Third Circuit Addresses Standard for Evaluating Misappropriation of Confidential Information Claims

Thomas & Betts Corp. v. Richards Mfg. Co., 2009 WL 2329916 (3d Cir., July 30, 2009) – In this case, the defendant’s previous employer sued him, as well as his new employer, after learning that he had misappropriated product information which he then used to capture his former employer’s clients. Interpreting New Jersey law, the Third Circuit determined that such claims are properly evaluated under the standard set forth in Lamorte Burns & Co. v. Walters, 167 N.J. 285 (2001); that is, whether the allegedly misappropriated information was provided to the defendant in the course of his prior employment, for the purpose of furthering the employer’s interest.

The court identified four factors to be considered in answering that question: 1) whether the information was generally available to the public; 2) whether the employee would have been aware of the information if not for his prior employment; 3) whether the information gave the new employer a competitive advantage over the prior employer; and 4) whether the employee knew that his employer had an interest in protecting the information to protect its own competitive advantage. The inquiry is not, the court said, directed at the information sought to be protected (as in trade secret law), but at the relationship between the parties, their expectations, and the intended use of the information.

Note: This article was published in the September 2009 issue of the New Jersey eAuthority.