The one thing fatal to protecting your trade secrets

The first rule of trade secrets: you do not talk about your trade secrets.

The second rule of trade secrets? You do not talk about your trade secrets.

Up in Oakland, Veronica Foods is learning these rules the hard way.

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The case is Veronica Foods v. Ecklin, Case No. 16-cv-07223 (N.D. Cal.).

The story in Veronica Foods begins like many others. Veronica employed Ecklin for over a decade as a salesman. Ecklin resigned, supposedly because he lost interest in the industry.

But then he started working for Veronica’s competitor, Millpress Imports. And now Veronica’s suing him for stealing trade secrets.

The problem (for Veronica): Veronica’s not able to identify any actual trade secrets. Twice now, the court’s dismissed Veronica’s complaints.

Veronica’s trying to claim that its customers and suppliers are trade secrets. Which absolutely can be true.

Except “can” isn’t “always.” Veronica’s blown it by boasting of its customers and suppliers on its website. So now Veronica’s curbed its claim only to those customers or suppliers who weren’t published on its website.

That’s not the only issue Veronica faces. It’s gotta allege that Ecklin knew of the secret customers and suppliers (probably easy). And it’s gotta plausibly allege facts showing it likely that Veronica’s customers replaced its product with its direct competitor’s because of Ecklin’s using Veronica’s trade secrets (probably hard). On the latter requirement, the allegations must tend to exclude the innocent explanation that the direct competitor was merely a new competitor entering the market.

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Bottom line: this is a great decision for entrepreneurs who’ve left companies to start their own. As well as for any company on the bad end of a trade secret suit. It provides strong ammo for getting a trade secret dismissed at the outset.