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: Cogito Ergo Teneo; an intellectual property blawg

Trade Secret Law: XWave 051807

By Sean Fowler

XWave New England Corp. v. McLean and Pratt, Superior Court of Maine, Cumberland County, No. CV-07-16 (May 18, 2007):

Issue:
McLean and Pratt signed noncompete agreements with XWave. The restrictions in the agreements prevented them from competing with XWave for one year from the date of departure from the company. McLean and Pratt resigned from XWave in early 2006 and started Downeast, a directly competing company. XWave found out and, in mid-2006, sent reminders to McLean and Pratt that they had one-year restrictions on competing. McLean and Pratt continued to compete, allegedly by knowingly underbidding XWave by using XWave's allegedly confidential pricing information to their advantage. In early 2007, XWave filed a case for breach of the agreement, arguing misappropriation of trade secrets and goodwill. The case came up for a temporary restraining order hearing against the two.

Pertinent issue of trade secret law:
1) The restrictions placed on the two were for one year, and the action filed against the two was about a year after their departure, so, can XWave succeed in restraining the two for a period of one year from judgment instead?

Conclusion:
The superior court found that it was likely that XWave would succeed on the preliminary injunction claim. As such, the temporary restraining order was granted. In prior cases where a plaintiff company sought to move the start date of a restriction from the date of departure to the date of judgment, the defendant had already been abiding by the terms from the date of departure. That did not seem to be the case here. If the two had actually been using their goodwill and possession of XWave's confidential information to launch and maintain Downeast, then they could not have abided by the terms of the agreement from their date of departure. Thus, to not allow the restriction to begin at some other time where the enforcement of the terms could actually be enforced against the two would be inequitable to XWave.

Full post as published by Cogito Ergo Teneo; an intellectual property blawg on November 07, 2007 (boomark / email).