If, like me, you’re a fan of PBS and its soothing, soft-focus, food-related shows (ahem, Great British Bake-off), you were probably devastated when you heard that longtime host Chris Kimball, was leaving America’s Test Kitchen. If you’ve never seen it, the premise of America’s Test Kitchen (“ATK”) is that a “test kitchen” comprised of several cooks experiments with and tweaks recipes for everything from roast chicken to chocolate cake to figure out which combination of ingredients and cooking methods will achieve the best outcome – the flakiest crust, the most flavorful stew, the perfect chewy chocolate chip cookie. These recipes are then demonstrated to viewers on the show. Kimball was the bespectacled, bow-tied host that brought his brand of quirky, nerdy humor to an otherwise straightforward cooking show. ATK also publishes print magazines, Cook’s Illustrated and Cook’s Country, and has an online cooking school.

Around this time last year, Kimball announced that his employment with ATK was ending, apparently on good terms. Earlier this year, Kimball started a new project called “Milk Street” in Boston, which involves…a television show, print magazine, and an online cooking school. Now it’s gotten ugly.

On October 31, America’s Test Kitchen Inc. sued Kimball and some of its other former employees for misappropriation of trade secrets, breach of fiduciary duty, and breach of contract, among other things. The lawsuit claims that Kimball “literally and conceptually ripped off America’s Test Kitchen” and had planned to start his own competing business using ATK’s confidential information and trade secrets while he was still employed with ATK. The complaint identifies several alleged similarities between ATK and Milk Street’s media content and design aesthetic, and accuses Kimball of stealing ATK’s employees, media contact lists, and magazine subscriber information, and usurping or interfering with ATK’s business opportunities with television and radio stations.

ATK filed its action in Massachusetts, which is one of two states that have not adopted the Uniform Trade Secrets Act. ATK did not file claims under the recently adopted federal Defense of Trade Secrets Act. To prevail on its trade secret claims, ATK will need to prove that the alleged trade secret information is not generally known, has independent economic value and ATK took reasonable steps to protect its secrecy. (See the 1972 Massachusetts case Jet Spray Cooler, Inc. V. Crampton.)

With regards to ATK’s allegations that Kimball breached his fiduciary duty, employees like Kimball are generally allowed to prepare to compete with their current employers, so long as they don’t actively compete by soliciting customers or fellow employees.

In many such actions, employers like ATK promptly seek temporary restraining orders or preliminary injunctions, seeking to prevent the former employee from using the alleged trade secrets. ATK’s failure to do so may indicate that it does not feel it has sufficient evidence, at least at this early stage, to obtain such extraordinary relief.

Kimball’s response to the complaint is due later this month.  I can’t wait to see what his attorneys cook up.

It’s official.  Defying all odds, the Senate and House passed the Defend Trade Secrets Act (DTSA) with bipartisan support and President Obama signed it.  Now what?

Same Standard, + 1

Under the DTSA and under most state laws (48 states adopted the Uniform Trade Secrets Act-get with the program NY and MA), the standard is the same, a trade secret is: (A) information that derives value from not being generally known and (B) owner took reasonable steps to keep information secret.  However under the DTSA the secret information must also affect interstate commerce.

Likely Major Effects of Federal vs. State Court Venue

State courts are generally perceived to be more lenient about allowing questionable cases to survive the initial pleading stage, whereas Federal courts apply the stricter Rule 12(b) standards for dismissal and are often considered more likely to weed out unmeritorious claims.

State courts tend to permit more discovery gamesmanship and delay, whereas Federal Rule 26 mandatory disclosures require parties to initially disclose key information near the outset of the case.

Similar Penalties + The Nuclear Remedy

Like the UTSA adopted by most states, the DTSA allows injunctions, damages, disgorgement of ill-gotten gains and a multiplier (double the penalties for “willful or malicious” misappropriation).  Also like the UTSA, the DTSA allows the courts to award attorneys’ fees either against a defendant who willfully or maliciously misappropriated or against a plaintiff who brought a trade secret claim in bad faith.

However, under extraordinary circumstances, the DTSA authorizes ex parte seizure of “property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”

Carve-Out for State Law Employee Protections

Many observers were concerned that the DTSA might replace state laws protecting employee’s rights, but the DTSA expressly provides that it is not intended to supersede “an applicable State law prohibiting restraints on the practice of a lawful, trade or business.”

What’s Next

The DTSA requires trade secret owners to include language giving notice regarding a whistleblower exception, so trade secret owners who intend to rely on the DTSA should be scrambling to amend their employment agreements and non-disclosure agreements to include the whistleblower exception language. 

The whistleblower amendment immunizes employees from civil or criminal prosecution if, in the course of reporting their employer’s wrongdoing, they disclose their employer’s trade secrets confidentially to government agency or in court, under seal.

Once the required language is in place, we should expect trade secret owners and their counsel to weigh the tactical pros and cons of litigating their trade secrets claims under the DTSA in federal court vs. bringing them under the applicable USTA in state courts.