NOT ONLY DIAMONDS BUT SOME RIVALRIES ARE FOREVER – CARTIER VS. TIFFANY

Tiffany and Cartier have never been chums. Cartier International SNC, a French luxury goods conglomerate last year filed a Trade secrets infringement suit in the Supreme Court of New York against Tiffany & Co., a premium luxury jewelry brand and one of the former employees of Cartier (hereinafter referred to as “employee in question”).

While the headline-making legal battle between Cartier and Tiffany comes to an end in February this year post-Cartier filed a Motion to dismiss the suit but this suit highlighted the growing competition between the high-end brands.

However, let us first understand the most discussed word “Trade Secrets” which made Cartier file this suit.

“What is a trade secret and what kind of information is protected by trade secrets?”

Trade secrets are intellectual property rights on confidential information which is commercially valuable because it is a secret and known only to a limited group of persons for which the rightful holder of the information has taken reasonably to keep it a secret, including the use of confidentiality agreements for business partners and employees.

Trade secrets encompass technical information, commercial information, financial information, formulas and recipes, and source codes. In nutshell, any confidential business information provides any other enterprise a competitive edge.

The unauthorized acquisition, use, or disclosure of such secret information in a manner contrary to honest commercial practices by others is regarded as an unfair practice and a violation of trade secret protection.

Cartier sues Tiffany & Co for allegedly stealing trade secrets:

In this case, Cartier claimed that Tiffany’s tortious interfered with contractual relations between Cartier and its formal employee to unlawfully obtain confidential information about Cartier’s North American business and specifically, its High Jewelry Division, to unfairly compete with the same. Cartier further claimed to maintain its confidential and trade secret information on password-protected computers and requires all employees to sign confidentiality and non-disclosure agreements in which each employee agrees, among other things, not to use or disclose Cartier confidential information outside of Cartier.

The following facts were submitted by the Cartier in the Complaint[1]:

1. The employee in question was working as Assistant Manager for Merchandising, Jewelry and in connection with her employment, an execution of Confidential Information and Non-Solicitation Agreements containing explicit terms regarding the confidentiality of Cartier’s business information and trade secrets, as well as employee non-solicitation provisions governing post-employment obligations where mentioned which were agreed and signed by the employee in question.
2. The employee in question was contacted by Tiffany’s Vice President, North America Merchandising for the position open in Merchandising team. After several calls and in-person interviews, the employee in question was hired with a sign-on bonus, a discretionary bonus opportunity, and a salary that was about 30% higher than her Cartier salary for a High Jewelry merchandising role
3. The day after her in-person interview at Tiffany, the employee in question searched through numerous Cartier electronic file locations and SharePoint folders, searching for documents that she believed would help her prepare for a High Jewelry merchandising role at Tiffany and sent all such documents from her work e-mail to her personal Gmail account attaching documents and Excel spreadsheets including relevant screenshots of materials that she viewed as potentially helpful to her.
4. Later, the Cartier’s information the employee in question forwarded to her personal G-mail eventually some of that info was eventually sent to Tiffany executives, in violation of the former employee’s nondisclosure agreement.
5. The Cartier sent a cease and desist letter to the employee in question, with a copy marked to Tiffany’s legal department.
6. An email from a Tiffany attorney was sent that claims that the two Tiffany executives who received the information didn’t know its origin. The employee in question asserted that the confidential information was never forwarded, the emails that contained it has been destroyed (aside from copies kept for legal purposes), and noted that the executive who received the information have been instructed not to use it. The employee in question is also terminated.

Tiffany & Co.’s Submissions:

Tiffany argued that Cartier failed to sufficiently plead that the allegedly stolen information such as inventory spreadsheet, general revenue data, etc. contained trade secret information or any high threshold of competitive sensitivity. Tiffany further argued that the information was never sufficiently kept secret to qualify as a “Trade Secret”.

Motion to dismiss the suit filed by Cartier:

The Court issued an injunction in December 2022 affirming that Tiffany & Co. will not use any information received from the employee in question. However, recently in February 2023 both brands submitted a “stipulation of discontinuance of lawsuit with prejudice” in the Supreme Court of the State of New York, thus ending the year-long dispute. The terms of the settlement have not been disclosed in the media yet.

Peek into a broad view of stumbling blocks:

The lawsuit wipes off some of the shine from these luxury brands throwing light on the disturbing culture of misappropriating competitive information practices at the branding level. The clash between Tiffany and Cartier gave a public peek into rising competition among businesses. Nonetheless, the settlement between the parties raises the question that it could be a doomed attack calibrated for maximum publicity by the Cartier.

The misappropriation of competitive information practice is a defacement of fair-Trade Practice and “common law” rights. As the world is getting more competitive and every business wants to build brand value. However, comprehensive protection for trade secrets is yet an underdeveloped area of IP Rights although “The Uniform Trade Secrets Act” has been adopted by many countries. It is the need of the hour to address the importance of trade secrets that CONTINUES TO GROW…!

[1] Complaint as filed at Supreme Court of The State of New York County, Commercial Division dated 02/28/2022 https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=Qvq5jJF1f3UgkJjvvzyXTA==