The case of Six Dimensions, Inc. v. Perficient, Inc., 969 F.3d 219 (5th Cir. 2020), dealt with the application of non-compete provisions in employee contracts after certain employees left to work for a competitor. Ultimately, on the trade secrets issue, the Fifth Circuit determined that the plaintiff Six Dimensions failed to provide evidence that the defendant Perficient acquired the trade secrets within the meaning of the Texas Uniform Trade Secrets Act (TUTSA). Therefore, the Court affirmed the decision of the District Court not to grant a new trial on this issue.
Six Dimensions, a digital marketing firm providing consulting services for information technology, hired Lynn Brading (Brading) as Corporate Partnership Manager in 2014. As part of her employment, Brading signed an employment agreement which prohibited her from soliciting or recruiting Six Dimension employees to work for a third party for a period of two years after she terminates her employment. Brading left Six Dimensions on June 10, 2015 and immediately began soliciting Six Dimensions employees for her new employer Perficient. Seven of Six Dimensions’ employees decided to join Perficient at Brading’s request.
Aaron Price (Price), one of these former Six Dimensions employees, obtained a thumb-drive prior to terminating his employment that contained Six Dimensions training materials. Price violated his employment agreement with Six Dimensions by possessing this thumb-drive, and he testified that he kept the thumb-drive to benefit Perficient. Price had multiple conversations with a Perficient employee regarding this thumb-drive. After initially expressing interest in the Six Dimensions’ training materials, the Perficient employee decided not to use the materials because he believed that Perficient’s training program was superior. Consequently, Price testified that he did not provide the training materials to anyone at Perficient, that no one at Perficient used the materials, and that he never uploaded the materials to any Perficient document system.
Six Dimensions filed suit against Brading and Perficient. With regards to Perficient, Six Dimensions asserted independent claims for unfair competition and for violations of statutes from both Texas and California that protected trade secrets. At trial, the jury found that the training materials were trade secrets, but the jury determined that Perficient did not misappropriate them. Six Dimensions filed a motion for a new trial on the misappropriation of trade secrets claim, which the District Court denied. Six Dimensions then appealed that decision to the Fifth Circuit.
The TUTSA provides six theories under which a plaintiff can establish misappropriation of a trade secret, and these six theories can be grouped into two categories: acquisition of a trade secret and disclosure of a trade secret. In its motion for a new trial, Six Dimensions limited its analysis to the acquisition category, and therefore, the Fifth Circuit limited its analysis to that category as well.
Six Dimensions argued that Perficient acquired, and therefore misappropriated, the training materials because Price admitted he misappropriated the training materials through improper means, continued to possess the training materials while employed by Perficient, and spoke to a Perficient employee about the contents of the training materials. Because Six Dimensions failed to provide any precedent that show that, as a matter of law, Perficient misappropriated the training materials when Price improperly acquired them before he joined Perficient and continued to possess them as a Perficient employee, the Court deferred to the jury’s decision to credit Price’s testimony that he did not provide the training materials to Perficient in any way. Further, the Court determined that without detailed evidence of the training materials and Price’s conversation explaining them to the Perficient employee, there was no showing that Perficient acquired the training materials through the conversation.
Ultimately, the Court affirmed the District Courts refusal to grant a new trial because Six Dimensions failed to show that Perficient possessed the trade secrets under the acquisition category of the TUTSA. The key takeaway from this case is that the possession of trade secrets by a former employee, without more, may not be sufficient to support a misappropriation claim against the new employer when there is no evidence that the new employer accepted the trade secrets.
Special thanks to Kyle Markwardt for his assistance with this blog post.