Intellectual Property Law

I have an admission to make as a co-author of this blog and the author of this piece - I lived in Ithaca, New York during law school and I drank alot of inexpensive beer while there. Now, with that established -

The Price Chopper grocery chain has filed a $20 million lawsuit against Binghamton Giant Market Inc. for allegedly stealing trade secrets.

The complaint, filed in state Supreme Court in Schenectady on Wednesday, alleges that Giant routinely obtained advance notice of the promotional items and prices that Price Chopper was planning to advertise in the Sunday editions of the Press & Sun-Bulletin to gain unfair competitive advantage.

The suit seeks compensatory damages of $5 million, recovery of the profits and gains that Giant allegedly obtained in the amount of $5 million, and $10 million in punitive damages.
Giant principal Ron Akel declined comment.

Todd E. Hoover, of Greene, a former salesman for beer distributor AL George LLC of Kirkwood, was charged by police April 1 and accused of taking copies of the Price Chopper advertising fliers, prior to their distribution to the public. The suit alleges Hoover delivered those fliers to his supervisor, who in turn would pass the fliers to August O. Kutchinski, operations director for Giant.

Kutchinski said he was unaware of the suit and denied any involvement in what Price Chopper claims occurred.

"That sounds like a good story from somebody," he said. "I don't know what you're talking about. People can say what they want to say."

The complaint alleges Hoover had access to a bottle-storage closet at the Price Chopper store on Glenwood Avenue in Binghamton, where the fliers were stored prior to public distribution.
According to the complaint, surveillance tapes show that on about seven occasions, Hoover took copies of the fliers from the closet and stuffed them down his pants. He routinely took the fliers on Wednesday mornings, prior to when they were distributed to the public on Sunday each week, the complaint said.

The parking lot tapes show Hoover handing the fliers to David J. Cannistra, of Binghamton, on Wednesday mornings on about six occasions, the complaint alleges. Cannistra worked as a supervisor for AL George and was Hoover's immediate superior.

"Upon information and belief," Cannistra would then pass the fliers on to Kutchinski on Wednesday afternoons, the lawsuit said. Price Chopper claims that Giant has used its trade- secret pricing information for years.

Hoover and Cannistra were terminated from their jobs at AL George on April 6, according to the suit, which does not elaborate on the reasons behind the termination.

Hoover, Cannistra and an AL George spokesperson could not be reached for comment.
This "ongoing conspiracy" occurred nearly every Wednesday for at least six months, the suit says.

"It's like someone walking into our stores and stealing our financial records," said Neil Golub, president and chief executive officer of Price Chopper Supermarkets, based in Schenectady.

"People were stealing our ads. They were using that information to change their pricing."
In order to have the fliers inserted into the Sunday paper and ready for distribution, Price Chopper would usually have them printed and prepared over the weekend and delivered to the Press & Sun-Bulletin by Tuesday of each week. Extra copies of the fliers would be delivered to the stores on Tuesday for distribution to customers in the stores on Sunday.

In the suit, Price Chopper said it believes that Giant's Sunday newspaper ads - which run in the middle of the first news section of the paper, and not in a flier insert - can be revised until Friday and possibly Saturday before Sunday distribution.

Golub said Price Chopper now keeps its fliers more secure but wouldn't elaborate.

He added that Hoover was a "known person in the store. He was in there a lot. ... So apparently people didn't pay as much attention to him. He knew he had no business going where he was going."

One thought - if the flyers contained trade secrets regarding price, how does Price Chopper prove it used reasonable means to keep them secret if they were storing the flyers in a bottle-storage closet that competitors or their agents could get access to ?