Trade secrets are a vital part of many companies' success. They can involve anything from special recipes to technology. In a legal battle between restaurant chains, however, it's technology that's the issue -- not recipes.

Panera Bread Co. is suing Papa John's International and a former Panera IT executive who is now working for the pizza company in federal court. According to the suit, the executive had signed a non-compete agreement while at Panera. It prohibited him from working for a number of competitors for a specific time period after he left the company.

Suit: Both Papa John's and Executive Violated a Non-Compete Agreement

Panera says that that Papa John's wrongfully pursued the executive, knowing of the agreement. In fact, Panera alleges, Papa John's has been targeting its IT employees "for some time now."

The suit states that he notified the Panera CEO that he'd accepted a position with Papa John's and asked to be released from his non-compete agreement. It contends that Panera's CEO offered to help him find a job at another company that wasn't in competition with Panera, but that he accepted the Papa John's position, anyway. Further, according to the suit, Papa John's actually encouraged him to take the job, in violation of his agreement.

What Does the Executive Know That Can Harm Panera?

So what is the knowledge that this executive, who worked as the company's IT vice president of architecture from 2012 to 2016, has that can be damaging to Panera when used by Papa John's? It involves technology-based initiatives that he helped implement at Panera, including digital ordering via smartphones and kiosks. Besides the technology itself, Panera says, he "intimately knows Panera's strategic technology plan for the next few years."

What Can Companies Do When Confidential Information Is Illegally Shared?

Panera is seeking damages, injunctive relief and attorneys' fees in its lawsuit. It is also asking for a jury trial.

Non-compete agreements, like trade secrets, copyrights and trademarks, are essential for many companies in establishing and protecting things they develop that are unique and set them apart from the competition. Violation of laws surrounding confidential information can result in millions of dollars in lost business. That's why companies often choose to take legal action when such violations occur by individuals and other companies.

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