Think twice before suing a departed employee for trade-secret misappropriation in California, or risk a big attorneys’ fees award

“The court affirmed a judgment both denying an injunction and awarding the ex-employees $1,641,216.78 in attorneys’ fees where their former employer was found to have sought an injunction in bad faith—since misappropriation was possible but not actually ‘threatened’ ….”  Rodger R. Cole and Rachael G. Samberg (Fenwick & West), Litigation Alert: FLIR Systems, Inc. v. Parrish (June 22, 2009).

“This case provides employers with an important reminder of California’s strong public policy in favor of employee mobility and the right to compete with a former employer. … Employers cannot use the California Uniform Trade Secrets Act to do an end-run around [California's ban on post-employment noncompetition clauses] by, for example, bringing a trade secret action against a former employee to prevent them from forming a competing business or joining a competitor unless there is evidence of threatened or actual misappropriation of trade secrets.” Michele Haydel Gehrke (Sheppard Mullin), Employers should carefully consider whether to sue former employees for threatened trade secret misappropriation … (June 19, 2009).

See also: (list is automatically generated)

• Trade-secret status of prices destroyed when customers allowed to share without restriction
• Trade-secret law cheat sheet
• Barnes & Noble sued for Nook e-book reader’s alleged misappropriation of trade secrets provided under nondisclosure agreement
• Employee fired, prosecuted for taking former employer’s confidential information with him
• Employee noncompetition clause invalidated because linked to stock-option grant, not to confidential information

Tagged as: Inevitable disclosure, Misappropriation, Trade secrets