Employee Mobility Wins Out Over Trade Secrets Claim

In a recent California Court of Appeals case, the court emphasized employee mobility over claims of potential trade secret violations. This case is important for all California workers who may consider leaving one company for another that performs similar services or provides similar goods to consumers. If you have questions about your employment, talk to an experienced California employment law attorney in your area today.

Hooked Media Group Inc. v. Apple Inc.

In the case Hooked Media Group Inc. v. Apple Inc., Apple expressed an interest in acquiring the startup company Hooked Media but ultimately passed on the deal. However, three of Hooked Media’s most important employees, two engineers and the Chief Technical Officer, left the company to go work for Apple. Hooked Media sued Apple, claiming fraud, misappropriation of trade secrets, interference of contract, and related claims. The trial court granted summary judgment to Apple, and the California Court of Appeals affirmed the ruling.

Ruling of Court of Appeals

In its ruling, the Court of Appeals held that the fraud claim made by Hooked Media failed because all misrepresentation claims involved possible future events, not actual events that already occurred or based on present facts. As for the trade secrets claim, the Court of Appeals also upheld the trial court’s ruling that just because the employees who left Hooked Media for Apple may have protected information in their possession it is not enough to establish that Apple acquired or used that information.

Citing California’s rejection of the inevitable disclosure doctrine, just because there is evidence that suggests that the former employees drew on their knowledge and skills from their prior employment to develop a product for Apple, it is not enough to win a misappropriation of trade secrets claim. This ruling emphasized California’s priorities of employee mobility and freedom to compete over those of potential trade secret violations, as did its final ruling in the case, which held that the Chief Technical Officer’s efforts to secure a job at Apple did not breach his fiduciary duty with Hooked Media.

Trade Secret Claims

California adopted the Uniform Trade Secrets Act, which refers to the theft of trade secrets as misappropriation. Trade secrets include, but are not limited to, software, formulas, unpatented inventions, customer lists, marketing information, techniques, processes, and other information that provides a company with a business edge. Misappropriation can occur if a company acquires trade secret knowledge that it knows was acquired by improper means as well as the disclosure or use of a trade secret without consent by someone who used improper means to acquire a trade secret. However, as the recent court ruling affirmed, it is not considered a misappropriation of a trade secret if an employee uses the skills learned at a former employer in their work at a new job.

Call or Contact an Employment Law Attorney

If you have questions about moving to a new job or concerns about trade secrets, talk to an experienced California employment law attorney today.