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UNCW BLA 361 - Study Notes

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NORTH ATLANTIC INSTRUMENTS, INC., Plaintiff-Counter-Defendant-Appellee, --v.-- FREDHABER and APEX SIGNAL CORP., Defendants-Counter-Claimants-Appellants.Docket No. 98-9423UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT188 F.3d 38; 1999 U.S. App. LEXIS 18462; 51 U.S.P.Q.2D (BNA) 1742; 139 Lab. Cas. (CCH)P58,738; 15 I.E.R. Cas. (BNA) 731May 26, 1999, Argued August 9, 1999, Decided PRIOR HISTORY: [**1] Appeal from an order of the United States District Court for the Eastern District of New York (Arthur D. Spatt, Judge) adopting a Magistrate Judge's Report and Recommendation (Michael L. Orenstein, Magistrate Judge) to preliminarily enjoin defendants-appellants from, inter alia, using a list of client contacts alleged to be misappropriated from plaintiff-appellee. We hold that the District Court did not clearly err in determining that the list of client contacts at issue was a protectable trade secret and that the defendants-appellants were bound not to use that trade secret. Accordingly, the District Court did not exceed its allowable discretion in granting the preliminary injunction. DISPOSITION: Affirmed. CASE SUMMARY PROCEDURAL POSTURE: Appellants challenged an order of the United States District Court for the Eastern District of New York affirming an order preliminarily enjoining appellants from using a list of client contacts alleged to be misappropriated from appellee.OVERVIEW: Appellee designed and manufactured specialized industrial equipment used on ships and aircraft. Appellee acquired another company that was in the same industry. Individual appellant was the chief executive and part owner of the stocks of the company. The asset purchase agreement between appellee and the company transferred all of the properties of the company, including all customer and vendor databases to appellee, and employed appellant. Appellant also covenanted to keep and retain all confidential matters of appellee. When individual appellant left the employ of appellee and joined corporate appellant, appellee's customer base was targeted. Appellee alleged unfair competition and misappropriation of confidential business information and successfully moved for preliminary injunction.On appeal, the court determined that appellee's client list constituted a protectable trade secret. The court held that appellee would suffer irreparable harm in the absence of an injunction. Therefore, it affirmed the order granting appellee's preliminary injunction.OUTCOME: The order granting preliminary injunction was affirmed because the list was a protectable trade secret, and appellants were not entitled to use the trade secret.CORE TERMS: trade secret, customer, employment agreement, customer lists, injunction, confidential, confidentiality, preliminary injunction, confidence, confidential information, protectable, confidential matters, soliciting, strictest, engineers, confidentiality agreements, former employer's, competitor, goodwill, database, secret, customized, technology, inter alia, irreparable injury, irreparable harm, likelihood of success, misappropriation, solicitation,specializedLexisNexis® Headnotes Hide HeadnotesCivil Procedure > Remedies > Injunctions > Preliminary & Temporary InjunctionsHN1A party seeking a preliminary injunction must establish that 1) absent injunctive relief, it will suffer irreparable harm, and 2) either a) that it is likely to succeed on the merits, or b) that there aresufficiently serious questions going to the merits to make them a fair ground for litigation and that the balance of hardships tips decidedly in favor of the moving party.Civil Procedure > Jurisdiction > General OverviewCivil Procedure > Appeals > Standards of Review > Abuse of DiscretionCivil Procedure > Appeals > Standards of Review > Clearly Erroneous ReviewHN2A district court's issuance of an injunction is reviewed for an abuse of discretion. Such an abuse of discretion typically consists of either applying incorrect legal standards or relying on clearly erroneous findings of fact.Trade Secrets Law > Misappropriation Actions > Elements > ConfidentialityTrade Secrets Law > Misappropriation Actions > Elements > Existence & OwnershipTrade Secrets Law > Misappropriation Actions > Elements > UseHN3To succeed on a claim for the misappropriation of trade secrets, a party must demonstrate: (1) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means.Antitrust & Trade Law > Trade Practices & Unfair Competition > General OverviewTrade Secrets Law > Factors > Business UseHN4A trade secret is any formula, pattern, device or compilation of information which is used in one's business and which gives the owner an opportunity to obtain an advantage over competitors who do not know or use it.Antitrust & Trade Law > Trade Practices & Unfair Competition > General OverviewTorts > Business Torts > General OverviewTrade Secrets Law > Factors > General OverviewHN5In determining whether information constitutes a trade secret, courts have considered the following factors: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended by thebusiness in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.Antitrust & Trade Law > Trade Practices & Unfair Competition > General OverviewTrade Secrets Law > Protected Information > Customer ListsHN6A customer list developed by a business through substantial effort and kept in confidence may be treated as a trade secret and protected at the owner's instance against disclosure to a competitor,provided the information it contains is not otherwise readily ascertainable.Antitrust & Trade Law > Trade Practices & Unfair Competition > General OverviewTrade Secrets Law > Civil Actions > Questions of FactTrade Secrets Law > Protected Information > Customer ListsHN7The question of whether or not a customer list is a trade secret is generally a question of fact.Antitrust & Trade Law > Trade Practices & Unfair Competition > General OverviewTrade Secrets Law > Protected Information >


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UNCW BLA 361 - Study Notes

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