Related Practices

• Intellectual Property & Information Technology Transactions
• Litigation

New Employees: Inevitable Disclosure of Trade Secrets?

Client

An international manufacturer of telecommunications power equipment and electronic equipment enclosures, and four of its new engineers.

Challenge

Our client wanted to expand its presence in a related industry—the manufacture of electronic equipment enclosures which house the telecom power equipment it makes.  It hired four experienced engineers from a competitor to augment its presence in this field.

The competitor filed a lawsuit in McHenry County, Illinois alleging that our client, and the four engineers it had hired, had misappropriated its trade secrets.  The crux of the competitor’s allegations was that the four engineers, through their employment at the competitor, had technical design and competitive business information "in their heads," which they would inevitably use and disclose in their new employment.  The competitor sought a preliminary injunction to prohibit the four employees from continuing to work for their new employer.

Schwartz Cooper Solution

To defend against the competitor’s request for a preliminary injunction, Schwartz Cooper conducted extensive legal research on the scope and limits of trade secret protection under Illinois law as it is applied in the engineering field.  They also engaged in extensive, expedited discovery focused on demonstrating that the competitor was not entitled to trade secret protection because the competitor was seeking to enjoin the four new employees from using the general engineering skills and knowledge which they had enhanced throughout the course of their educations and their employment.

Results

After engaging in a seven-day evidentiary hearing on the competitor’s request for a preliminary injunction, Schwartz Cooper successfully defeated the competitor’s claim that the four new employees should be prohibited from working in their new employer’s outdoor electronic equipment enclosure business.  The trial court found, as had been argued by Schwartz Cooper, that the four new employees were using general engineering skills and knowledge in their new employment, that Illinois trade secret law does not provide protection against the use of such general skills and knowledge and, consequently, that there was no likelihood that the new employees would inevitably disclose their former employer’s trade secrets.