Perfumer Off the Hook for Printing Out Secrets

(CN) - The world's largest flavoring and fragrance manufacturer cannot sue a former employee for downloading fragrance formulas he allegedly gave to a competitor, a federal judge ruled.

Givaudan Fragrances Corp., headquartered in Vernier, Switzerland, sued its former perfumer, James Krivda, and a French competitor, Mane USA Inc., in the federal court in Trenton, N.J. months after he resigned in early May 2008.

Although Krivda was authorized to access Givaudan's confidential "computerized formula management system," he was not allowed to "review and print" formulas or "access existing formulas, especially those created by others," the Swiss company claims.

But soon after Krivda quit, he gave his new employer, French competitor Mane's American division, 616 fragrance formulas he downloaded and printed before leaving Givaudan, the complaint states.

That allegedly included formulas created by Krivda and other perfumers; so-called 'head-space' analyses prepared by a world famous Givaudan perfumer; other commercialized fragrances worth millions of dollars individually; gas chromatographies, i.e. product analyses; and at least one formula for a proprietary ingredient developed by Givaudan.

Krivda insists he shredded the documents, Givaudan says in its complaint.

The company asserts claims for Computer Fraud and Abuse Act violations, breach of contract, misappropriation of trade secrets, conversion, and replevin.

U.S. District Judge Peter Sheridan dismissed Krivda's counterclaim for defamation of character in September 2009, holding that Givaudan's letters demanding Krivda explain himself "clearly fall within the broad strokes of the litigation privilege."

After the district court held a discovery issue status conference on Feb. 7, 2013, the defendants moved for reconsideration, seeking to limit discovery to only the allegedly misappropriated formulas, and to order Givaudan to produce any information to be used at trial.

U.S. Magistrate Judge Douglas Arpert denied the motions March 5, finding that Mane ignored Givaudan's invitation to inspect the allegedly stolen formulas.

But Judge Sheridan awarded Krivda partial summary judgment on the computer fraud claim Sept. 26, holding that the perfumer was authorized to access Givaudan's database.

"The term 'exceeds authorized access,' refers to one who had access to part of a system and then accessed other parts of the computer system to which he had no permissible access," the unpublished opinion states. "Here, Krivda had permissible access to the formula management database system. Givaudan's proposition that Krivda could not 'review and print' does not fall within the definition of 'exceeds authorized access.' In applying the summary judgment standard and utilizing Givaudan's version of the facts, it is clear that Krivda had access to the computerized formula management system, and Krivda entered areas to which he had access. Summary judgment is granted."

The court reserved decision on the remainder of the motion, however.

Trial is set to begin Nov. 1, a ruling from June 10 states.

With 3500 employees across 30 countries, Mane reported $841 million in sales in 2012, while Givaudan's 9,000 workers in over 40 nations made about $4.7 billion in revenue last year.

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