UnIP (UnIntellectual Property): Trade Secret for Certain Confidential Information Acquired During Employment

In a case out of the United States District Court for the Eastern District of California, Plaintiff sought summary judgment against Defendant for multiple claims, one of which being trade secret misappropriation. Plaintiff is a Texas-based petroleum products distributor doing business in California who sued its former employee and the company he started in the petroleum products industry. The issue before the Court was whether summary judgment was appropriate under the California Trade Secrets Act.

Plaintiff alleged that Defendant misappropriated its trade secrets by: (1) taking certain confidential information acquired during his employment after his resignation; (2) using that confidential information to secure new customers and negotiate a favorable lease on behalf of his newly started company. The trade secret was further specifically identified as “documents containing confidential information, including profit and loss statements, income statement[s], and information related to Thomas Petroleum’s 2009 acquisition of Eastern Sierra Oil …” The former employee argued that such information does not amount to a trade secret because he had possessed much of the information independent of his employment with Plaintiff. Not reaching the issue of whether in fact it would constitute a trade secret, the Court noted that Plaintiff failed to allege any harm from Defendant’s possession, and/or use, of such information. A question of fact existed as to the extent of any such use to secure new customers or a more favorable lease, which is why summary judgment was denied.

While this case does not flat out say something is not a trade secret, and thus UnIntellectual Property, it does reconfirm the fact that just because information is kept confidential does not mean it constitutes a trade secret and can form the basis for a trade secret misappropriation claim. Once again, facts, facts, and more facts will dictate the outcome of a trade secret misappropriation case. Just because an employee leaves with something the company deems to be confidential does not necessarily mean liability for trade secret misappropriation is a given.

Thomas Petroleum, LLC v. Lloyd, 1:11-CV-00902-LJO, 2012 WL 4511369 (E.D. Cal. Oct. 2, 2012).


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