Takeaway: Companies should not hesitate to protect their trade secrets in court. This is especially true if an employee quits, takes trade secrets with them and provides the information to a competitor that then uses the information to its advantage.

Companies may wish to review their trade secret policy in light of this recent action's analysis of what is a trade secret.

Caudill Seed & Warehouse Co., a Kentucky-based manufacturer and seller of agricultural products, sued another firm, Jarrow Formulas Inc., for alleged violations of the Kentucky Uniform Trade Secrets Act (KUTSA), and was awarded approximately $7 million in damages.

Jarrow Formulas is a dietary supplement manufacturer that sells BroccoMax, a broccoli-seed extract product. To make BroccoMax, Jarrow purchased glucoraphanin-containing powder from Caudill.

Jarrow eventually decided to "design and sell" its own activated glucoraphanin product, the appeals court said. To do this, it made overtures to Caudill's director of research "to learn Caudill's manufacturing process from him."

The research director eventually ended his employment with Caudill and became a consultant to Jarrow.

The individual's "expertise proved very useful for Jarrow," according to the appeals court, as the company never conducted its own research and development (R&D) on broccoli-seed extract products, but instead looked to the former Caudill employee to provide the necessary input.

"Jarrow profited handsomely from this research....

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