small companies compete against larger, more established companies working in the same space, they often rely on their unique selling points to set them apart from their competition and establish their own niche in the marketplace. But succeeding with that tactic becomes much more difficult if your competition starts using your own tactics against you.

According to a recent lawsuit against Ray Borg, the UFC flyweight allegedly stole trade secrets and took them to a competitor, broke his contract with a gym and a management company without warning, and committed fraud, among other things.

The lawsuit was filed by Wild Bunch Management, which is run by Tim Vaughn, who’s a team member of the gym, Fit NHB. According to the complaint, Borg was working out at Fit NHB and had a three-year contract with Wild Bunch in which the management company would arrange fights for Borg, as well as train and promote the fighter and manage the business side of his fighting career. For his end of the deal, Borg was allegedly supposed to pay Wild Bunch 20% of everything he earned in the cage up to $10,000, plus 10% of any bonuses of $10,000 or more. The contract also allegedly included a non-compete clause in which Borg agreed not to teach martial arts within 50 miles of Fit NHB for the first year after his contract with Wild Bunch had been terminated.

Wild Bunch had allegedly negotiated Borg’s five-fight contract with UFC when Borg allegedly broke off all ties with both the gym and the management company after just the first fight and without any warning. After that point, Borg allegedly switched to Jackson Wink MMA in Albuquerque, a direct competitor of Wild Bunch that’s located across town. Continue reading ›

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