I have an employee who came to work for us from a competitor. Recently one of our clients was visited by the owner of the company she last worked for (also her husband, which we were not aware of until she came to work for us). We are in the contract stages of the agreement with this client and believe she may have shared confidential information with her husband and our competitor. What is the correct course of action?
You will need to discuss the specifics with a business litigation attorney, who will need to review the confidentiality agreement and get a better understanding of what confidential or proprietary information may have been compromised.
Are any of these "trade secrets"? A trade secret is information that derives independent economic value from not being generally known and is the subject of reasonable efforts to maintain its secrecy. (California Civ. Code §3426.1(d).)
Possible courses of action will run the entire gamut of writing a simple cease and desist letter all the way to engaging in full blown litigation seeking monetary damages and injunctive relief.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.
Employment / Labor Attorney
In many Confidentiality Agreements, there is a provision regarding what the company can do if it suspects the employee breached the agreement. For example, there may be a liquidated damages provision, or an arbitration provision, or some other provision regarding consequences of a breach. So, start by re-reading the agreement, and any other documents the company provided to the employee regarding this topic (like policies, handbook provisions, etc.)
It is difficult to answer your question much further without more specific information and this public forum is not the appropriate forum for specifics. But, depending on how well-supported your suspicions are that your employee breached the Confidentiality Agreement, and what type of information you believe she provided to third-parties, you may have claims for breach of contract, breach of duty of loyalty, misappropriation, and a few others. Also, again, based on specifics, you can even terminate her employment (as long as you are doing it for non-discriminatory/non-retaliatory legitimate business reasons).
I would recommend you consult with an attorney so that the attorney can help you analyze the specifics of your situation.
Information provided on this website is not legal advice, nor should you act on anything stated in this article without conferring with the Author or other legal counsel regarding your specific situation. No attorney-client relationship is created by this website.
Construction / Development Lawyer
I agree with the answers provided by my colleagues. You do need to see a qualified business litigation attorney.
The terms of the confidentiality agreement along with the recourses specified are of utmost importance here. The other issues, that need to be discussed with an attorney, are the amount of damages your business has suffered because of the violation of the agreement; the amount of time involved; and the evidence you can provide to justify your claims. Finally a cost-benefit analysis should be done to determine if the damages are substantial enough to justify the amount of money you will spend in attorneys' fees and litigation costs.
Please go see an attorney in your city soon.
The above information is educational in nature and is provided as a guideline. It is not given as specific legal advice. Each case is different and you should consult with a licensed attorney for your specific case.