Shhh… Tiffany knows your (trade) secrets!

Photo by minxlj (Flickr)
 

Jasmine Yu is an IPilogue Writer and a 1L JD Candidate at the University of Toronto Faculty of Law.

All that glitters is not gold, but trade secrets in the sparkling world of luxury jewellery might just be worth the gold and diamonds they sell. On February 28, French luxury jeweller Cartier sued its competitor, Tiffany & Co. (“Tiffany”), for stealing trade secrets related to its High Jewelry collection from a former Cartier employee, Megan Marino.

Cartier’s Claims

Tiffany’s high jewelry unit was in the midst of a restructuring following several resignations. Cartier claims that their competitor’s management used “quick money and title advancement” to lure Marino away in December 2021. Further, Cartier also asserts that immediately upon hiring her, Tiffany’s President for the Americas met with Marino for the express purpose of obtaining information about Cartier. This act disregarded Marino’s confidentiality and non-solicitation contractual obligations to Cartier.

Marino,  a named co-defendant, started working at Cartier in August 2013, and most recently served as Assistant Manager for Merchandising, Jewelry. Cartier claims that upon her hiring at Tiffany in December 2021, Marino forwarded files containing “sensitive and valuable information” related to Cartier’s high jewelry business to her personal email. These files could purportedly “allow a sophisticated competitor to replicate key strategies” and to “reverse engineer how Cartier allocates, merchandises, and prices its High Jewelry stock.” Cartier claims that this was a breach of her employment agreement, as she was to return “any and all documents” containing “Confidential Information and Trade Secrets” that she obtained in connection with her employment.

The Lawsuit

In the wake of Cartier’s repeated written notices, Tiffany fired Marino for “failing to disclose her misconduct” in February 2022. The corporation did not take any action against upper-level management, who, according to Cartier, “repeatedly and knowingly solicited and received trade secrets” from Marino and tacitly approved of Marino’s breaches of her legal obligations to Cartier.

As Tiffany continues its use of Cartier’s confidential information, such as through using such information in its internal business presentations, Cartier brings this suit. Cartier is seeking injunctive relief and damages for Tiffany’s “deliberate scheming to misappropriate and convert Cartier’s highly confidential business information to unfairly compete with Cartier.”

The Trade Secret Claim

To succeed in its trade secret claim, Cartier will need to show that:

  • The information is in fact, secret — that it is not generally known or readily ascertainable to competitors, and confers to Cartier a competitive advantage,
  • Cartier has undertaken reasonable efforts to maintain its secrecy, and
  • Tiffany & Co “misappropriated” the information

Cartier gains a strong position in this case from the evidence of emails and text messages between Tiffany’s management and Marino, as well as their outreach to current Cartier employees for information. Nevertheless, Tiffany may have some strong arguments as well. For instance, to the third requirement, Tiffany may argue that Cartier did not make reasonable efforts to maintain its secrecy. What is “reasonable” is typically a cost-benefit analysis. Marino, a lower-level employee who was not directly involved in Cartier High Jewelry, could access allegedly valuable, sensitive, and restricted information.

If they acquired the trade secret by improper means or a breach of confidence, Tiffany can be considered to have committed “misappropriation”. Tiffany may be in an even stronger position if they can establish that they somehow obtained the trade secrets lawfully — through means such as independent discovery or reverse engineering.

We should look forward to seeing the Court’s take on what constitutes “reasonable efforts” to maintain the secrecy of electronic documents in the age of Zoom.

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