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September 18, 2020

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September 17, 2020

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Do You Need Hard Proof of Data Theft To Bring Trade Secret Claims? Maybe Not

The large majority of employment based trade secret claims start with an employer uncovering evidence that its employee or former employee improperly downloaded confidential business information. But a recent case in Boston illustrates that such evidence may not be necessary to bring a trade secret or unfair competition claim.

The Dispute. In Amgen USA Inc. v. Karyopharm Therapeutics Inc., Karyopharm hired away several of its competitor’s, Amgen, sales managers in 2018.  Presumably this would have been ok, but Amgen claimed that those sales managers then used confidential information to later hire away 14 of Amgen’s top sales reps, who all resigned on the same day. Amgen filed suit against Karyopharm alleging misappropriation of trade secrets, but there was no allegation that any of the departing employees stole proprietary documents before leaving Amgen.

Karyopharm filed a motion to dismiss the lawsuit arguing that none of the Amgen former employees had non-compete agreements and were free to work for Karyopharm.  At the hearing the Judge pressed both sides on their arguments. He asked Amgen’s lawyer, “Don’t you wish you had a covenant not to compete?” But he also noted that, without discovery, it would be hard for Amgen to know whether its former sales managers used confidential information to target its most successful sales reps.

Take Away. Ultimately, the court didn’t decide the motion at the hearing, but the relevant facts, arguments made, and the court’s response to those arguments do provide some important take-a-ways:

1.  You should always consider protecting your company’s most important assets (its employees) with enforceable non-compete agreements.

2.  You may still have a trade secret claim or unfair competition claim even if you don’t have evidence of physical documents or data being stolen.

3.  If a competitor files a trade secret claim without hard evidence of theft, it is worth filing an early motion to dismiss because, at the very least, you will educate the court on the weaknesses of the claim, which could be helpful in limiting discovery.

© 2020 Jones Walker LLPNational Law Review, Volume IX, Number 150

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About this Author

Joseph F. Lavigne, Jones Walker, unfair trade practices lawyer, noncompete violations attorney
Partner

Joe Lavigne is a partner in Jones Walker's Labor & Employment Practice Group and a lead trial attorney for the firm's Trade Secret Non-Compete Team. His practice focuses on prosecuting and defending claims of employee misconduct including trade secret violations, unfair trade practices, noncompete violations, invasion of privacy, Computer Fraud and Abuse Act, and theft. He also advises clients on employment policies and practices and negotiates employment agreements for employers. 

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