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Law School Case Brief

Omega Optical v. Chroma Tech. Corp. - 174 Vt. 10, 800 A.2d 1064 (2002)

Rule:

The case law requires something more than the mere employer-employee relationship to establish a duty of confidentiality as to alleged trade secrets. Whether a duty of confidence attaches is a factual inquiry. Furthermore, the party claiming a trade secret must demonstrate that it has taken steps to ensure the information's secrecy to prevail on a claim for trade secret misappropriation.

Facts:

In early 1991, a number of employees of plaintiff Omega Optical (Omega) left Omega and went into business together under the name of defendant Chroma Technology Corporation (Chroma). Chroma began making thin-film optical interference filters used in fluorescence microscopy, a product that Omega had developed and was also producing. Thereafter, Omega brought suit against Chroma and ten of its employees for trade secret misappropriation, conversion, breach of loyalty, tortious interference with business relations, unfair competition, conspiracy, and breach of contract. According to Omega’s allegations, Chroma acquired substantial amounts of information that the court found was "protectible as a trade secret," hence, it was entitled to judgment as a matter of law. The district court concluded under the evidence that Chroma owed no duty of confidentiality with regard to the information. Omega appealed.

Issue:

Did the defendants, former employees of plaintiff, owe duty of confidentiality to the latter with regard to the information in question?

Answer:

No.

Conclusion:

The appellate court agreed that defendants owed no duty of confidentiality with regard to the information. The company had no internal policies concerning confidentiality, failed to convey the confidential nature of the information it later sought to protect; and when the company did institute a policy of confidentiality, the defendants still employed with the company refused to sign it and resigned. While the employees planned the creation of the competitor while still working at the company, they did not solicit the company's customers while still working there and continued to perform their duties in good faith. As the company failed to show the defendants acted solely to harm the company, or used improper means to advance their own competitive interests, it failed to prove tortious interference with business relations. And the trial court properly found that the competitor had not deliberately tried to foster confusion of itself with the company.

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