Eighth Circuit Affirms $2 Million Judgment in Trade Secrets Case
The Eighth Circuit affirmed a $2 million dollar judgment based on trade secret misappropriation and breach of confidentiality agreements in Synergetics, Inc. v. Hurst, 2007 WL 313585 (8th Cir. 2/5/07).
Synergetics sells laser equipment for eye surgery procedures. Messrs. Hurst and McGowan held high-level sales positions with Synergetics. Both Hurst and McGowan signed confidentiality agreements that prohibited them from using Synergetics' confidential information during or after their employment.
Hurst and McGowan formed a competing company during their employment. They constructed equipment using Synergetics' confidential designs and contacted Synergetics' customers about the new company, which they opened 2 weeks after terminating their employment. The court was not hard pressed to affirm the judgment of $1,759,165 actual damages and $293,194.16 punitive damages per defendant.
Hurst and McGowan presented a novel argument regarding confidentiality agreements. They argued these agreements cannot be enforceable unless they have time and geographic limitations like noncompete agreements. The court rejected this argument because these limitations have never been required in confidentiality agreements. This case reflects the growing trend of limited noncompete agreements to protect confidential information and avoid the pitfalls of noncompete agreements.
