In the 1995 season of the National Football League, the Dallas Cowboys pretty much had their way with every team in the league--culminating with their 27-17 victory over the Pittsburgh Steelers in Super Bowl XXX on January 28, 1996. The only exception was the Washington Redskins, who despite the fact that they finished the season with a losing record, defeated the Super Bowl Champions twice in the same season.
How did the Redskins accomplish this feat? While the hard work and determination of the Redskins' players certainly played a role, many football analysts attributed the team's victories to the unique circumstance of their head coach, Norv Turner. You see, Turner is the ex-offensive coordinator of the Dallas Cowboys. In fact, while it has been three years since Turner coached the Cowboys' offense, the offensive schemes and plays used by the Cowboys today remain--in large part--based on the offense Turner created. Thus, Turner's Redskins team--based on the ability of Coach Norv Turner to craft defensive game plans designed to stop the potent Dallas offense which he himself crafted--seemingly has a competitive advantage over the Cowboys which no other team in the National Football League has been able to duplicated.
Sports is fast becoming a big business. Likewise, big business often imitates sports. Victoria Cundiff (1992) (speaking about the business context, but whose comments would be equally applicable to football) stated that "sometimes an employee appears most valuable at the moment he announces that he is leaving to work for a direct competitor" (p. 302). This is precisely because the competitor can gain benefit from the valuable information about a company that he or she may bring from the former employer.
Recently, there has been an important case decided by the Seventh Circuit involving the Pepsi Cola Company and a senior executive who left the company to join a major competitor (Quaker). In deciding the case of Pepsico v. Redmond, the Seventh Circuit itself compared the company's circumstances to that of a football team, writing: "Pepsico finds itself in the position of a coach, one of whose players has left, playbook in hand, to join the opposing team" (Redmond, 1995, p. 1089).
In this article, we will examine the Pepsico v. Redmond case and its ramifications. The Redmond case raises the novel question of whether or not corporate strategy is a protectable trade secret. As such, the case sparks important issues for both the law of trade secrets and the practice of executive recruitment in marketing. Both of these matters will be addressed in the conclusion of this article.
Most businesses rely--to one extent or another--on proprietary information as they seek to gain a competitive advantage in the marketplace. We (or more precisely our stomachs) encounter examples of such proprietary knowledge everyday, whether it be in the form of McDonald'sTM secret sauce, the Colonel's recipe of thirteen secret herbs and spices at KFCTM, or the method by which the cooks at Pizza HutTM actually get the cheese inside the crust. Companies such as these obviously have a vested interest in maintaining the confidentiality of these recipes to maintain their advantage in the marketplace. In like fashion, customer lists and databases, engineering and manufacturing processes, and software and product designs, along with countless other examples, serve as the basis of many companies competitive advantage as well.
Observers have noted that most managers do not realize just how valuable and in need of protection their proprietary "information assets" are until they face the prospect that a departing employee could use the company's trade secrets against their former employer potentially negating whatever competitive advantage such information gave to the company (Gleason & Engelberg, 1994). Almost all trade secret cases involve a claim made by a company that a former employee or contractor has misappropriated (or likely will misappropriate) information gained from an employing organization (Wiesner & Cava, 1988). …