Tervis Versus Trinity - What Good Is a Handshake?
Last week, a Florida printing company announced that it was suing Tervis Tumbler Company for violating a non-disclosure agreement and “handshake agreement” that the company would print all of Tervis’s tumbler inserts.
Tervis seemingly violated that handshake agreement, going to a competing company that would offer a similar product for a lower price (and possibly giving said company trade secrets in the process).
While this case is interesting in the usual sense of trying to figure out whose side of the story is the most accurate, it’s also interesting because it brings into focus the legality of handshake agreements and the process of giving another company trade secrets illegally.
The plaintiff in the Tervis case, Trinity Graphic, claimed that Tervis had employees jot down information at a factory tour, and give the details of its printing capabilities to the competitor.
If that were the case, it seems that Tervis would have, in fact, violated the Uniform Trade Secrets Act, which defines “misappropriation” of trade secrets as, among other things, information “derived from or through a person who had utilized improper means to acquire it.”
If Tervis had signed the NDA that Trinity Graphic claimed it had, this would violate that NDA as well as the UTSA.
Within the definition of misappropriation, the UTSA includes information “acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use.” It seems that Trinity laying out the fact that its printing methods were proprietary, rather than common knowledge or general practice (hence why its competition, Southern Graphics, was allegedly unable to print at Trinity’s quality until the Tervis employee allegedly passed along the information), would fall under this umbrella.
This is because, according to the UTSA, a “trade secret” is defined as information that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
So, if Southern Graphic was unable to print the inserts as Trinity had been for years, until it suddenly could when it signed the agreement with Tervis, it certainly would seem that Trinity’s printing method would quality as a trade secret.
But let’s go back to Tervis signing an ink-and-paper agreement with Southern Graphic. This comes after Tervis reportedly came to a “handshake agreement” with Trinity that the latter would produce the custom inserts.
Just how much water does that agreement hold, and would Tervis have actually violated an agreement if it’s not legally binding?
That’s where things get a little murky, and different countries have different definitions and consequences surrounding a handshake—or gentlemen’s—agreement.
In order to make a handshake agreement hold up in court, the party needs to either have a witness testimony or some sort of evidence, such as correspondence between the two parties, per Legal Zoom.
Looking at contract law in the U.K., a handshake agreement becomes legally binding when there is “intention to create legal relations,” but in commercial dealings (which would apply to the Tervis/Trinity situation), there is a presumption that the two parties intend to create legal relations, per the U.K. House of Lords decision in Rose & Frank Co. v. JR Crompton & Bros Ltd.
So it seems as if the burden of proof falls on Trinity to show that Tervis not only violated the NDA, but violated the oral agreement that it would manufacture the inserts for Tervis’s tumblers.
The moral of the story, really, is always get it in writing.