Trade Secrets & Noncompete Blog

Trade Secrets & Noncompete Blog

News & Updates On Developments in the Law of Restrictive Covenants, Unfair Competition & Trade Secrets

Category Archives: Duty of Loyalty / Fiduciary Duty

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Sixth Circuit Affirms $3.7 Million Award And Permanent Injunction In Trade Secret/Breach Of Duty Of Loyalty Case

In Nedschroef Detroit Corp. et al. v. Bemas Enterprises et al., the U.S. Court of Appeals for the Sixth Circuit recently affirmed an award of nearly $3.7  million in damages against two individuals found to have engaged in misconduct related to the operation of a business which competed with their employer.

Nedschroef Detroit Corporation (“Nedschroef”) services and provides replacement parts for fastener machines made by an affiliate in Europe.  Without Nedschroef’s knowledge, two of its employees formed a business – under their wives’ names – to do exactly what Nedschroef did.

After Nedschroef learned about this, it fired the … Continue Reading

Bad Leaver Pays the Price

A former California State judge in an arbitration awarded nearly $1.7 million to an employer against its former employee based primarily on his acts taken going out the door.  His joking email with a co-worker after recruiting three others, characterizing their resignations as “Three bullets to the back of the head” of his employer, was clearly shooting himself in the foot in the eyes of the arbitrator.  The Award is interesting for many reasons – – the interplay between fiduciary duties and non-solicitation of employees provisions, the allowable damages when such a fiduciary duty is breached by co-worker solicitation, and … Continue Reading

Caveat Resigning Employees: A Lesson From The U.K.

“Gardening Leave” is a legal concept we have imported from England and is often used as a paid notice period to effectuate non-competition and a continuation of the duty of loyalty without the stigma of an outright non-compete. In a recent High Court decision, Thomson Ecology Ltd. v. Apem Ltd, et al. (9/24/13), Deputy Judge John Martin set strict standards on the conduct of a departing employee in terms of communicating his decision to leave to his superiors and to his colleagues and the legal implications of the timing of both.

Upon giving his thirty-day notice of resignation, the … Continue Reading

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