Swiping from the Swoosh: Nike sues former shoe designers for trade secret theft

Jan 07, 2015

Nike recently sued three of its former shoe designers who defected to Adidas, claiming the trio brought trade secrets with them, including Nike’s strategic development plans, design drawings, and other information “tied” to several of its shoe lines.

What do shoes have to do with trade secrets?

The common perception of trade secrets usually revolves around customer information, vendor or “key contact” information, product pricing, or some combination thereof. Mention “Nike” and “intellectual property” in the same sentence, and odds are you’re talking about trademark protection for the famous swoosh.

But the recent Nike case highlights that the definition of a “trade secret” can include a broad array of information. Yes, even including shoes, and shoe-related information.

(For other examples of the far reach of trade secret law, see my earlier posts regarding technology design concepts and real estate investment vehicles.)

Designs, Drawings, and Business Plans

The Complaint (filed in Oregon state court) is novel-like, weighing in at 50 pages – without exhibits – and includes many claims other than trade secret misappropriation (breach of a non-compete clause, breach of duty of loyalty, and tortious interference, among others).  But most of the case value – alleged by Nike to be at least $10 million – will likely hinge on the strength of the trade secret claim, given the possibility for punitive damages and attorney fees under the Oregon Uniform Trade Secrets Act.

Here are the trade secrets Nike claims were stolen by the former designers:

  • future strategic development plans and product offerings/launches
  • unreleased product design drawings and models
  • unreleased product technology
  • product financial performance information
  • marketing campaign materials
  • virtual testing methodologies
  • blueprints for product launches

In a mild surprise and departure from the norm in a trade secrets case, Nike named only the three former designers as defendants, not their new employer Adidas.  (Not yet, at least ….)

 “Standard Playbook” Electronic Evidence

No trade secrets case would be complete without allegations that the former employees engaged in electronic misdeeds, and the Nike lawsuit is no exception.  Often, this type of evidence will make or break a case.

Nike claims that prior to leaving Nike, one defendant extracted proprietary documents from his company-issued laptop regarding Nike’s soccer footwear product line, and also sent an email from his work email account to his personal email account attaching confidential design drawings for an unreleased shoe designed for one of Nike’s sponsored athletes.

The defendants also allegedly erased incriminating emails, text messages, and other files.

Trade Secrets Rise

Trade secret law used to be the Rodney Dangerfield of intellectual property, getting far less respect and attention than its I.P. brethren – patents, copyrights and trademarks.  But in this “knowledge economy,” trade secret law provides a vital role in protecting the confidential information that drives profits (including shoe designs and a broad array of other items).