The New York State Supreme Court recently shot down a request to enjoin two former salesmen and their new employer from tortiously interfering with a real estate investment firm’s business, from interfering or contacting its customers or using or exploiting its trade secrets. See Koenigsberg v. Silber Investment Properties Ltd., Index No. 20127/08 (Nassau County March 17, 2009). The two former salesmen claimed that they were not actual employees of the real estate investment firm, but independent contractors, that they did not sign non-compete contracts and that the alleged client lists were their personal property. The plaintiff sought to enjoin the former sales representatives' solicitation of clients based on its contention they misappropriated trade secrets (i.e., the client lists). In disagreeing with the plaintiff, the Court referred to plaintiff's prior course of conduct with other former sales representatives. Specifically, the Court pointed out that there was no indication that the plaintiff had prohibited other sales representatives from soliciting clients after they left, had required other sales representatives to sign non-solicitation agreements, or had prevented other sales representatives from keeping their own lists of customers. The Court stated "[i]f AIP did not require that its salespeople guard the secrecy of the customer list during their service with AIP or attempt to prevent the AIP salesmen from using the information in the list once they left AIP's service, this is an indication that the customer list was not a 'trade secret.'" The Court further reasoned that the plaintiff failed to set forth "what 'considerable efforts' were expended in developing the purported secrets." Nor did the plaintiff establish how the client list was created.
The case serves as a reminder to employers to take appropriate and reasonable steps to protect their confidential information and trade secrets. Such steps may include limiting access to the confidential information, requiring persons with access to such information to execute written confidentiality and/or non-solicitation agreements, and requiring departing employees to return company property and documents.
