Jury Verdict Stands in Broccoli Extract Trade Secrets Case

On June 9, Senior Judge Charles R. Simpson III of the Western District of Kentucky published an opinion denying the defendant’s motion for judgment as a matter of law (JMOL).  The defendant, Jarrow Formulas (Jarrow) lost a legal battle brought by Caudill Seed (Caudill) after a jury determined that Jarrow violated the Kentucky Uniform Trade Secrets Act by hiring a former Caudill employee who upon departure also departed with “the lab notebook and external hard drive containing [Caudill’s] critical formulas and research data (Trade Secret 1)” necessary to develop supplements containing broccoli extract.

The court noted that the denial of the defendant’s motion proved to be an easy decision as the “court was early on convinced that Caudill…had a legally viable cause of action for the alleged misappropriation in this case and remains of that opinion today.” In order to grant the JMOL motion, the judge must find, while drawing every favorable inference in favor of the non-moving party, that “there is a complete absence of proof on a material issue in the action.”

Jarrow argued that “the jury could not reasonably find misappropriation of Trade Secret 1 because (1) Trade Secret 1 was not sufficiently defined; (2) the jury could not find that the entire compilation of Trade Secret 1 was misappropriated by Jarrow Formulas; and (3) Caudill failed to prove a combination of elements in Trade Secret 1 that was unique and not publicly known.”

The court rejected each of Jarrow’s arguments. First, the judge determined that Caudill “adduced evidence from which the jury could reasonably have concluded that the confidential and proprietary materials which [the ex-employee] undisputedly provided to [Jarrow] contained [Caudill]’s extensive and complete instruction on the process for successfully and profitably, producing the [Caudill] products from ‘seed to shelf’, enabling [Jarrow] to launch its own manufacturing operation in just a few months.” Second, the judge held that extensive expert testimony existed to allow a reasonable jury to conclude that while the broccoli extract development process “could be reverse engineered by an outsider…that even an experienced scientist in the field could not have read the patents, journal articles, manuals, and research materials and come up with a reproducible marketable product in four months as [Jarrow] did.”

Finally, the court concluded, Kentucky trade secret law did not require Caudill to convince a jury that the entirety of a trade secret process was stolen in order to find success under a trade secret misappropriation claim. The correct standard was whether Caudill presented “enough evidence for the jury to legitimately conclude that the misappropriated information/materials contained at least some trade secrets.”

The denied motion means that Jarrow must pay Caudill the jury-granted compensatory damages of $2,427,605.  The plaintiff was represented by Dentons Bingham Greenbaum , while the defendant was represented by Stites & Harbison.