Within days of each other, your clothing company―Free Country Ltd.―loses two employees who decamp to a rival to set up a competing apparel line. You discover that just before leaving, they transferred some 50,000 documents to a personal account—customer orders, your master contact list, and product design information. Incensed, you file a trade secrets lawsuit and seek an injunction prohibiting the thieves from soliciting your customers. Their defense amounts to, “so what if we took the documents―it’s a free country!” Easy win, right? Wrong. These are the facts of a recent trade secrets lawsuit in the Southern District of New York, in which the court denied the plaintiff’s request that its former employee defendants be prohibited from soliciting plaintiff’s customers. READ MORE
Posts by: Diana Szego
Businesses that compete globally are once again reminded of the need to avoid overreaching when requiring employees to sign non-compete agreements. Earlier this year, the Court of Appeals for the Eighth Circuit affirmed a ruling that a non-compete agreement was unreasonable on its face and thus enforceable because it imposed a blanket prohibition on the employee’s ability to seek employment of any kind with a competitor worldwide. While the Eighth Circuit recognized that non-compete agreements had been upheld in the past despite containing no geographic limitations, the court distinguished those agreements on the basis that they contained narrowly circumscribed prohibitions. The Eighth Circuit’s analysis provides a valuable “lesson learned” for businesses crafting or considering an effective non-compete. READ MORE
You wake on a Tuesday morning expecting to have an average day at work. You are skimming through the emails that came in while you were asleep, when you notice an email from one of your employees. He is not only giving his resignation, but is also, more importantly, demanding a ransom in exchange for not disclosing company trade secrets and other highly confidential information. What do you do?