Well, Matt, there was a recent case that discussed Michigan's Uniform Trade Secrets Act. Under the Michigan Trade Secrets Act, Michigan courts are authorized, as well as other courts in other jurisdictions, who have also adopted a version of the Uniform Trade Secrets Act, have authorized courts to award injunctive relief for actual or threatened misappropriation of trade secrets.
In this particular case, the name of which is Actuators Specialties Inc. v Chinavare, and it is a recent Court of Appeals decision in Michigan, which is unpublished. What this means, Matt, is that the case is persuasive authority for other courts but not binding authority, so while it has no precedential value, it can be used to make the same arguments that occurred in that case.
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Matt: Hello, again. It's Matt Plessner for Trade Secret Law Radio. Here to talk about a recent court decision is attorney-at-law Mark Clark, from the Traverse Legal Office in Traverse City, Michigan, who joins us here today. Mark, how are you?
Mark: Good morning, Matt.
Matt: Now, Mark, can you tell us about these new developments that have impacted the area of trade secret law?
Mark: Well, Matt, there was a recent case that discussed Michigan's Uniform Trade Secrets Act. Under the Michigan Trade Secrets Act, Michigan courts are authorized, as well as other courts in other jurisdictions, who have also adopted a version of the Uniform Trade Secrets Act, have authorized courts to award injunctive relief for actual or threatened misappropriation of trade secrets.
In this particular case, the name of which is Actuators Specialties Inc. v Chinavare, and it is a recent Court of Appeals decision in Michigan, which is unpublished. What this means, Matt, is that the case is persuasive authority for other courts but not binding authority, so while it has no precedential value, it can be used to make the same arguments that occurred in that case.
The case is significant for employers because of the fact that a court issued an injunction against former employees, under the Michigan Trade Secrets Act, without any independent employment agreement that prohibited the removal or stealing of trade secrets. Nor was there any non-compete agreement that discussed the removal of trade secrets from the employer.
In this case, Matt, the employees left their employment and went to work for a direct competitor, because there was no non-compete agreement. The employer went ahead and hired a forensic computer specialist to determine whether or not anything had been removed from their computer systems in the days preceding the employees leaving of the company. What they found was that significant confidential information had been removed from the computers, and so they filed a lawsuit.
Ultimately, it was determined that the information had been removed by the employees and that it had been utilized for the benefit of a competing company. In that case, the court issued a three year injunction prohibiting those employees from working for any competitor of their former employer, under the provisions of the Michigan Trade Secrets Act, without any non-compete agreement in play, relative to the former employers. So, this is a significant case because what it indicates is that courts will order drastic relief for an employer who can establish, by a preponderance of the evidence, that the employee has left with trade secret information that could potentially be utilized by a competitor.
Matt: OK. And how would you say, Mark, that this would affect the competition between the employee and the employer, who have gone to work at different places that are competitors?
Mark: Well, let's talk about how it might affect an employee. Many times employees are compelled, as a condition of employment, to sign non-compete agreements, and often times those non-compete agreements, or even a simple employment agreement, will contain specific provisions concerning the confidentiality of information, and specifically trade secret information.
What this case indicates is that even without a written agreement, the courts will order injunctive relief prohibiting you, the employee from working in a competitive field, if you have removed trade secret information from your employer and have taken it with you. So, my advice for the employee is simply don't take it, because it will be established by forensic computer analysis that information was, in fact, removed.
On the employer side, it is a beneficial decision for employees who may have no written non-compete or employee agreement that addresses the specific issue of trade secrets, in that we have a court decision which is now persuasive for arguing that the court can and should issue injunctive relief in an appropriate case, where a former employee has left with confidential trade secret information.
Matt: Mark, as a business owner, or an employee, what would you say would be a good thing to do, or steps to take, to make sure that this isn't an issue to begin with?
Mark: On the employer side, I would recommend that before hiring an employee, that they check to make sure that there is no written non-compete agreement that would obviously prohibit you from hiring the employee, and to conduct an interview to make certain that that employee has not taken any confidential or trade secret information with them to their new employment, as this will obviously impact the new employer in the event that a court issues an injunction.
Of course, on the employee side, the employee will be in a position where it has left one employment, has taken a position of new employment, and can wind up without any employment in their field, if they are found to have taken away confidential trade secret information from their former employer.
Matt: As always, Mark, thank you very much for your time today.
Mark: Thank you very much, Matt. It's always a pleasure.
Matt: This is Matt Plessner. Join us next time on Trade Secret Law Radio.
You’ve been listening to Trade Secret Law Radio, where trade secret protection, legal cases, and defenses are always the topic of the day. Whether you are a trade secret attorney, a business looking to protect your trade secrets or have been accused of trade secret theft, we will answer your questions here.
Matt: Hello, again. It's Matt Plessner for Trade Secret Law Radio. Here to talk about a recent court decision is attorney-at-law Mark Clark, from the Traverse Legal Office in Traverse City, Michigan, who joins us here today. Mark, how are you?
Mark: Good morning, Matt.
Matt: Now, Mark, can you tell us about these new developments that have impacted the area of trade secret law?
Mark: Well, Matt, there was a recent case that discussed Michigan's Uniform Trade Secrets Act. Under the Michigan Trade Secrets Act, Michigan courts are authorized, as well as other courts in other jurisdictions, who have also adopted a version of the Uniform Trade Secrets Act, have authorized courts to award injunctive relief for actual or threatened misappropriation of trade secrets.
In this particular case, the name of which is Actuators Specialties Inc. v Chinavare, and it is a recent Court of Appeals decision in Michigan, which is unpublished. What this means, Matt, is that the case is persuasive authority for other courts but not binding authority, so while it has no precedential value, it can be used to make the same arguments that occurred in that case.
The case is significant for employers because of the fact that a court issued an injunction against former employees, under the Michigan Trade Secrets Act, without any independent employment agreement that prohibited the removal or stealing of trade secrets. Nor was there any non-compete agreement that discussed the removal of trade secrets from the employer.
In this case, Matt, the employees left their employment and went to work for a direct competitor, because there was no non-compete agreement. The employer went ahead and hired a forensic computer specialist to determine whether or not anything had been removed from their computer systems in the days preceding the employees leaving of the company. What they found was that significant confidential information had been removed from the computers, and so they filed a lawsuit.
Ultimately, it was determined that the information had been removed by the employees and that it had been utilized for the benefit of a competing company. In that case, the court issued a three year injunction prohibiting those employees from working for any competitor of their former employer, under the provisions of the Michigan Trade Secrets Act, without any non-compete agreement in play, relative to the former employers. So, this is a significant case because what it indicates is that courts will order drastic relief for an employer who can establish, by a preponderance of the evidence, that the employee has left with trade secret information that could potentially be utilized by a competitor.
Matt: OK. And how would you say, Mark, that this would affect the competition between the employee and the employer, who have gone to work at different places that are competitors?
Mark: Well, let's talk about how it might affect an employee. Many times employees are compelled, as a condition of employment, to sign non-compete agreements, and often times those non-compete agreements, or even a simple employment agreement, will contain specific provisions concerning the confidentiality of information, and specifically trade secret information.
What this case indicates is that even without a written agreement, the courts will order injunctive relief prohibiting you, the employee from working in a competitive field, if you have removed trade secret information from your employer and have taken it with you. So, my advice for the employee is simply don't take it, because it will be established by forensic computer analysis that information was, in fact, removed.
On the employer side, it is a beneficial decision for employees who may have no written non-compete or employee agreement that addresses the specific issue of trade secrets, in that we have a court decision which is now persuasive for arguing that the court can and should issue injunctive relief in an appropriate case, where a former employee has left with confidential trade secret information.
Matt: Mark, as a business owner, or an employee, what would you say would be a good thing to do, or steps to take, to make sure that this isn't an issue to begin with?
Mark: On the employer side, I would recommend that before hiring an employee, that they check to make sure that there is no written non-compete agreement that would obviously prohibit you from hiring the employee, and to conduct an interview to make certain that that employee has not taken any confidential or trade secret information with them to their new employment, as this will obviously impact the new employer in the event that a court issues an injunction.
Of course, on the employee side, the employee will be in a position where it has left one employment, has taken a position of new employment, and can wind up without any employment in their field, if they are found to have taken away confidential trade secret information from their former employer.
Matt: As always, Mark, thank you very much for your time today.
Mark: Thank you very much, Matt. It's always a pleasure.
Matt: This is Matt Plessner. Join us next time on Trade Secret Law Radio.
You’ve been listening to Trade Secret Law Radio, where trade secret protection, legal cases, and defenses are always the topic of the day. Whether you are a trade secret attorney, a business looking to protect your trade secrets or have been accused of trade secret theft, we will answer your questions here.
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