Interviewer: What’s the difference between a business dispute versus a contract dispute?
Robert Cummings: Well, a business dispute can be a contract dispute. It all depends on what the facts are of the situation. For example, if Business A agrees to cut the lawn of Business B and Business A doesn’t cut the lawn, then Business B can sue for various remedies. This situation would be a “business dispute” but would arise as a breach of contract.
There are other business disputes aside from breaches of contract. For example, a common case in the current business litigation landscape is misappropriation of trade secrets. These cases involve scenarios where Company A has certain proprietary or confidential information that it derives value from being kept secret from competitors. Somehow, Company B gets ahold of that proprietary, confidential trade secret information. One common way is that Company B hires one of Company A’s former employees, and that employee happens to know Company A’s cherished secrets. Then, you have a business dispute where Company A is saying, “Company B, do not use my trade secrets anymore and pay me for the damages caused from your misappropriation thereof.”
Personal Injury Litigation Generally Entails Someone Who is Injured Due to Another Party’s Mistake
Interviewer: How does personal injury differ from business disputes?
Robert Cummings: Personal injury litigation generally involves a person getting injured as a result of another party’s negligence. For simplicity, think of these cases as involving a slip and fall at somebody’s house, a car accident when someone runs a red light, or a crash on a ski slope from a dangerous condition on the run. The cases usually begin, if the injured party hires an attorney, with a demand letter to the responsible party. For the most part, if the responsible party has insurance, the insurance company will get involved to hopefully resolve the claim. The insurance adjustor then says, “All right. Where is the liability here? What are the damages? Is my client, the insurance company’s client, liable?” That is a rough sketch of how personal injury litigation generally begins. If the case cannot be resolved through negotiations with the insurance company or if the individual does not have insurance, the injured person can look at going after the responsible party personally or taking the insurance company into court to resolve the matter.
A Trade Secret is a Formula, Practice, Process, Pattern, or Compilation of Information Which is not Generally Known or Reasonably Ascertainable
Interviewer: What are some examples of trade secrets? What sort of information are we talking about?
Robert Cummings: Well, the easy example is: “How do you make Coca Cola?” There are a handful of people in the world that know the actual formula for Coca Cola. Another example is computer code. If the computer code that you use in your software is proprietary, that can be a trade secret. Or, if you have a customer list that you spent a lot of time in compiling and that list not widely known, that can be a trade secret.
The test generally is, depending on the jurisdiction where the case arises and if it is federal or state law, whether the party took reasonable steps to ensure the confidentiality of the information and whether the party derives an independent economic benefit from the information remaining confidential. So, a lot of things, so long as you can fit that definition, can constitute trade secrets.
A Confidential Recipe Utilized at a Restaurant May be Construed as a Trade Secret
Interviewer: Could it be as simple as someone working for one restaurant, and then decides to work for another restaurant. You might say they are private small businesses, but for some reason someone suspects that the second restaurant may have shared some secrets about the other restaurant, the recipes or whatever like that.
Robert Cummings: Let us assume Company A has a secret sauce, and the employee knows about that secret sauce formula, and he goes to Company B who is a direct competitor of Company A, and all of a sudden Company B starts having this secret sauce. There is potentially a claim in that scenario. But, you got to take a step back. For Company A to ensure that they have a trade secrets claim, the Company needs to, before the problem arises, take certain steps to ensure that the secret sauce is protected. It needs to implement policies and procedures where employees sign off acknowledging that this stuff is kept confidential, acknowledging that the Company derives profit from the secret sauce remaining a secret and that if Company A’s employees go to work for a competitor, the employee promises to not disclose the information.
So, if Company A can to point to steps that it took before the dispute arose, showing that it was acting reasonable and diligent in trying to protect the secret sauce, there could be a misappropriation claim against the employee and potentially against the hirer on the other side. For Company B, there are steps that Company B can take to ensure that it is not liable for trade secret misappropriation on hiring an employee, such as the Company did not know that the employee knew the secret sauce formula, for example.