Nike has filed a lawsuit against former design director Matthew Millward and Ralph Lauren Corp., accusing the two parties of breach of contract and tortious interference. According to Nike’s suit, Millward worked for Nike as a Senior Design Director in its men’s sportswear division for three years until October 6, 2015, and then accepted a job as vice president of men’s design for Ralph Lauren’s Club Monaco brand beginning on or about November 19, 2015, in direct violation of his one year non-compete agreement with Nike. His new role at Club Monaco allegedly involves a number of duties similar to the ones he held at Nike – including “designing the same types of apparel” – and Nike claims that “Club Monaco’s line of activewear competes directly with Nike’s men’s sportswear division.”
According to the Oregon-based sportswear giant’s suit, which was filed on Monday against Millward and his new employer in federal court in Oregon, Millward was a “highly compensated designer who was given access to Nike’s most sensitive trade secrets and other confidential and proprietary business information, such as detailed product designs, technical specifications for new and advanced materials, and other similar information.” Nike alleges that “the information to which Millward was given access during his employment is a core Nike asset of immeasurable value, and its strict confidentiality is critical to Nike’s continuing success in the marketplace.” The company alleges that this is especially significant given the fact that “many of the products are still in the planning phase and have not yet reached the market,” including 2016 Olympics products and Nike’s special ACG collection with ACRONYM creative director, Errolson Hugh – a collection that it alleges “employs many of Nike’s most advanced materials and concepts.”
“Nike’s competitors, including [Ralph Lauren] would be able to inflict substantial competitive harm on Nike if they were able to obtain any of the trade secrets or other highly confidential business information to which Millward had access during his employment,” the complaint further states.
More than merely a symbolic lawsuit, it seems Nike is, in fact, concerned about the level of similarity between its goods and those being offered under Club Monaco’s activewear collection, and thus, the damage that Millward could do to its brand now that he has deflected to Club Monaco. In addition to providing side-by-side photos of its wares and those of Club Monaco, (some of which are pictured below), Nike stated in its lawsuit:
Many Club Monaco products are similar to Nike’s […] Notably, even the names of many of Club Monaco’s products contain the same elements as the names of Nike products, such as “Tech” and “Woven.” Club Monaco even advertises the “Tech Thermal Full Zip” shown above as a “sporty outer layer.” And its Gusseted Sweatpant is advertised as exemplifying its activewear collection’s “athletic-inspired slant.
According to Nike’s complaint, as part of Millward’s non-compete agreement (which was a condition for his employment), Nike is compensating him during the year in which he is legally prohibited from working for competing companies. Nike notes that such payment is not required by Oregon state law. The sportswear giant further states that it has given notice to Millward and Ralph Lauren of the breach of contract. However, “both Millward and [Ralph Lauren Corp.] have chosen to continue violating Nike’s legal rights.”
Thus, Millward is not the only one at fault here, according to Nike. The company alleges that Ralph Lauren is intentionally interfering with its non-compete agreement with Millward by “employing Millward, knowing that doing so violated and continues to violate Nike’s rights under the agreement,” and “in order to gain access to its trade secrets and other confidential proprietary business information that it would not otherwise be able to obtain through legitimate means.”
Millward marks the fourth high-level Nike employee that has jumped ship to a competitor in violation of Nike’s strict non-compete provisions. You may recall that this time last year, Nike filed a $10 million lawsuit against three of its former senior shoe designers, accusing them of stealing its trade secrets and joining rival, Adidas. Specifically, the Oregon-based sportswear giant alleged that former Nike employees, Denis Dekovic, Marc Dolce and Mark Miner violated their non-compete agreements by stealing years worth of trade secret information (think: confidential design and business documents, including drawings for unreleased shoes made for one of Nike’s sponsored athletes) and taking that info to Adidas where they are setting up a copycat of Nike’s design studio. The parties in that case were able to settle out of court this past June.