Your key employee walks in (or sends an e-mail after disappearing) and says that they are leaving to join (or start) a competitor. What now? 

There are state, and now, federal, laws which are likely to be useful. However, before pursuing relief, it is essential to ensure that you have a reasonable position, as federal law now allows for significant sanctions against those who pursue such claims without a good faith basis. Someone going into competition with you is not likely to be actionable by itself unless they are violating an express contract of some sort and/or ‘misappropriating any of your trade secrets’. Not all business information is a ‘trade secret’ under law.

You need to address the following:

  • Pull their file to see what was signed when they came on board. Hopefully, there is at least a nondisclosure and invention assignment agreement covering material such as customer lists and pricing data, supplier lists and employee lists. Perhaps there is an employment contract containing this material and possibly a noncompete or non-solicitation provision.
  • Disable electronic access to sensitive materials.
  • If circumstances appear suspicious, FisherBroyles, LLP can assist with the engagement of an independent forensic consultant to create a forensic image of the departing employee’s computer and to assist in determining whether unauthorized activities occurred before the departing employee’s termination of employment. The former employee’s office or work space should be cordoned off and internal IT should be instructed not to turn on or off the computer pending the acquisition of an EnCase image for preservation of evidence by the independent forensic consultant.
  • Determine what meterial is most sensitive and poses the greatest competitive threat.
  • For the most sensitive material, enumerate the steps you have taken to safeguard it, such as physical access limitations and electronic access controls.
  • See what notices of whistleblower rights were given to the person in question [LINK]. The answer may dictate whether you can obtain enhanced damages and/ or attorney's fees.
  • Determine what you want to be done to protect your business. For example, if there is no non-compete or it would be difficult to enforce, can you live with a limitation on solicitation of your customers? For how long? For technical information, what restrictions do you want regarding transfer and/or use of information? If damage has been done, do you have a realistic estimate and evidence that it arose from the departure?

While you are compiling this information, talk to your FisherBroyles lead to develop a customized plan to rectify the situation. Every plan is different, but we will work with you to apply all laws, including the new Defend Trade Secrets Act of 2016, which may get you into federal court. Sometimes prompt litigation is needed, but in many other cases, a properly worded letter will be enough to minimize the competitive threat. 

More helpful to most organizations than after the fact efforts ti restraub former employees is likely to be proactive steps to support your trade secret position.