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Doubleclick Inc. v. Henderson - Index No.: 116914/97, 1997 N.Y. Misc. LEXIS 577 (Sup. Ct. Nov. 5, 1997)

Rule:

The elements of a cause of action for misappropriation of trade secrets are that 1) plaintiff possesses a trade secret and 2) defendant is using that trade secret in breach of an agreement, confidence, or duty, or as a result of discovery by improper means. A trade secret is any formula, pattern, device, or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.

Facts:

DoubleClick is engaged in advertising on the internet. It has agreements with popular websites to sell advertising space. The spaces are sold to advertisers who enter into a single contract with DoubleClick to have ads shown on all of the websites networked with DoubleClick. DoubleClick hired Jeffrey Dickey and David Henderson for top positions giving them access to confidential files. Dickey’s contract required him to maintain the confidentiality of the information provided by the clients and a non-compete clause. Henderson’s contract also had a confidentiality agreement but without the non-compete clause. Due to their continuing dissatisfaction with how DoubleClick was run, Dickey and Henderson decided to start their own company, Alliance Interactive Networks. When DoubleClick’s president received a tip, he immediately fired Henderson and seized his computer where files regarding the formation of Alliance was found.

Issue:

Was Dickey and Henderson’s use of confidential information accessed while working for DoubleClick to start up a new company, a breach of trade secrets?

Answer:

Yes.

Conclusion:

The Court ruled that DoubleClick is entitled to preliminary injunction.

First, DoubleClick has demonstrated that it is likely to succeed on its misappropriation of trade secrets claim. Dickey and Henderson had access to highly sensitive information regarding DoubleClick including its revenue projections, plans for future projects, pricing and product strategies, and databases containing information collected by DoubleClick concerning its clients. These pieces of information particularly the pricing and customers are trade secrets and it has been proven that Dickey and Henderson intended to use them for Alliance.

Second, facts demonstrate that DoubleClick is likely to succeed on the merits of its claim sounding in breach of the duty of loyalty. Henderson admitted that they solicited DoubleClick’s potential customers for Alliance. Also, an e-mail was discovered where Henderson solicited financing from one of Double Click’s competitors.

Third, DoubleClick has proven that the damage that could be inflicted upon it by Henderson and Dickey’s exploitation of intimate knowledge of the proprietary information is irreparable.

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