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Trade Secrets: Another Case of Departing Employee Problems - Colorado This Time

Green Patent Blog's Court Orders Ex-Xantrex Veep to Stop Solar Inverter Work for Competitor contains a longish report on this case. By now the factual basis ought to be so commonplace as not to need mentioning:

Xantrex?s complaint (xantrex.pdf) alleged that Thompson breached his employment agreement by leaving Xantrex and immediately starting employment with AE (the non-compete provision prohibited Thompson from working for any competitor within one year of leaving Xantrex). Thompson worked on solar inverter technology at Xantrex, and AE entered the solar inverter market shortly before Thompson joined AE.

While at Xantrex, Thompson was Vice President of Engineering and Product Development and had access to the company?s confidential information. According to the complaint, Thompson had played a leading role in acquiring and integrating certain cutting edge solar inverter technology into Xantrex?s products.

About trade secrets, I found this paragraph particularly interesting:

As to success on the merits of the trade secrets claim, Judge Daniel found enough evidence that the confidential information accessed by Thompson prior to leaving Xantrex rises to the level of trade secrets (e.g., solar inverter product development information and data on the benefits of various product features). The court also found that Thompson?s rapid accessing of trade secret documents just before leaving Xantrex was of particular concern because his ready recollection of possible trade secrets would make their use by AE possible without him actually telling anyone. In other words, Thompson?s mere knowledge of the information would make misappropriation likely.

While only a decision on a motion to dismiss and a motion for preliminary injunction, I still find it interesting if only for providing another detail to the following lessons:

1. Protect your trade secrets - it is cheaper than litigation.
2. Hiring a high profile employee from a competitor is an invitation to a lawsuit that will likely to be successful.
3. Hiring a high profile employee from a competitor with a non-compete agreement is an even greater invitation to a lawsuit that will likely to be successful.

Full post as published by Indiana Civil & Business Lawyer on June 26, 2008 (boomark / email).