However, he also emphasizes the importance that owners and managers know the difference between trade secrets and public information. “Fundamentally, if information is publically known, like prices of services, that’s not a trade secret. The same with certain procedures or installation methods. If … people can easily figure out, then it’s not a trade secret,” Mentzer said. “However, if it’s something one shop developed and is not widely known, you would want to have an agreement. If you specifically reference the technique or procedure, that’s a good thing in proving that it is a trade secret. In any case, these agreements can be drafted to mention any specific techniques. That should be good enough as long as it’s still knowledgeable and generally known and not ascertainable out there.” To capture the specifics of what retailers could potentially face from a legal perspective, Mentzer was given a set of three different scenarios to obtain his professional opinion on each.
Scenario #1: An installer who has worked for Store #1 for 10 years decides to leave and start his own shop in the same city to become Store #2. He puts up a website and showcases work he’s done while he worked at the other shop. At that point, does #1 have a right to complain, sue or get intellectual property of that material back from #2? “It depends on what the item is that the original store owner could go after that is their property. Let’s say store owner number two posts photographs on his website that store owner number one took. That’s potential copyright infringement. Store #1 would own those photos and #2 would not be allowed to use those. I would wonder if other confidential information would be listed on the website. It could be misappropriation of a trade secret,” Mentzer said. “That’s less likely to happen. Another possibility is if Store #2 uses a mark or brand name similar to the first. That’s potential trademark infringement. It would be permissible for Store #2 to mention he worked at Store #1 in a way that is descriptive to make them
Stefan Mentzer, Partner, White & Case
Chris Gerardi, Intellectual Property Consultant, FTI Consulting, Inc.
think that it’s associated with Store #1.” For a company to claim the legal act of misappropriation of a trade secret by a former employee, it would need to prove the information is not public knowledge, according to Mentzer. The alternative case in the scenario above would be potential infringement on something exclusive to the company, either copyright of a document(s) or of a trademark. Should an employee decide to watermark a photo, thinking it will protect the photo as belonging to them, they would also be wrong as it would depend on several factors. “The watermarking is less important than the question. Who took the photograph? Is it the store owner or the installer? If the store owner took them and the installer uses them, it’s a pretty strong case for copyright infringement. There’s a doctrine called ‘Work For Hire’ that says if you are an employee and document work within scope of employment, it’s property of the employer,” Mentzer said. “Employers who provide the means and manner to do work should not have to have a contract every time. But for those who do work on the side after hours, maybe there is an argument to be made that this is not a work made for hire. It’s a real gray zone that can be disputed.” Taking the idea further, Mentzer stressed that if an employee does use their own equipment, on their own time, in their own space, it’s hard for the employer to argue that it’s a work made for hire. If an employee emails or texts
about a non-work related project during business hours, it could be used against them since those conversations occur on the employer’s time. “What is the involvement of the employer’s business? Is it on the side? I don’t think the law would look too kindly on it if a person were doing work for hire when they are supposed to be doing work for their job.” Stereo King is a three-store chain based in Portland, Ore. According to Kevin Cornutt, General Manager of the company, the ideas presented by Mentzer are part of company policy, but not as thoroughly as Mentzer recommends. “We found that doing the no compete clause doesn’t really work. So we really don’t do those. If people do go to another shop and violate the clause, it’s such a huge legal effort, you’re going to spend so much on attorney fees. You can’t keep someone from making a living,” Cornutt said. “If someone is going to leave us we would definitely prefer to do it on a happy note. A lot of times they say the grass is greener, but they usually come back. We have a very high rate of employees returning.” Stereo King protects all confidential information digitally with a system that is password-protected. An employee’s access is removed when they leave the company. “We provide access to M.E.S.A. Fit to show clients what fits their vehicle. Once you leave the company you can’t take that with you since there’s one central hub. So far we have not had a problem with proprietary information being
me-mag.com 11