the situation
A sales rep quits and goes to work for a competitor. Naturally, you
had him sign both a noncompete and a confidentiality agreement when he
first came to work for you. So can’t you stop him from using any
customer and pricing information?
the ruling
You might be able to—but maybe not immediately, depending on the
nature of the information you are trying to protect. A Virginia Circuit
Court recently denied a company’s motion for a temporary injunction
seeking, among other things, to prevent a former employee from competing
with it and using what it claimed was trade secrets contained in its
database, including customer and pricing information. SanAir Technologies Laboratory, Inc. v. Burrington, et al., Case No. CL15-1612 (Chesterfield County Cir. Ct. September 25, 2015).
The former employee had entered into a number of confidentiality
agreements during his employment in which he acknowledged that he would
have access to confidential information including customer and pricing
policies and that he would not utilize or exploit the information with
any other individual or company. However, the court still found that at
least for purposes of a temporary injunction, the company had not
demonstrated that it was likely to succeed on the merits of its claims
related to disclosure or misappropriation of confidential information.
The reason? Because there was testimony that the customer base was
“generally known throughout industry trade groups and publications” and
the contact information was similarly available to the general public.
Thus, the court found that even though the company could ultimately
prevail on a claim of a violation of the confidentiality agreement,
there wasn’t enough there to issue an immediate injunction.
As far as the covenant not to compete, the company claimed that it
was reasonable and enforceable and the former employee claimed it was
overly broad on its face. The court observed that the noncompete was
subject to a number of different interpretations in terms of the jobs
that the former employee could hold with a competitor and the geographic
scope. The court did not express any opinion as to the enforceability
of it, but found that the company had not sufficiently shown enough to
warrant a temporary injunction.
the point
This ruling doesn’t change the fact that it is important to have
confidentiality agreements—and to be mindful that these agreements
specifically delineate the type of information you want kept
confidential, including, if appropriate, customer and pricing
information. But in terms of your ability to immediately shut down a
former employee’s efforts to use this information, you may need to be
very convincing that this information is unique and not publicly
available.
Originally published on Virginia Employer Law Blog, by Elaine Inman Hogan, November 4, 2015