Category Archives: Misappropriation of Trade Secrets

Quirky Question # 141, Customer Lists as Trade Secrets

Quirky Question # 141:

One of our sales employees recently left our company.  He now is starting to call on our customers.  It appears that he may have some of our customer lists in his possession.

We do not have any post-employment restrictive covenants, such as a non-compete or a non-solicitation agreement, that would govern his conduct.  But, aren’t customer lists trade secrets that he is precluded from using? Answer→

When Workers Steal Data to Use at New Jobs

When Workers Steal Data to Use at New Jobs
Despite some negative case law, the Computer Fraud and Abuse Act is an effective tool for employers.

In response to the economic crisis, companies have downsized, resulting in some terminated employees stealing vital data to improve their job opportunities with a new employer. In addition to traditional state remedies such as misappropriation of trade secrets, employers have been “increasingly taking advantage of…[the federal Computer Fraud and Abuse Act’s] civil remedies to sue former employees and their new companies who seek a competitive edge through wrongful use of information from the former employer’s computer system.” Pacific Aerospace & Electronics Inc. v. Taylor, 295 F. Supp. 2d 1188, 1196 (E.D. Wash. 2003). Answer→

Stealing Confidential Information, Quirky Question # 78

Quirky Question # 78:

I am the HR Director at our company.  I just learned that one of our most valuable employees has resigned and taken a position with a competitor.  I requested our IT Department to make an evaluation of his computer.  They reported to me that before he left, he emailed to himself and his new employer customer and rate information  We consider that information to be highly sensitive, potentially providing our ex-employee the chance to divert a significant portion of our business to his new employer.

Most of our employees have non-competition agreements but, as it turns out, the employee who just quit never signed one.  I also doubt that we could claim the data he took is trade secret.  Unfortunately, we have not taken reasonable steps to protect the confidentiality of this information.  Are we out of luck? Answer→

“Memorized” Trade Secrets, Quirky Question # 69

Quirky Question # 69:

One of our key employees recently took a position with a competitor.  We do not believe that he stole any of our trade secrets by taking hard copies or electronic copies of our confidential information.  We checked his computer and it does not appear that he downloaded any data or emailed any information that we consider our trade secrets.  But, what if he simply memorized our trade secrets?  Would we have any basis to seek injunctive relief to prevent him from sharing this information with our competition? Answer→

Executive Termination, Quirky Question # 1

Quirky Question # 1:

We recently terminated one of our executives “without cause.”  Under his employment contract, we are obligated to pay one year’s severance for terminations without cause.  In contrast, we have no obligation to pay him anything if he is terminated “with cause.”  Following his departure, we reviewed his computer hard drive.  We discovered two areas of concern.

First, he had downloaded pornography onto his work computer, in violation of our clear policies regarding use of company computers and sexual harassment.  Second, much to our surprise, we found on his computer a substantial number of confidential documents that he had taken from the company where he worked before joining our firm.  This too violates our company policies – we strictly prohibit employees from introducing confidential, proprietary and trade secret information belonging to a former employer into our work place, whether in hard copy or electronic form.

Had we known these facts, we would have fired the executive for cause.  Do we still have to pay him his one year severance pay? Answer→