Trade secrets. (Judicial Decisions).
The Utah Supreme Court has ruled that when a salesman took pricing lists labeled confidential from his former employer to a competitor and helped that company develop chemical formulas based on specific client data, he was guilty of stealing trade secrets.Steven Keil began working for Water and Energy Systems Technology (WEST) in 1986. Keil's job as a water treatment chemical salesman required him to manage the company's industrial sales accounts, which included several large companies. To do his job, Keil had access to the formulas WEST used to make its chemicals and the company's pricing plans, which were unique to individual companies.
In September 1997, managers from Brody Chemical Company (BCC) offered Keil a job. Keil declined. BCC executives continued to contact Keil until, at the end of 1997, he agreed to leave WEST.
Before Keil officially left WEST, he met with various BCC employees to ensure that BCC carried chemicals comparable to those sold by WEST at competitive prices. Keil then helped BCC create products that would be similar to those sold by WEST but less expensive.
On February 18, 1998, Keil wrote letters on BCC stationery to six WEST clients. In the letters, Keil announced that he would be changing employment and would be offering "essentially the same chemicals" he had provided before but for 10 percent less.
On March 2, 1998, Keil resigned from WEST. When he left that day, he took the pricing information for several WEST clients. The next day, Keil delivered the letters he had written to these WEST clients. Within two weeks, three of WEST's largest clients had switched to BCC, despite the fact that all the companies had contracted with WEST for several years.
WEST sued Keil and BCC for theft of trade secrets. Keil requested a summary judgment--a hearing based on the facts of a case without a trial. However, the Second District Court of Davis County denied the request and sent the matter to trial.
The jury found in favor of WEST and awarded the company $188,675 in damages from lost profits and the earned salary and benefits that had been paid to Keil. The jury found that WEST's price lists were confidential, that Keil had misappropriated the lists, and that Keil intentionally interfered with WEST's business on behalf of BCC.
The defendants appealed the decision, arguing that the evidence presented at trial was insufficient to prove that Keil had misappropriated WEST's trade secrets. The Utah Supreme Court upheld the jury verdict, finding that by enumerating the existing evidence to show what was lacking, the defendant had made the case more compelling.
The supreme court found that WEST had taken precautions to protect its trade secrets. It provided price lists to its sales representatives only on a "need to know" basis. Similarly, WEST told sales personnel to always inform customers that any pricing information they received was confidential. All such information was stamped with a statement reading "This material is proprietary and confidential. We honor your commitment to maintain it as such." (Water and Energy Systems Technology Inc., v. Steven L Keil and Brody Chemical Company, Inc., Supreme Court of the State of Utah, No. 20000468, 2002)
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| Author: | Anderson, Teresa |
|---|---|
| Publication: | Security Management |
| Article Type: | Brief Article |
| Geographic Code: | 1USA |
| Date: | Jul 1, 2002 |
| Words: | 529 |
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