On Tuesday, in an unpublished opinion, the Sixth Circuit addressed the relationship between trade secrets, contractually protected confidential information, and general skills and knowledge. The Sixth Circuit reversed the district court’s ruling and held that not all contractually protected confidential information is either a trade secret or general knowledge or skill. Rather, confidential information can be contracted for; it exists independent of trade secrets and general knowledge and, while there can be overlap between confidential information and trade secrets, an overlap does not necessarily exist.
In Orthofix, Inc. v. Hunter, Orthofix, a medical device company, brought suit against Hunter, a former sales representative with Orthofix. During his time with Orthofix, Hunter received information relating to the practices of the area doctors, including schedules, prescribing habits, and preferred brands. In 2012, Hunter left Orthofix to join DonJoy Orthopedics, a competitor operating in the area. In an attempt to avoid conflict with the non-compete provision that was part of his Orthofix contract, Hunter did not continue selling to his Orthofix customers and instead introduced his former customers to other DonJoy representatives. Orthofix filed a claim against Hunter for, among other things, misappropriation of trade secrets and breach of contract for violating the non-disclosure and non-compete provisions of Hunter’s employment agreement. The district court found for Hunter on both issues.
Hunter argued Texas law, which both parties agreed governed the non-disclosure agreement, required information subject to a non-disclosure provision to be secret. Reviewing the issue de novo, the Sixth Circuit noted that both Texas courts and federal courts applying Texas law have given effect to non-disclosure provisions regardless of whether the information covered achieved trade-secret status. Orthofix articulated that information covered by Hunter’s non-disclosure could constitute confidential information, but not be classified as a trade secret. The Sixth Circuit also agreed with Orthofix that the information that Hunter gave to other DonJoy representative fell within the definition of confidential information contained in the employment agreement. Using these points as support, the Sixth Circuit reversed the district court’s ruling in favor of Hunter and remanded the case for an assessment of damages caused to Orthofix. This case thus demonstrates the importance of protecting confidential information by contract, and helps illustrate how such provisions can be enforced.