Lauren and I represent employees in noncompete and nonsolicitation disputes with employers and we discuss the issues and considerations which arise in those cases on this Blog. Sometimes we represent an employee who, although she never signed a noncompete agreement, is now being sued by her ex-employer for the misappropriation of “trade secrets.” Can they do that? You betcha!
What are “trade secrets” and what must an ex-employer (owner of the “trade secret“) prove in order to prevail.
Forty-six states have adopted the Uniform Trade Secrets Act and Virginia is one of them. (Virginia Code § 59.1-336, et seq.) The law defines a “trade secret” as information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that:
1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
An ex-employer must prove the ex-employee case and the factors to be considered by the court include:
1. The extent to which the information is known outside of the business;
2. The extent to which the information is known by employees and others involved in the business;
3. The extent of measures taken by the employer to guard the secrecy of the information;
4. The value of the information to the owner and the owner’s competitors;
5. The amount of money and effort expended by the owner in developing the information; and
6. The ease or difficulty with which the information could be properly acquired or duplicated by others.