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New Case Law on Protecting Company Proprietary Information

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The Massachusetts Supreme Judicial Court (SJC) issued a decision last month that may be a game changer when it comes to a company’s efforts to protect its proprietary information and trade secrets.

In the decision, the SJC affirmed a trial court ruling finding that an employee who copied wholesale the proprietary information from his company laptop to a web-based storage service prior to his termination, failed to disclose and return the copied information after his termination and even took steps to conceal his copying, did not materially breach his employment agreement, which required the employee to protect the company’s proprietary information and to return the information and all copies. The decision undoubtedly raises the bar for employers who want to enforce their confidentiality provisions against former employees who have taken proprietary information. It is no longer enough to prove an employee made a personal copy of his employer’s information.  Now, employers must have some evidence that the employee actually disclosed or used the information.

In light of this decision, employers must make sure that their employment agreements contain precise language. All employers should review and if needed revise their employment agreements to more specifically identify employee obligations concerning the unauthorized copying, disclosure and use of proprietary information and to expressly identify material obligations.

If you have any questions about this issue or would like assistance in drafting your employment agreements, please contact any of the attorneys in our Employment Law Practice Group.

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