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Schwan’s VS. Conagra: Pizza Dough Trade Secret

Minnesota-based Schwan’s is taking on Conagra in court, accusing Conagra of swiping trade secrets on the making of frozen pizza dough after Conagra hired away one of its employees. Schwan’s, known in the upper Midwest for its home delivery of frozen foods, and its pizza brands include Red Baron, Tony’s and Freschetta.

In October 2020, Schwan’s filed suit against the employee but during evidence discovery in that case, Schwan’s concluded that it also had a case against Conagra and filed an amended complaint in April 2021, accusing Conagra of violating the federal Defend Trade Secrets Act, the Minnesota Uniform Trade Secrets Act, interfering with a contract and “unjust enrichment” from hiring the employee. Conagra sought to dismiss the case but on Dec. 2, a judge ruled that Schwan’s can proceed with its claims.

According to court documents, the case started in November 2017 when Rongxuan Cai, the principal research scientist for Schwan’s, accepted a job from Conagra. At Schwan’s, Cai had done research on yeast and flour for dough for use in pizza crusts and frozen pies.

It was not until Friday, Dec. 15, 2017, that Cai resigned from Schwan’s. The following Monday, Schwan’s learned that Cai was leaving to work for Chicago-based Conagra, a competitor to Schwan’s in the frozen food business. Schwan’s immediately fired Cai, and escorted him from the building.

Court documents state that “Schwan’s alleges that from the time Cai accepted the job at Conagra until he was escorted from Schwan’s property, he accessed files containing Schwan’s confidential and proprietary information and trade secrets on several projects related to grain, pizza crust, and encapsulated sugar, among other projects.” Schwan’s also says Cai took devices and notebooks with research information.

Nine days after Schwan’s fired him, Cai filed two United States patent applications: “Method of Making Frozen Dough and Products Made Using the Method” and “Microwaveable Frozen Breads and Method of Making the Same.” He also filed for a patent in China on the first patent.

Beginning from his hiring in 2003, Cai had signed agreements saying his Schwan’s work would be confidential and could not use that information to help another company or use it to get another job. It also specified that any patents from his work at Schwan’s would belong to the company. A noncompete clause barred Cai from working for “any business which competes with [Schwan’s] in the geographic or job function areas assigned to” Cai for one year after leaving Schwan’s.

Cai began working for Conagra on Jan. 8, 2018. Three days before that, Schwan’s sent Conagra a letter notifying Conagra that Cai was a former Schwan’s employee and was in possession of confidential and proprietary information from Schwan’s and asked Conagra to ensure that Cai did not use this information for Conagra’s benefit.

The company is seeking Cai to return all information he took from Schwan’s, to have patent applications switched to Schwan’s and for damages incurred in the case.

The case is set to go to trial next year.

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This entry was posted on Thursday, December 23rd, 2021 at 11:42 am. Both comments and pings are currently closed.