Disloyalty and the UTSA
The National Law Journal
April 20, 2009
Michael Starr- New York
Labor, Employment and Benefits Partner Michael Starr co-authored The National Law Journal article titled "Disloyalty and the UTSA."
A venerable principle of the common law of employment is that all employees owe a duty of honesty and loyalty to their employers. So strong is this duty that employees who are placed in a position of trust and, on that account, receive confidential information from their employer, may not use that information in competition with the employer or to the employer's detriment — even after the employment relationship has ended. See, e.g., North Atlantic Instruments v. Haber, 188 F.3d 38, 47 (2d Cir. 1999). This duty of loyalty can be breached even if the information used does not “rise to the level of a trade secret.” See, e.g., Lamonte Burns v. Walters, 770 A.2d 1158, 1166 (N.J. 2001).
Then comes along the Uniform Trade Secrets Act (UTSA), which has now been adopted, in some form or other, by 45 states. The UTSA has a broad pre-emption clause that, generally speaking, displaces prior common law relating to the misappropriation of trade secrets. Indeed, replacing the common law of the several states, with their individual variations, by a single multistate statute is precisely what a “uniform” law is supposed to do.
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