Recent Decisions of Interest (No. 3)

This week...a ubiquitous trade secret problem and two cases concerning non-compete drafting.

General Patent Corp. v. Wi-Lan, Inc., 2011 U.S. Dist. LEXIS 134625 (S.D.N.Y. Nov. 22, 2011). In denying a plaintiff's motion for preliminary injunction, a New York federal district court dealt with one of the most common issues in trade secrets litigation - the lack of specificity concerning what was misappropriated. The case gives a laundry list of generalized information too lack in detail to survive trade secret scrutiny at a contested evidentiary proceeding. Though New York has not adopted the Uniform Trade Secrets Act, the common law factors it uses to assess trade secrets claims are similar to those that UTSA states consider.

The decision in Murphree v. Yancey Bros. Co., 311 Ga. App. 744 (2011), has to be viewed in light of Georgia's employer-friendly common law prior to the time the legislature passed its sweeping amendments last year. For covenants decided under the common law, it is impermissible to prohibit an employee from merely accepting business from his or her former customers. A non-compete or non-solicit clause must only prohibit so-called active solicitation. In this particular case, the Court of Appeals of Georgia had no issue with the covenant's use of the term "solicit, divert or take away", ruling essentially that each of those was a synonym. Other cases seem to suggest that merely accepting unsolicited business from an account falls within the term "divert."

Ophir-Spiricon, LLC v. Mooney, 2011 U.S. Dist. LEXIS 135608 (D. Utah Nov. 23, 2011), dealt with a non-compete covenant I see more and more frequently. The covenant did not require the employee from working for a competitor. Rather, it prohibited him from entering employment competitive with his former employer if such employment would "inherently require" him to reveal or use any confidential information or trade secrets. Though these covenants may narrow the non-compete a bit, they lead to vast uncertainty. An employee (like the one in this case, apparently) may legitimately believe that he is complying to the letter if he avoids certain activity - say, taking customer lists or directly contacting his old accounts. However, the employee is at the mercy of his former employer's interpretation or subjective belief as to what the new employment "inherently requires." In such circumstances, it is critical that the employee and his new employer work to create a detailed job description and enter into an agreement concerning what acts the employee is not allowed to engage in during the restricted period.