The Georgia Court of Appeals recently ruled that a company failed to present sufficient evidence that its former employee had misappropriated its trade secrets, where the former employee’s denials conflicted with circumstantial evidence of misconduct. In this case, Contract Furniture Refinishing & Maintenance Corp. of Georgia d/b/a The Refinishing Touch v. Remanufacturing & Design Group, The Refinishing Touch ("TRT") alleged, among other things, that its former employee Scott Deutsch and his new firm Remanufacturing & Design Group ("RDG") used “several thousand pages” of market and sales recap reports provided to Deutsch during his employment to secure jobs that TRT had previously bid on.
The trial court granted summary judgment in Deutsch’s favor on the trade secret misappropriation claim. On appeal, the court explained that the recap reports consisted of customer and prospect information, along with TRT’s quote amounts. The court stopped short of analyzing whether this information constituted trade secrets, however, and instead determined that TRT had not presented evidence to create a genuine issue of material fact with regard to the misappropriation element of its claim. The court found that TRT only presented circumstantial evidence, which consisted of the timing of when the recap reports were provided to Deutsch compared to when Deutsch and RDG made competitive bids to two customer leads listed in those recap reports, as well as the fact that a flash drive had been connected to Deutsch’s personal and work laptops that were later missing data. Conversely, Deutsch testified unequivocally that he did not use or disclose any trade secrets provided to him by TRT, and presented evidence showing how his new firm could have independently bid on the jobs, which included presenting an email from one of the customer leads to RDG that included a copy of TRT’s preceding quote.
The court stated that “a finding of fact that may be inferred from, but is not demanded by, circumstantial evidence has no probative value against positive and uncontradicted evidence that no such fact exists, provided that the circumstantial evidence may be construed consistently with direct evidence.” The court then ruled that while TRT produced strong circumstantial evidence that Deutsch may have misappropriated or disclosed its alleged trade secrets, the “evidence is also consistent with the direct evidence that Deutsch did not in fact do so. The circumstantial evidence therefore has no probative value, and TRT cannot demonstrate a genuine issue of fact with regard to its misappropriation of trade secrets claim.”