Employers don't need contracts to protect trade secrets
Published 08/01/03

While confidentiality agreements between an employer and workers are often prudent, they are not necessary in order prevent a worker from disclosing the employer's trade secrets.

New Hampshire law prohibits the misuse of an employer's confidential and proprietary information by statute. Particularly, RSA 350-B, which is titled the Uniform Trade Secret Act, clarifies that it is illegal to disclose or use a trade secret of another without express or complied consent.

Under that Act, a trade secret means information including a formula, pattern, compilation, program, device, method, technique or process that is of particular value because of its confidential, proprietary nature and is subject to efforts that are reasonable under the circumstance to maintain its secrecy.

A customer list, particularly to the extent it has detailed customer information that is not known to the employer's competitors, may constitute a trade secret and therefore a worker disclosing or using the contents of customer list may be in violation of the Act.

If a former worker was actually to disclose or use such information in competition with her former employer, even absent a confidentiality agreement or non-compete agreement, the employer may still be able to get a Court injunction prohibiting the former worker from using that information.

Furthermore, to the extent the employer was damaged, the law entitles the employer to receive a monetary award which could include both the actual loss to the employer caused by the misappropriation and the unjust enrichment to the former employee caused by the misappropriation that has not taken in account in computing actual loss.

Therefore, to the extent the use of these trade secrets by the former worker benefited her more than the actual loss caused to her former employer, those monies may also be recouped by the former employer from her and those who were conspiring with her in using those trade secrets.

In cases where the employer is able to show willful of malicious misappropriation the Court may award exemplary damages not to exceed twice the amount of the total damages and unjust enrichment.

The Court may also award reasonable attorney's fees to the prevailing party when it finds:   

•  the claim of misappropriation was made in bad faith;

•  a motion to terminate an injunction is made or resisted in bad faith; or

•  willful and malicious misappropriate exists.

Depending on the circumstances, it is also possible that federal laws and state criminal laws of theft may also apply.

In conclusion, a worker who is considering leaving her former employer should realize that, irrespective of whether or not she signed confidentiality agreements or non-compete agreements, she has certain legal obligations to her employer under the law and it would be prudent for her to discuss with legal counsel what those legal obligations are in moving forward with taking a new job with a competitor or setting up her own company to compete with her former employer.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.