Trade Secrets & Employee Mobility

On January 29, 2010, in an unpublished opinion, Majestic Marketing, Inc. v. Nay, No. E047085 (Fourth District, Division Two), at least one California Court of Appeal appears to have recognized the viability of the trade secret exception to California Business & Professions Code ¶16600 prohibition of employee non-competition agreements.

In Zambelli Fireworks Manufacturing Co., Inc. v. Wood, the U.S. Court of Appeals for the Third Circuit recently held that a stock sale did not invalidate an employee's non-compete agreement.

A lawsuit recently filed in the United States District Court for the Eastern District of Virginia could be of interest to employers and attorneys alike who are following the split in the courts across the country as to whether computer access while an employee meets the statutory test for "without authorization" under the Computer Fraud and Abuse Act.

In Baker v. Tremco Incorporated, a case applying Ohio law, the Indiana Supreme Court recently held that, for purposes of a non-competition agreement, competition with a subsidiary corporation also constituted competition with the parent.

A recent New York case, Edelman v. Starwood Capital Group, LLC, 2009 NY Slip Op. 09309 (1st Dep't December 15, 2009), is another reminder that companies should take appropriate precautionary steps when dealing with confidential information.

As noted in a blog post in October 2009, in Sunbelt Rentals, Inc. v. Ehlers, 333 Ill.Dec. 791, 915 N.E.2d 862 (Ill. App. Ct. 2009), an Illinois appellate court reexamined and rejected over thirty years of well-established precedent regarding the enforceability of restrictive covenants. To date only one published decision, Aspen Marketing Services, Inc. v. Russell, No. 09 C 2864, 2009 WL 4674061 (N.D. Ill. Dec. 3, 2009), has cited Sunbelt. In that case, the Court noted its awareness of Sunbelt and its rejection of the legitimate business interest test, but applied that test anyway.

An article recently published in the New Jersey Law Journal reviews potential sources of information to be searched and procedures that can be followed by employers faced with a departing employee who may have misappropriated the the employer's information, client lists and know-how.

A recent decision from the California Court of Appeal questioned the viability of the trade secrets exception to California's broad prohibition against noncompete covenants.

The recent case of Perlan Therapeutics v. Superior Court (California Ct App 11/04/2009) serves as a reminder that when litigating, the definition of the trade secrets at issue is important.

A recent decision from the First Circuit Court of Appeals, Astro-Med, Inc. v. Nihon Kohden America, Inc. and Kevin Plant, which affirmed a jury verdict granting the plaintiff more than $1 million, illustrates that it is important for employers to be familiar with applicable state law with respect to their employees' continuing obligations to previous employers arising from restrictive covenants in employment agreements.