Can a Former Employee Use His Knowledge of Employers’s Strategies After He Began Working With His Competitor ?

In Pepsico, Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995), the district court found defendant learned plaintiff's secret pricing, distribution, packaging, and marketing strategies while working as its employee.

The defendant began working for a competitor, and the court found he would inevitably use his knowledge of the plaintiff's strategies to make decisions at his new job.

On appeal, the Seventh Circuit concluded the trial court's findings were supported by the evidence. Pepsico, 54 F.3d at 1269-71.

Although the defendant asserted he did not intend to use the knowledge he acquired while working for the plaintiff, the court was not convinced, in part because he demonstrated a lack of candor when he failed to tell his employer he had been hired to work for a competitor.

The fact that the competitor "had an unnatural interest in hiring the plaintiff's employees" also weighed against the defendant. Pepsico, 54 F.3d at 1271.

The court said, the "defendant could not be trusted to act with the necessary sensitivity and good faith under the circumstances in which the only practical verification that he was not using plaintiff's secrets would be defendant's word to that effect." Pepsico, 54 F.3d at 1270.