Whenever a former employee misappropriates and/or uses confidential information or trade secrets to benefit a competitor, the former employer should consider bringing tortious interference claims based on prospective economic advantage, business relationships, and contractual relationships. However, it is crucial to note that courts will require an employer, as the plaintiff alleging tortious interference, to show that the defendant(s) used certain improper means or motives to act tortiously, as opposed to demonstrating that the defendant(s) engaged in legitimate competitive activity.
Having exhausted our discussion on “Common Law Tort Claims,” we have now switched gears to focus on “Common Law Contract Claims” in this blog post and Part XVI of the series.
Breach of Restrictive Covenant Claims under the Defend Trade Secrets Act (DTSA) & Uniform Trade Secrets Act (UTSA)
The breach of restrictive covenant claim is one of the most common law contract claims brought by employers against employees who have engaged in the misappropriation of trade secrets and/or confidential information. Employers should assert a breach of contract claim in a complaint against a departing employee who, while still subject to one or more restrictive covenants, such as non-compete or non-solicit agreements, concerning using the former employer’s privileged information, engaged in unlawful theft, misappropriation, and/or use of such trade secrets and confidential information.
However, in order to avoid dismissal and/or enhance the success of litigation, every employer should consider a number of issues when bringing a breach of restrictive contract claim in a court of law. Such issues include, but are not limited to:
- Practical and legal considerations under state law
- Strategies and techniques for succeeding in a lawsuit, and how to ensure restrictive covenants between the employer and former employee have been restored and enforced
- Steps and process of conducting discovery of a breach of restrictive covenant incidents, including, but not limited to, taking depositions, serving written discovery, and expedited discovery
- The feasibility and appropriateness of seeking injunctive reliefs (preliminary injunctions or temporary restrictive orders (TRO)) to bar the former employee (and their new employer) from utilizing the misappropriated trade secrets and/or confidential information to obtain a competitive advantage-and-
- The process and steps to be taken in the preparation of a restrictive covenant lawsuit, including issuing litigation hold notices and drafting desist-and-cease letters.
In Part XVII of this series, we will switch gears and hammer on the issue of “employee raiding” and the steps employers may take to prevent it from happening in our blog post titled “Legal Considerations for Employee Raiding under the DTSA & UTSA.”
Until then, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions or comments via the Contact Us page on our website!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.