by Dennis Crouch
Henry Schein, Inc., v. Cook (N.D.Cal. 2016)
In one of the first written decisions based upon the Defend Trade Secrets Act (DTSA), Judge Tigar has granted Schein’s motion for a temporary restraining order (TRO) blocking former employee Jennifer Cook “from accessing, using, or sharing” allegedly stolen confidential data. Cook was a sales representative for Schein’s dental-supplies business and left to join competitor Patterson Dental. The TRO also prohibits Cook “from soliciting, contacting, or accepting business from any HSI customers assigned to her while she was employed by Plaintiff.” In addition to the standard fiduciary duty employees owe to their employer, Cook had also signed a confidentiality and non-solicitation agreement.
Here – as with most trade secret cases – the basis for the case begins with a breach of contract. That breach is then used to establish misappropriation. The trade secret claim gets the plaintiff to Federal Court and offers additional remedies not otherwise accessible.
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In California many non-solicitation agreements are deemed void based upon the state’s Business and Professions Code section 16600 which provides that “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
If it moves forward, this case will be an important test of whether the new federal law protecting trade secret rights preempts this state-law policy.*
Judge Tigar here failed to even consider this issue in his opinion — likely because, as is typical with TROs, the defendant was given no chance or opportunity to respond to the allegations.
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* In looking at the agreement, it recites that NY law will control its interpretation. [CookAgreement]