In Six Dimensions, Inc. v. Perficient, Inc., No. 19-20505, 2020 WL 4557640 (5th Cir. Aug. 7, 2020), the Fifth Circuit explores the issue of what happens when an employer hires a new employee who is in possession of his former employer’s trade secrets. In Six Dimensions, plaintiff Six Dimensions’ former employee left his Six Dimensions employment with a USB drive of Six Dimensions’ training materials. The employee started work at competitor Perficient and brought with him the USB drive. The evidence at trial demonstrated that there was discussion between the employee and Perficient about uploading the Six Dimensions’ training materials to Perficient’s server, but Perficient ultimately decided not to use the training materials.
At trial, the jury determined that Perficient did not misappropriate Six Dimensions’ trade secrets under the Texas Uniform Trade Secret Act (TUTSA). On appeal, Six Dimensions argued that it established that Peficient had misappropriated its trade secrets through acquisition (and not by use) and through the employee’s acquisition based on theories of respondeat superior and ratification.
The Fifth Circuit rejected these arguments. First, the Court noted that the employee’s possession of a trade secrets prior to his employment with Perficient was not sufficient to establish Perficient’s misappropriation by acquisition.
Second, the Court stated that there was no precedent that the employee’s possession of trade secrets during his employment with Perficient established, as a matter of law, that Perficient acquired those trade secrets. Instead, the jury was allowed to credit the testimony that the employee did not provide the materials to anyone at Perficient or upload the materials to Perficient’s system.
Finally, the Court refused to consider the respondeat superior and ratification theories of liability because there were not alleged in the complaint and not part of the instructions of the jury.
The Six Dimensions case provides an important defense for employers who hire employees who may have taken trade secrets from their previous jobs: so long as the employers do not use the trade secrets, they will generally not be held to have acquired the trade secrets. In that situation, though, it would have been better for the new employer to work with the former employer to make sure the trade secrets were properly returned or destroyed. Doing so may have avoided the lawsuit.