Yesterday, a tech company announced that a Virginia jury had awarded it the biggest damages award in state court history. It was an employment case.
Hopefully, I have your attention.
According to the plaintiff’s press release, the jury heard evidence that the defendant hired an employee of a government contractor to gain access to the plaintiff’s software to identify ways to compete against the plaintiff. Supposedly, the contractor — whom the defendant referred to as a “spy” — passed trade secret information to the defendant to enable its employees to build competitive features and train the defendant’s sales team to better compete against the plaintiff.
The contractor allegedly helped the defendant generate dozens of video recordings of the plaintiff’s development environment that the defendant could then use to compile competitive materials and evaluate improvements to its platform. The jury heard evidence that the defendant called it “Project Crush.”
Speaking of getting crushed, after news of the monster jury verdict became headline news, Reuters reported that the defendant’s shares fell $13.68, or 20.7%, to $52.25 after earlier falling to $36.50, their lowest since January 2017. Conversely, the plaintiff’s stock shares rose $16.60, or 38.6%, to $59.62 in Tuesday trading.
The obvious takeaway is that unless you have $2 billion to spare, the juice probably isn’t worth the squeeze for your company to engage in the type of behavior that the jury found to be “willful and malicious.”
Instead, as a prophylactic measure, consider having your new hires execute a document as a condition of employment in which they verify that they will neither misuse your trade secrets nor introduce any competitor’s trade secrets to your business.