Cases from Minnesota

United States District Court for the District of Minnesota
Minnesota Trade Secret Law Preempts Unitherm Food Systems Claims

Unitherm is a developer of processes and equipment for cooking meat. Hormel is a manufacturer and marketer of brand-name food and meat products. In 2007, the companies entered a joint development agreement to develop an oven that would make bacon products using high levels of steam for cooking.  

Under the agreement, both parties agreed that "following completion of a commercially viable application of the Project, the parties will negotiate an agreement by which Unitherm will be the exclusive supplier to Hormel of equipment related to the Project for an initial period of five (5) years," with the possibility of an extension. The parties also agreed that all information shared relating to the Project would be considered confidential in accordance with the terms of the Mutual Confidential Disclosure Agreement ("MCDA") signed by both parties.

In 2008 Unitherm filed a patent application covering the process of cooking food at high steam levels.  In 2010, Hormel withdrew from the agreement with Unitherm and filed for patent protection of its own method of cooking bacon.  However, Unitherm alleged that the method claimed by Hormel was developed by Unitherm during the course of the joint development agreement and was proprietary. In September 2014, Unitherm filed suit against Hormel, claiming breach of contract, unjust enrichment, trade secrets misappropriation, accounting, and declaratory relief.

On January 27, 2015, the Honorable Paul A. Magnuson dismissed the trade secrets and accounting claims. In turn, Hormel answered and filed breach of contract and declaratory judgment counterclaims. Each remaining claim and counterclaim is covered by one or both of the summary judgment motions.

On July 25, 2016, United States District Judge Joan N. Ericksen ruled on Unitherm's motion for partial summary judgment and Hormel's motion for summary judgment. Unitherm's breach of contract and unjust enrichment claims were dismissed with prejudice, Hormel's breach of contract counterclaim was dismissed with prejudice, Hormel's declaratory judgment counterclaim was dismissed with prejudice to the extent it claims ownership of the Unitherm Process. The claim remains unresolved to the extent it claims ownership of the Hybrid Process. Unitherm's claim for declaratory relief remains unresolved.

Unither's unjust enrichment claim brought in lieu of its breach of contract claim is of significance. "Unjust enrichment is an equitable theory which cannot be asserted where the rights of the parties are governed by a valid contract." Holiday Hosp. Franchising, Inc. v. H-5, Inc., 165 F. Supp. 2d 937 , 941 (D. Minn. 2001). Since Unitherm's claim is based on conduct that is governed by the joint development agreement, the unjust enrichment claim fails. Unitherm's claim based on Hormel's disclosure of confidential information and reverse engineering of the oven also fails because it was governed by the MCDA. Lastly, to the extent that Unitherm's claim is based on the allegations that Hormel stole the Unitherm Process, the claim fails becuase it is based on the same operative facts and is therefore preempted by Unitherm's dismissed claim under Minnesota's Uniform Trade Secrets Act.

Ramsey County District Court
Breaking News

Last week, Bryan Szweda, a former vice president at St. Jude Medical was charged with theft of trade secrets in Ramsey County District Court in Ramsey County, Minnesota. While at St. Jude Medical, Szweda filled the role of vice president of operations for global manufacturing of structural heart devices. Szweda presently works at Edwards Lifesciences, one of St. Jude’s competitors that manufactures artificial heart valves. In addition to five felony counts of theft by swindle, Szweda is accused of taking over 4,000 files related to his work at St. Jude before he was placed on administrative leave in September 2014. The stolen files included one of St. Jude’s most restricted documents- its strategic plan which detailed a roadmap of St. Jude’s research and marketing initiatives. Szweda had already moved out of state by the time investigators executed the search warrant on Szweda’s former home in Plymouth, Minnesota. Stay tuned for more developments in this case.

For more information on the case see here and here.

United States District Court for the District of Minnesota
Court Suggests Lenient Pleading Standard for Trade Secret Claims Surviving a Motion to Dismiss

Plaintiff TE Connectivity Networks, Inc. (TE) develops and sells fiber connectivity products. Defendant All Systems Broadband, Inc. (ASB), after hiring a number of TE’s past employees, began marketing products in direct competition with TE. TE alleged in its complaint that in developing these competing products, ASB had misappropriated numerous TE trade secrets in violation of the Minnesota Uniform Trade Secrets Act (MUTSA). ASB filed a motion to dismiss, arguing that in light of the heightened pleading standards established in cases like Iqbal, TE had not pled facts with sufficient particularity to survive a motion to dismiss. In denying the motion to dismiss, the court explained that a trade secret plaintiff is “understandably hesitant” when it comes to revealing particular details of a trade secret claim, and seemed to suggest that a more lax pleading standard may apply to trade secret misappropriation claims facing a motion to dismiss.

Minnesota Court of Appeals
Trade Secrets are not Synonymous with Confidential Information

Relco LLC of Willmar, Minnesota, sued former employees in May 2011, alleging they took confidential information to their new jobs at Custom Fabricating & Repair Inc. of Marshfield, Wisconsin, and violated terms of their employment agreement. As a reminder that confidential information and trade secrets are not synonymous, the Minnesota Court of Appeals held that the Uniform Trade Secrets Act does not necessarily apply to all confidential information. As a result, however, it is not necessary information be a trade secret to be protected, since a trial court may issue an injunction against a party who has, in violation of an explicit agreement or a common law duty, wrongfully used confidential information or trade secrets obtained from his employer.