Company Q was unhappy when it hemorrhaged four employees with access to sensitive trade secrets. The first Company Q employee to resign, Defector A, set up two competing companies.
Three more information-privileged Company Q employees, Defectors B, C and D left Company Q’s domain, attracted to Defector A’s new ventures. The enterprising defectors absconded with some nice parting gifts in the form of Company Q’s trade secrets and client database.
The case of the trade secrets’ disappearance
Company Q claimed it discovered that Defector D, upon his resignation, had left his personal Facebook page open on a Company Q computer. Company Q felt justified in snooping. It is a well-known axiom that those who read others’ diaries are not happy after the experience. Company Q ordered its IT department to install software to covertly search Defector D’s Facebook conversations with his colleagues during the prior months before A through D left its employment; Company Q continued to observe real-time Facebook interactions among its former employees.
Not surprisingly, Company Q did not expect to see all the prior and current posts flying back and forth between the defectors. Company Q was profoundly unhappy when it discovered its valuable trade information was now firmly in the defectors’ hands; Company Q noted the competitors vigorously put the stolen trade secrets to good use.
The case of the federal court appearance
Company Q was not amused and sent its capable legal team to New Jersey federal court to file a stiff lawsuit against the former employees and their new business ventures. Company Q posited breach of loyalty, theft of trade secrets, attempts to lure away Company Q’s clients and other unsavory activities. The court disapproved the betrayal and awarded a preliminary injunction to stop the competitors from siphoning its clients away and handed down a temporary restraining order.
The case of circuit court nonacceptance
The defecting employees promptly appealed. A forensic investigator supported Defector D’s statement that he had logged out of his personal Facebook account before he resigned; therefore, Company Q had violated his right to privacy and sifted through his posts with unclean hands. To the four defectors’ dismay, the Third Circuit Court of Appeals was not impressed by the “unclean hands” gambit; furthermore, the court remonstrated that no amount of unclean hands were sufficient to sway its decision in this particular case. It upheld the decision of the lower court.
Business owners who are victims of defecting employees who help themselves to trade secrets should be careful before risking a privacy lawsuit. Other courts have ruled against companies who accessed an employee’s private communications, even when the defector used company-owned technology. Company Q prevailed in this instance, but others may not encounter similar success. When trade secrets walk out, owners may want to obtain representation to steer them away from an uncertain court battle. Courts can act unpredictably toward invasion-of-privacy issues.