Why You Misappropriate a Trade Secret Doesn't Matter

Utah State Supreme Court’s decision in InnoSys v. Mercer gave a boost to plaintiffs in trade secret misappropriation cases by laying out a presumption of harm. But what’s interesting about this case is that Mercer didn’t use InnoSys’ trade secrets to compete with it. Mercer had been employed by InnoSys. She had signed a non-disclosure agreement. At some point, she e-mailed and downloaded confidential trade secrets to a thumb drive. Mercer disclosed the trade secrets in an administrative unemployment hearing after she was dismissed by InnoSys. She eventually deleted the trade secrets from her storage devices. But according to the Utah State Supreme Court, her misappropriation of the trade secrets had already caused harm to her employer. Bottom line is that Mercer was liable for trade secret misappropriation even though she didn’t use the trade secrets for competitive purposes.

TAKE AWAY: Mercer made a grave mistake by disclosing InnoSys’ trade secrets. What could Mercer have done differently? First, she shouldn’t have e-mailed and then saved the trade secrets on a thumb drive. That alone was actionable. Second, if Mercer felt it was absolutely necessary to her case, she could have told the hearing officer why the trade secrets were relevant without revealing them. Third, if the hearing officer thought knowing the trade secrets were important, either the hearing officer, Mercer, or InnoSys, or any combination of the three, could have worked out an agreement to allow the hearing officer to review the trade secrets under seal. Thanks to my Employment Law gurus, Laura Balson and Ashley Orler for their help with this take away.