Trade Secrets & Employee Mobility

You are cordially invited to attend EpsteinBeckerGreen's Complimentary Briefing/Webinar on April 18, 2012, regarding the Protection of Trade Secrets and Confidential Information in a Social Media Workplace.

In a recent decision, the Utah Court of Appeals broadly interpreted the preemption clause in the Uniform Trade Secrets Act ("UTSA") to hold that it "preempts claims based on the unauthorized use of information, irrespective of whether that information meets the statutory definition of a trade secret."

An updated version of our guide, "Non-Compete Laws: Illinois," is now available. It reflects the recent decision of the Second District of the Appellate Court of Illinois, Hafferkamp v. Llorca, which contains an important holding regarding standards for enforcing non-compete agreements in Illinois.

Emotions often run high in business disputes involving trade secrets. The case of Sean Morrison Entertainment v. Thompson, et al., which is pending in Chicago federal court, serves as a good reminder that emotions and the need for business leverage are no substitute for a good factual basis for claims.

Over a dozen years after the New York Court of Appeals specifically recognized, in BDO Seidman v. Hirshberg, that an employer may have a legitimate and protectable business interest in preventing former employees from exploiting or appropriating the relationships and goodwill of its customers which had been created and maintained at the employer's expense, some New York courts still appear to be reluctant to uphold contractual provisions in employment agreements that are designed simply to protect customer goodwill.

On January 23, 2012, the Canadian National Railway Company filed suit against its former Chief Executive Officer, E. Hunter Harrison, for allegedly violating certain non-compete and non-disclosure obligations. Peter A. Steinmeyer was interviewed about the lawsuit on the Business News Network's show, "Headline with Howard Green."

A federal judge in Chicago recently refused to issue an injunction based upon either the "inevitable disclosure" of trade secrets doctrine or a geographically broad, 24-month non-compete that did not have a narrowly drawn activity restriction.

On Monday, January 9, 2012, Governor Chris Christie signed into the law the New Jersey Trade Secrets Act (NJTSA), the Garden State's version of the Uniform Trade Secrets Act (UTSA). New Jersey, thus, becomes the forty-seventh state to adopt some form of UTSA. While the New Jersey Act will promote some level of uniformity in the approach to trade secrets issues, New Jersey specific changes to the uniform act promise that this statute will build upon, rather than depart from, New Jersey's common law tradition of protection of trade secrets and other valuable business information.

In a recent New York case, a commercial insurance broker whose business and employees had been raided on a substantial scale by a former employee and competitor was awarded a preliminary injunction barring the former employee, the competing company, and certain other former employees from soliciting business from the broker's clients, and from soliciting other employees of the broker to join the competitor. The Court's finding of irreparable harm was premised on reputational harm and loss of confidence in the marketplace suffered by the broker due to the perception that the broker was badly "wounded" by the extent of the raid.

The U.S. Court of Appeals for the Eighth Circuit recently held that compilations containing only minimal secret information nevertheless qualified for trade secret protection because the substantial investment involved in preparing them gave their owner a competitive advantage and because the owner undertook reasonable efforts to maintain their secrecy by labeling them with a proprietary legend and only distributing them to parties which signed a confidentiality agreement.