Client Letter (Trade Secret)

By:Lawyer Xu Lu – Shanghai Ganus LawDate:2018-03-08

Client Letter About Trade Secret To

Gray & Lopez, LLP

36 W. Wacker Dr. Chicago, IL 60601

(312) 558-8000 Z fax (312) 558-9000 Z www.Gray&Lopez.com

                                                                                               By Lulu Xu

Elizabeth Lopez

(312) 555-5678

elopez@gray&lopez.com

Via E-Mail

Mr. Kevin Lewis

Woodstock Roasting Company

121 E. Van Buren St.

Woodstock, IL 60098

kevin@wrc.com

Re: Possible Claim for Illinois Trade Secret Act Against Edward Hooper

Dear Mr. Kevin Lewis:

    This letter is to follow up your question about the possible claim against Edward Hooper for the trade secret matter. I appreciate the opportunity to advise you regarding this matter. And just to ensure a complete understanding between us, I am going to state the pertinent information about the facts you provided to me. If these facts are incomplete or incorrect, please let me know right away. I also will render the pertinent recommendations to you based on these facts.

    You built Woodstock Roasting Company (hereinafter referred to as “WRC”) in Woodstock in 1998, and you usually hire only 10-12 people. WRC imports coffee beans from different areas of the world and produces 8 unique blends of coffee. WRC sells the blends to many coffee shops and diners throughout the Chicago area, and it has become famous in the last decade for producing a very high-quality roast. The exact formulations for the coffee blends are top secret. Only you and the two vice presidents are authorized to know access the exact formulas, and both of them have signed confidentiality agreements. WRC keeps paper copies of the formulas in a safe, and in a safe-deposit box at a local bank.  There are no electronic copies.

    Last year, WRC decided to experiment with a coffee-flavored cola and did lots of product testing, spent about overall $300,000 before it got the final formula for the coffee cola. WRC also hired a consultant named Edward Hooper to assist the product testing; he coordinated all the product trials and taste testing sessions. In order to make the cola, WRC blends various beans together, brews coffee, and distills the coffee down to a syrup, then adds the syrup to a cola base that you and Edward created together. The cola base is based loosely on various Coca-Cola-type recipes that are publicly available. Because the recipe for the coffee cola likes the coffee blend formulas also is top secret, so WRC included a confidentiality agreement in Edward’s consulting contract since he had access to the recipe for the coffee cola. In addition, WRC goes to keep the recipe in the safe and at WRC’s bank.

    The coffee cola has generated some significant excitement after WRC marketed it. Given the popularity of the drink, WRC is considering marketing it on a wider scale, possibly nation-wide. Unfortunately, here comes the problem. Last month, you went to New York for a coffee convention and noticed that a coffee cola was offered in several local cafés and diners. After you tried it, finding it so similar to WRC’s coffee cola surprised you. The coffee cola recipe for WRC’s product is very distinctive, and the beverages you tasted were essentially identical. You found that the company that sold the coffee cola is actually owned by Edward Hooper after investigation.

    In my opinion, you are able to file an Illinois Trade Secret Act claim to against Edward Hooper and may win, if we can prove that WRC’s final formula for the coffee cola is a trade secret, Edward Hooper misappropriate the secret information and, Edward used the secret information in his business or his using had made damage to your business. The Illinois Trade Secret Act indicates that information to a formula can be a trade secret if it satisfies the criteria. In determining whether WRC’s final formula for the coffee cola is a trade secret, the court may focus on some significant factors. Based on the facts you provided: (1) no one knows the formula outside of your business; (2) only you and the two VPs of WRC know the exact formulation for the coffee blends, and only you and Edward Hooper know the recipe for the coffee cola; (3) there are no electronic copies for these formulas, and WRC keeps the paper copies are in a safe, and in a safe-deposit box at a local bank; (4) the value of the formula to you and your competitors may huge; (5) WRC spent $300,000 more than six months in developing the final formula for the coffee cola; (6) the formulations are very difficult be properly acquired or duplicated by others. So it likely that we can convince the court that WRC’s final formula for the coffee cola is a trade secret.

    The Illinois Trade Secret Act defines “use of a trade secret of a person without express or implied consent by another person who used improper means to acquire knowledge of the trade secret” as a kind of misappropriation. The statute further specifies that improper means of acquiring a trade secret include “breach of a confidential relationship or other duty to maintain secrecy or limit use.” Based on the statute, we can convince the court that the behavior of Edward Hooper is a misappropriation. Because he got the secret formulations by been a consult of WRC during the testing period, and there was a confidentiality agreement included in his consulting contract. Now he gets the secret information of the coffee cola by breaching of the confidential relationship between himself and WRC. So his conduct should be regarded as misappropriation of the secret information.

    The company distributed the coffee cola in New York is owned by Edward Hooper, and the coffee cola tasted almost the same with WRC’s coffee cola, so we are able to prove that Edward Hooper used the secret information of the formula for the coffee cola in his own business. So it is likely that we will win the trade secret claim.

    Under the Illinois Trade Secret Act, “actual or threatened misappropriation may be enjoined.” Since WRC wants to market the coffee cola on a wider scale, possibly nation-wide, then the company owned by Edward Hooper can be in direct competition with WRC. So we may convince the court to issue a permanent injunction if we established that WRC will suffer irreparable harm if a permanent injunction dose not issue, or we have no adequate remedy at law, that the injury to WRC would exceed if injunctive relief dose not issue. And compared your situation to many other similar cases, I think it is likely that we can get a pretty good amount of compensatory damages, may we can even get the punitive damages.

    I recommend that we first act to convince Edward Hooper to stop his business of coffee cola immediately and compensate WRC a sum of money. I would recommend before filing a complaint, you can have settlement discussions with Edward Hooper and offer him your order, if he does not accept or the outcome of settlement discussions dose not satisfy you, then we will file the complaint with the court.

    I hope this is helpful, if you would like to talk further about this matter, please feel free to contact me. You can call me at (312) 555-5678, or you may email me at elopez@gray&lopez.com. I will proceed as quickly as possible once I hear from you.

Sincerely,

               Elizabeth A. Lopez

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