Athletic shoe manufacturer Nike filed suit on December 8, 2014 in Multnomah County Circuit Court in Oregon against three of its former designers alleging that the designers misappropriated Nike’s trade secrets and conspired with Adidas to start a new, competing business venture.
The three former designers, Denis Dekovic, Marc Dolce and Mark Miner, all resigned from Nike in September 2014, telling Nike that they decided to pursue their own design studio. Two weeks after the three designers resigned, Adidas announced that it would fund the designed studio managed by Dekovic, Dolce and Miner.
The lawsuit, which alleges $10 million in damages, claims that while the three designers were employed with Nike, they “conspired to and developed for themselves, and then for Adidas, a strategic blueprint for a creative design studio to compete against Nike, began consulting with Adidas and misappropriated Nike trade secrets for use in their new business venture.”
In the Complaint, Nike alleges that Defendants knowingly violated several agreements signed with Nike at the outset of their employment. All three Defendants signed non-competition agreements pursuant to which they agreed to: (1) not to compete with Nike during and for a period of one year following their employment; (2) not to use or disclose any of Nike’s confidential information and to return all copies of such information upon leaving Nike’s employment; and (3) not to solicit other Nike employees away from Nike to a competitor.
In addition, the Defendants also signed Employee Invention and Secrecy Agreements, by which each of them “assign[ed] to Nike all…inventions…conceived” during his employment term with Nike relating “in any way” to Nike’s “business…or products.” Defendants further agreed to “disclose promptly and in writing to Nike all [such] inventions…conceived or made by me during the term of my employment with Nike whether or not such inventions are assignable under this Agreement.”
Nike’s describes the extensive, company-wide efforts taken to protect its confidential information. Since 2012, Nike has invested more than $1.5 million in a company-wide security initiative known as “Keep it Tight” or “KIT.” As described in the Complaint, KIT is a program designed to educate employees regarding the protection of Nike’s proprietary and confidential information, including its product design information. The KIT initiative provides employees with on-line training on social media, information security, device (laptop/mobile) security, and workplace and situational awareness security. Nike asserts that there has been, and continues to be, significant publicity of the KIT principles on postings throughout the Nike campus and on Nike’s internal employee website and social media platforms. Nike has apparently gone to great lengths to prevent leaks of proprietary, confidential and trade secret information and reinforces the company-wide culture of locking down such information.
Nevertheless, Nike claims the three designers stole a “treasure trove of Nike products designs, research information and business plans” in an effort to market themselves to Adidas. Dekovic in particular, had the contents of his laptop copied, which gave him access to “thousands of proprietary documents relating to Nike’s global football (soccer) product lines.”
In addition, just three days before leaving Nike, Dolce sent an email to his personal email account with highly confidential design drawings related to an as-yet unreleased shoe designed for one of Nike’s sponsored athletes. On their final day at Nike, the Defendants allegedly took to social media to announce joining Adidas and to promote the Adidas brand in further violation of their non-compete agreements with Nike.
As a result of Defendants’ actions, Nike claims that it will suffer irreparable harm in the form of lost market share, lost sales, and lost goodwill if Defendants are not enjoined from this continued and ongoing wrongdoing, including from consulting for or launching a creative design studio with Adidas, connecting themselves to Adidas through social and traditional media, and continued use of Nike’s Confidential Information still in their possession in operating the design studio or otherwise.
The lawsuit identifies that the information taken by the Defendants is among the most important and highly confidential information in Nike’s athletic footwear business, particularly its global football business. Disclosure of any of this information, it claims, would irreparably harm Nike, by, among other things, enabling a competitor to effectively undermine and counter Nike’s performance in the athletic markets for the next three to four years.”
Nike also brings claims of breach of contract, breach of duty of loyalty, and “civil conspiracy,” among other charges.
The lawsuit, involving one of Oregon’s most famous companies, will be an interesting test of its KIT initiative to protect proprietary information and could provide a road map for other employers.