Last month, Panera, the sandwich company perhaps best known for its “You-Pick-Two”® soup-salad-sandwich offering, brought suit under the Defend Trade Secrets Act (DTSA) against Michael Nettles, a former Panera executive who left the bread bowl purveyor for employment with Papa Johns. In its suit, Panera alleges that Nettles breached his employment agreement (which specifically identified Papa John’s as a competitor for whom Nettles could not work within one year after leaving Panera) and stole valuable trade secrets when he departed for Papa John’s.
According to the complaint, Panera and Papa Johns “compete with each other as a ‘food alternative’ … [and] fight for customers during the lunch and dinner hours … [by] selling products made from dough.” Nettles – Panera’s former Vice President of Architecture in its Information Technology department – took valuable trade secrets regarding Panera’s “Panera 2.0” initiative, Panera alleges. The initiative consists of “enhanced to-go and eat-in options enabled by a series of integrated technologies” and is designed to “reduce wait times, improve order accuracy, and minimize or eliminate crowding; and create a more personalized experience.” Simply put, Panera is seeking to protect its “strategic technology plan” which Nettles “intimately knows” and consists of “[Panera’s] use of technology to enhance guest experience, its successes in the delivery business, and its use of powerful and integrated systems and processes.”
Earlier this month, Judge John A. Ross of the Eastern District of Missouri granted Panera’s motion for a temporary restraining order. In its opposition to the TRO, Papa John’s had argued that Nettles’s non-compete agreement was unenforceable under Missouri law because Papa John’s and Panera are not actually competitors. Judge Ross was not persuaded – Panera demonstrated (through Papa John’s marketing materials) that both restaurant chains target a so-called “clean ingredient consumer” and that the chains compete in the market for carryout meals among this consumer base.
This case presents an atypical fact pattern: in a case between two restaurants, one might expect that a relevant trade secret would be a recipe or a new way of baking bread faster or more efficiently. This case demonstrates that sometimes the IP used to optimize delivery or consumer experience is just as valuable as the core product itself.
The preliminary injunction hearing is set for November 16, 2016 and the case is titled Panera, LLC v. Nettles and Papa John’s International, Inc., Case No. 4:16-cv-1181-JAR (E.D. Mo.).