Trade Secrets: Did Your Old Employer Accuse You Of Stealing Clients?

Accusing a prior employee of stealing a book of business once they leave is a classic move of a jaded employer that believes you only had access to your book of business because of them. It’s a desperate move but it needs to be taken seriously. Let’s dive into the legal framework and assess your position from a 30,000 foot view but you will need to fill out the contact form below and we will be in touch to dive into your specific case. 

The Legal Framework: Trade Secrets and Where You Stand

1. What’s a Trade Secret?

   • Trade secrets are protected by the Defend Trade Secrets Act (DTSA) (federal law) and California Uniform Trade Secrets Act (CUTSA). A trade secret must be:

   • Information not generally known to the public.

   • Economically valuable because it’s secret.

   • Reasonably protected by the employer to maintain secrecy.

2. Employer’s Likely Claims

   • Misappropriation: They’ll allege you took confidential client information (e.g., a customer list or contact details) for your new business. 

   • Breach of Contract: If you signed an NDA, non-solicitation clause, or any agreement restricting post-employment conduct, they might accuse you of violating it.

   • Conversion: They might argue that the client list is their property, and you improperly retained or used it.

3. Your Defense

   • Was the information publicly available? If so, it’s not a trade secret.Example: If the client names and emails are on LinkedIn, it’s like saying you "stole" what was already in the public domain.

   • Did you actually use or disclose the information? Retaining access isn’t necessarily illegal unless you use it to compete.Example: If the “book” is gathering dust on a shelf, it’s hard to argue you’re profiting from it.

   • Were the clients personal relationships you developed? If so, they’re likely yours to keep.Example: If you’ve been golfing with a client every weekend for five years, they’re not the employer’s property.

Steps to Respond to the Demand Letter

1. Don’t Freak Out (or Ignore the Letter)

   • This letter is not a lawsuit—yet. Ignoring it, however, could escalate things faster than a simple communication from us in your corner.

2. Stop All Potentially Problematic Use Immediately

   • Cease contacting or soliciting any clients tied to the allegations. This avoids claims of ongoing misuse.Example: If you’ve already reached out to former clients, stop now and let’s figure out if that contact crossed any legal lines.

3. Review Agreements You Signed

   • Did you sign an NDA, non-solicitation clause, or any agreement limiting post-employment conduct? We need to determine whether those agreements are enforceable.

4. Gather Evidence Supporting Your Case

   • How Did You Obtain the Information?

     • If it’s publicly available, document where you found it.Example: “This list came from a public trade directory, not their CRM.”

     • If it’s personal, show evidence of pre-existing relationships.Example: Emails proving you had a connection before working there.

   • How Did They Protect the Information?

     • If they didn’t password-protect the list or mark it as confidential, that weakens their claim.Example: “The list was left on the breakroom table—hardly a vault.”

5. Respond Strategically to the Demand

   • We’ll craft a response that:

     • Denies misappropriation if their evidence is weak.

     • Challenges the claim that the client list qualifies as a trade secret.

     • Proposes a resolution (if necessary) to avoid litigation.Example: “My client did not misuse any proprietary information. The alleged contacts are publicly accessible and not protectable trade secrets.”

If Litigation Ensues: The Process

1. Filing of the Complaint

   • They might sue under DTSA, CUTSA, or breach of contract.

2. Discovery Phase: The Evidence Exchange

   • Their Evidence:

     • Investigator reports of data downloads before you left.

     • Communications showing you contacted clients using their list.

   • Your Defense:

     • Prove the data isn’t a trade secret.Example: “Here’s the LinkedIn profile showing all this information was public.”

     • Prove you didn’t use the information.Example: “The emails I sent were to people I knew independently.”

3. Motions to Narrow the Case

   • We can file motions to dismiss baseless claims or for summary judgment if their case lacks merit.

4. Trial (If It Gets That Far)

   • They’ll need to prove:

     • The information was a trade secret.

     • You misappropriated it.

     • They suffered damages.

My Recommendations Moving Forward

1. Don’t Use the Disputed Information for Now: Play it safe until we’ve assessed the claims.

2. Document Everything: Keep records showing how you built your contacts.

3. Let Me Handle the Letter: This isn’t just legal advice; it’s stress relief.

You didn’t start this fight, but you don’t have to fight it alone. Fill out the contact form below and we will be in touch right away.