Here at the Law Office of Vincent Miletti, Esq. and the home of the #UnusuallyMotivated movement, we take pride as a resilient and dependable legal services firm, providing such services in both a traditional and online, web-based environment. With mastered specialization in areas such as Employment and Labor Law, Intellectual Property (IP) (trademark, copyright, patent), Entertainment Law, and e-Commerce (Supply Chain, Distribution, Fulfillment, Standard Legal & Regulatory), we provide a range of legal services including, but not limited to traditional legal representation (litigation, mediation, arbitration, opinion letters and advisory), non-litigated business legal representation and legal counsel, and unique, online legal services such as smart forms, mobile training, legal marketing and development.

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As the authoritative force in Employment Law, it only seemed right to introduce one of the many upcoming series in which we introduce a variety of topics that looks to educate and deliver in a manner that only Miletti Law® can. In this regard, this blog is Part II of our new series on “Trade Secret Misappropriation & Restrictive Covenant Claims.” As mentioned previously, employers rely on restrictive covenants a great deal because they help protect a variety of vital business interests and aspects, including but not limited to client goodwill, trade secrets, and proprietary and confidential information. In Part I, we hammered on how to “Investigate Potential Misconduct & Gather Evidence” and provided you with a hands-on guide on the measures an employer can take to effectively develop causes of action needed to assert in an eventual lawsuit, as well as to understand the extent and scope of misconduct better.

As you would expect, after investigating potential misconduct & gathering evidence, the employer faces another critical question – what strategies can be used to determine who to sue. On the one end, the answer to this question depends on the findings of the investigations and the evidence gathered. However, several other factors also come into play and significantly influence the employer’s decision regarding whom to sue. This is the primary issue of discussion in this blog and Part II of the series.

Strategies for Determining Whom to Sue

Generally speaking, the former employee, the new employer, and/or other potential individuals may be named the defendant(s) in a trade secret misappropriation and/or breach of restrictive covenant litigation.

Naming the Former Employee a Defendant

Assuming that been the “former employee(s)” has been found to have misappropriated trade secrets and/or breached a restrictive covenant, such a former employee(s) should, as a factual matter, be the defendant(s). This implies that the employer (complainant) should name this former employee and have their full name and last known address or place of residence.

Naming the New Employer a Defendant

It also goes without saying that the new employer can also be named another defendant. However, while this issue is highly debatable, the decision depends on a number of factors and may not be applicable in all scenarios. As such, the former employer should consider several issues to determine whether to name the new employer as a defendant in a trade secret misappropriation and/or breach of restrictive covenant litigation. Such issues include, but are not limited to:

  • The role of the new employer has played in the misappropriation or breach – a former employer may have evidence that the new employer was aware of the former employee’s covenants or the employee’s engagement in acts (such as bringing the former employer’s trade secrets or other confidential information to the new employee), which led to a breach of covenants. In such a case, the new employer may be subject to a number of claims following their involvement in the underlying misconduct.
  • The relationship between the new employer and the former employee – an employer may be faced with more nuanced considerations. For instance, as an employer, you may find out that the new employer is willing and ready to indemnify the employee. Before naming the new employer as the second defendant, you may need to consider how deep-pocketed they are and probably decide to coax an early settlement with the former employer.
  • The financial and litigation track record of the new employer – an employer may find out that naming the new employer as a second defendant may significantly increase the cost and duration of the lawsuit, contrary to their own preparations and readiness for the litigation. Further, they may also realize that involving the new employer could only invite aggressive discovery tactics, potential counterclaims, and additional downsides.
  • The need to send a message to the new employer – as an employer, one may find that the new employer has been involved in a series of foul play with employees from other companies or businesses contrary to underlying restrictive covenants. In such a case, you may decide to name the new employer as a way of sending a message that this new employer should take caution and think twice before sharing and involving themselves with such misconduct and hiring your employees.

Nonetheless, this does not exhaust the list of individuals who can be named as defendants. Coworkers and current employees might also be named if the employer finds out that they were involved or helped the former employee in misappropriating trade secrets or stealing confidential information at a fee or other personal favors.

In Part III of this new series, we shall move the discussion forward and hammer on “How to Determine Where to Sue/Choosing Your Forum,” as it concerns trade secret misappropriation and/or a breach of a restrictive covenant.

In the meantime, stay tuned for more legal guidance, training, and education. In the interim, if there are any questions or comments, please let us know at the Contact Us page!

Always rising above the bar,

Isaac T.,

Legal Writer & Author.