The Third Circuit Court of Appeals recently heard arguments regarding a district court decision in a trade secrets case between Bimbo Bakeries USA, Inc. (maker of Thomas’ English Muffins) and its former executive, Chris Botticella.  Many in the popular media dubbed this the “nooks and crannies” case, a reference to the unique texture of the muffin, to which Botticella had access.  In reality, the case involves a much broader spectrum of trade secrets, as well as the enforcement of a confidentiality agreement and the use of computer forensics to detect possible violations of that agreement.

Until January of 2010, Chris Botticella was Bimbo’s Vice President of Operations for California.  In this capacity, he was one of less than 12 people at Bimbo with access to a variety of confidential and proprietary information, such as product formulas and process parameters, which were stored on a secure website.  Among these trade secrets were the three components (formula, manufacturing, engineering design, and process parameters) that give Thomas’ English Muffins their celebrated texture.  With annual sales of about $500 million, the muffins have been a vitally important item in Bimbo’s product line.  In order to keep these trade secrets from its competitors, Bimbo compartmentalized this information so that only seven people (among them Botticella) had access to all three components.

But Botticella was also knowledgeable about other sensitive aspects of Bimbo’s business operations.  As a company vice president, he was one of only five people with access to Bimbo’s highly confidential cost-reduction strategy for the Western region.  This strategy included information about lines and plants to be closed, new processes to be implemented, new products to be launched, and formulas to be optimized.

In March of 2009, Botticella entered into a confidential agreement with Bimbo as a condition of employment.  Less than seven months later, in September of that year, he received a job offer from Interstate Brands Corporation, the predecessor to Hostess Brands, Inc., one of Bimbo’s three major competitors.  In October 2009, Botticella accepted the position with Hostess, and in December he signed an “Acknowledgement and Representation Form,” stating that Hostess was not interested in Bimbo’s trade secrets, nor would Botticella disclose such secrets to his new employer.

Botticella was to resign from Bimbo on January 15, 2010, but it was not until January 4, 2010 that he informed Bimbo of this intention, and not until about 10:00 a.m. on January 13 that he let Bimbo know that he was going to work at Hostess.  He was then told to stop all work and leave that same day.  But according to the testimony of a computer forensics expert, at 10:12 a.m. on January 15, Botticella accessed 12 company documents on his laptop computer (including highly confidential Bimbo documents), all in the course of 13 seconds.  Computer forensics also revealed that three external storage devices had been attached to the laptop, only two of which have been accounted for.  When questioned about this in deposition, Botticella testified that he attached the USB flash drives to the computer as “practice” in order to improve his computer skills for his job at Hostess.

On February 9, 2010, the court entered a preliminary injunction barring Botticella from starting his employment at Hostess and from divulging any of Bimbo’s trade secrets to anyone.  He was also ordered to return all of Bimbo’s confidential information in his possession back to his former employer.  This injunction was to remain in effect until after the trial, which was scheduled for April 12.  But by filing an appeal, Botticcella actually prolonged his unemployment until at least after the court of appeals enters its decision.

It remains to be seen how this case will be decided, but one thing is certain: it’s not just about English muffins.

Invite Chris Stewart to speak at your next function.

Contact Chris@MrIntangible.com.

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