Third Circuit Rules Upholds District Court Ruling Against Employer who Alleged Misappropriation of Trade Secrets

In Givaudan Fragrances, Corp. v. Krivda, Plaintiff Givaudan filed suit against its former employee and the employee’s new employer for misappropriation of trade secrets. 639 F.App’x. 840, 842 (3rd. Cir. 2016). Givaudan alleged that Krivda stole over 600 fragrance formulas from its database before leaving for another employer in 2008. Givaudan alleged that the fragrance formulas were worth millions of dollars and considered them to be trade secrets. While the District Court of New Jersey granted Defendants summary judgment on the vast majority of Givaudan’s claims, it permitted Plaintiff to move forward to trial as to 34 formulas allegedly misappropriated by Krivda. After a five-week jury trial, the jury unanimously ruled in favor of Krivda on all clams, finding that Givaudan failed to prove that Krivda violated his employment contract or misappropriated any of the 34 fragrance formulas. Givaudan appealed to the Third Circuit Court of Appeals.

The Third Circuit began its analysis by preforming a de novo review of the District Court’s grant of summary judgment. For misappropriation to be proven in trade secrete cases, “it is patently obvious that trade secrets must be identified with enough specificity to put a defendant on notice of what is actually alleged to have been stolen.” Additionally, the Third Circuit notes that circumstantial evidence can be used to establish misappropriation of trade secrets, but only after enough specific information has been given to the defendant so the defendant can defend himself from the accusations. However, the availability of circumstantial evidence, to prove misappropriation of trade secrets, is tempered by the fact that it cannot be used to substantiate bald assertions

Here, the Court noted that Givaudan failed to provide Krivda with enough specific information about many of the formulas it believed to have been misappropriated. Out of the 600 formulas alleged to be stolen, Givaudan provided specific information on only 34. The Third Circuit next noted that even though the District Court allowed Givaudan to submit circumstantial evidence which showed Krivda printing out formulas, and being recruited by his new employer, the jury rejected the circumstantial evidence. The Third Circuit therefore affirmed the District Court’s decision to grant summary judgment in favor of Krivda and, finding that since the District Court did not deprive Givaudan of a fair trial, there existed no basis to overturn the District Court’s jury verdict.

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