Last week, the Ninth Circuit finally ruled that a former Anheuser-Busch employee cannot avoid claims filed by the brewer alleging misappropriation of trade secrets and breach of a nondisclosure agreement, the latest in a long running saga that started when Anheuser-Busch filed suit 6 years ago. Former Anheuser-Busch employee James Clark (“Clark”) had filed a motion to strike the company’s trade secrets claims accusing him of stealing proprietary information under the California Anti-SLAPP statute (“strategic lawsuits against public participation”).
California is one of 28 states that have enacted anti-SLAPP statutes, having done so after observing a “disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” California’s statute contains a two prong test. First, the defendant must establish that suit was filed in response to “any act . . . in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue.” Once a defendant has established that the suit was brought to chill petitioning activity, the action will be “be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
The district court denied Clark’s initial motion, but the Ninth Circuit reversed and remanded in November 2015, holding that Clark’s disclosure of the recipe to counsel in support of a putative class action was a protected activity. After the matter had been remanded, Clark moved a second time to strike the beer maker’s claims on the grounds that he violated his confidentiality agreement and spilled the trade secrets “in furtherance of a protected activity.” In March of 2017, the district court again denied Clark’s motion to strike, teeing the matter up for another battle before a different Ninth Circuit panel.
Here, Clark’s defense came up flat when the beer maker demonstrated there was a “reasonable probability” that it would prevail in demonstrating that the recipe “constituted a trade secret” and Clark breached his confidentiality agreement. In support of its holding, the court noted “that Anheuser-Busch used reasonable efforts to maintain secrecy, and described potential damages.”
This decision underscores the importance of taking reasonable steps to ensure the secrecy of proprietary information, including through the use of confidentiality and non-disclosure agreements.
We will keep readers apprised of any further developments in the litigation, so stay tuned.