It’s a common scenario: An employer requires employees to sign non-competes, confidentiality and non-solicitation agreements. A sales employee leaves for a job with a competitor. Before leaving, the employee takes files—perhaps by emailing files to a personal email address or by copying files to a flash drive. The old employer investigates the employee’s computer and finds the files. The old employer then sues the employee for misappropriating trade secrets and for breach of agreement. As part of the suit, the old employer asks for an injunction preventing the employee from using the old employer’s information and from either soliciting the old employer’s customers or from working for the new employer. And, often, the old employer gets the injunction.
But in two federal cases last year in Georgia, the old employer lost the injunction.
Why? Here are three reasons the old employers lost.
- The old employers could not show that the employee had actually used the information taken in the new job or had given the information to the new employer. Often, an old employer will not have the facts to prove that the former employee used the information in the new job—though sometimes customers or other employees will alert the old employer. Old employers do have some alternatives. As one alternative, evidence of taken information plus specific facts about the potential loss of a customer also can be sufficient. And when the old employer sues for trade secret misappropriation, the Inevitable Disclosure Doctrine may be another alternative. The Inevitable Disclosure Doctrine may apply if the old employer can prove that the employee is in a job so similar to the old job that the employee will inevitably rely on and disclose the old employer’s trade secrets.
- Courts probably aren’t going to help those that have not helped themselves. One old employer did not ensure that the employee actually signed the non-solicitation agreement the employer gave her in her onboarding packet.
- The former employees at least argued that they had returned the information supposedly taken from the old employers by the time of the injunction hearing. An old employer seeking an injunction must show a threatened, irreparable injury. A threatened, irreparable injury will be hard to show if an old employer lacks facts about customers it is about to lose or about how the former employee already passed the information on to someone else. A threatened, irreparable injury will be even harder to show if the employee then returns the information supposedly taken. A court might see the return of information as leaving nothing to fight over.
In short, an old employer needs to be ready to show that the former employee has disclosed its information. Failing to do so may mean losing the injunction.
Still, losing the injunction does not always mean losing the lawsuit. In one of the two cases, the court cautioned that discovery might lead it to reexamine its ruling. In the other, the employee’s new employer was a defendant too. And the court gave the new employer about ten days to search for and turn over all information the new employee had put on its system. Such a search was likely a tough task and one that could have led to helpful evidence for the old employer.
 Advanced Data Processing, Inc. v. Hill, No. CV 216-043, 2016 WL 1529906 (S.D. Ga. Apr. 14, 2016); Geo Specialty Chemicals, Inc. v. Kakavand, No. 1:16-CV-2629-WSD, 2016 WL 4079730 (N.D. Ga. Aug. 1, 2016).
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