Published by LawTechie - March 8, 2011 - LawTechie

In its most recent ruling on trade secrets protection via non-competition agreements, the Southern District of New York followed a step by step approach to point out that IBM’s ex-business management executive did not know enough trade secrets to prevent him from working for competitor HP. Int’l Business Machines Corp. v. Visentin, 11-cv-399 (SDNY 2011).

Defendant Giovanni Visentin accepted a job with HP as the Senior Vice President and General Manager of its Enterprise service. Ex-employer IBM immediately sued for a preliminary injunction to enforce the non-competition agreement in Visentin’s previous employment contract.

After a six-day, closed door hearing to assess what, if any, trade secrets Visentin might be taking over to the competition, the Court held, in a step by step analysis that:

  1. Visentin is a “top level” general management guy who knew just enough technical info to discuss with potential clients but not enough to give HP any competitive advantage against IBM.
  2. IBM’s Cloud Computing platform is not so state of the art, as compared to market leaders Google and Amazon, that Visentin’s knowledge, if any, would help HP all that much.
  3. Visentin’s knowledge of “client pipelines” (e.g., the deals and prices) did not constitute trade secrets since deals and prices do not say much about the specific solutions offered or any specific terms of the deals.
  4. General market strategies are not trade secrets under NY law.

In sum, the Court seemed to reiterate the BDO Seidman proposition that highly technical employees are far more likely to hold protectable trade secrets than top-level executives whose jobs are to manage large teams of people and further general operative efficiency.

Take-away: Internal business strategies, market strategies, etc… are not trade secrets and it is very difficult to make a NY non-compete agreement stick to employees responsible for such non-technical aspects of the business.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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