Scope of injunction narrow based on rejection of inevitable disclosure doctrine
In a trade secret case, courts tailor the scope of an injunction to narrowly protect the trade secret information of the trade secret owner. Anything more may prevent others from being able to seek employment or engage in a lawful profession which goes against California’s strong public policy of encouraging employee mobility embodied in California Business & Professions Code Section 16600. For example, the injunction would normally be directed to prohibition on the use of customer data and not to communication with the customer if the means by which communication is established is through public information (e.g., linkedin.com, directories, etc.). Employers must also bear in mind that if an employee has learned trade secret information on-the-job, the Courts will not enjoin the employee from seeking employment even though disclosure of the trade secret information would be inevitable. California has rejected the inevitable disclosure doctrine.
Background of litigation
In Pyro v. Souza (E.D. Cal. March 21, 2012), Mr. Souza was employed by Pyro from 1995 – January 2012. Pyro is the largest fireworks production company in the United States. Shortly before resigning and leaving Pyro, Souza downloaded over 60 Pyro files from his Pyro – assigned laptop to his personal external hard drive and two (2) additional USB drives. Mr. Sousa additionally used a wiping software – “Disk Redactor” – to delete and write over several computer files on the Pyro – assigned laptop. Mr. Sousa also hired a computer expert to help delete various files and folders from the Pyro – assigned laptop. Mr. Sousa also informed Pyro that he had not found alternative work when he resigned, when in fact he had already signed an employment contract with J & M displays – a competitor of Pyro.
Request for broad injunction
During litigation, Pyro sought injunctive relief prohibiting Mr. Souza from using customer lists and other trade secret information he had downloaded from Pyro. Moreover, Pyro also requested the Court to enjoin defendant from doing business with any Pyro customer he learned of through his employment at Pyro. This was in addition to the prohibition from utilizing the downloaded computer data (i.e., trade secret information) misappropriated by Mr. Souza. Pyro was in essence asking the court to issue a nonsolicitation injunction based on client data Mr. Souza had memorized while employed with Pyro. Although the opinion did not specifically describe the request as being related to the inevitable disclosure doctrine which has been expressly rejected by California, Pyro’s enlarged request without tying it to trade secret data is in essence an attempt to base the injunction on the inevitable disclosure of Pyro’s trade secret information by Mr. Souza.
Court grants enlarged injunction based on pattern of bad acts by trade secret misappropriator
In this case, since Mr. Souza had a pattern of bad acts, the Court granted the enlarged injunction. In particular, the Court enjoined Mr. Souza from directly or indirectly initiating contact with any current Pyro customer in Northern California and Hawaii with whom Mr. Souza and contact with while employed by Pyro. Accordingly, although California has expressly rejected the inevitable disclosure doctrine, the courts appear willing to broaden an injunction if given a reason to do so.
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