Summary Judgment Denied in Trade Secrets Dispute
In a November 7, 2022, Order handed down by the Superior Court for the Northern District of Hillsborough (the “Court”), Defendants David Bukowitz, Paul Berberian, and Jose Flores (“Defendants”) failed to persuade the Court that summary judgment was appropriate in an action brought against them for various alleged violations of trade secrets and breach of their employment non-disclosure agreements (“NDAs”).
What started out as a hopeful employee/employer relationship soon turned sour, when Plaintiff GTI Spindle Technology, Inc., (“Plaintiff”) became suspicious of Defendants dealings with its customers and development of products without notifying Plaintiff. Defendants then left Plaintiff’s employment to work for a competing company and began working for several of Plaintiff’s clients. Plaintiff responded by filing an action alleging that Defendants misappropriated its trade secrets and breached their employment nondisclosure agreements (“NDAs”), and Defendants moved for summary judgment on the matter.
The Court began its opinion by explaining New Hampshire’s motion for summary judgment evaluation standards, stating that summary judgement is proper “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits filed, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” RSA 491:8-a, III.
Defendants first argued that Plaintiff failed to take reasonable steps to maintain the secrecy of their trade secrets and confidential information, and therefore they committed no breach and are entitled to judgment as a matter of law in accordance with summary judgment standards. Plaintiff argued in response that the adequacy of the measures it took to preserve secrecy is a question of fact, making summary judgment inappropriate at this juncture. The Court pointed to New Hampshire’s Uniform Trade Secret Act (“NHUTSA), which does not specify the protective measures that need to be taken to maintain trade secrets, but simply says the measures must be “reasonable under the circumstances to maintain its secrecy.” RSA 350-B:1, IV. Additionally, the Court noted that while although the New Hampshire Supreme Court has not specifically addressed this issue, courts in other jurisdictions with similar laws in place have held that whether appropriate measures to maintaining secrecy were taken is a highly fact-specific analysis generally inappropriate for summary judgment. See e.g. Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 179 (7th Cir. 1991). The Court found that not only was there a question regarding the reasonableness of the steps taken by Plaintiff, but the parties were also in complete disagreement as to what those steps even were, making summary judgment inappropriate.
Regarding Defendants’ claims that their non-disclosure agreements were unenforceable, the Court took issue with Defendants’ supporting case law (ACAS Acquisitions (Precitech) Inc. v. Hobert, 155 N.H. 381, 389 (2007)), finding that the three-ponged test utilized in ACAS Acquisitions was more appropriate in the evaluation of non-compete agreements, rather than non-disclosure agreements. The Court reasoned, “[n]oncompete agreements may materially limit employees’ ability to work in the same industry, while nondisclosure agreements only prohibit employees from misappropriating employers’ confidential information. It strikes the Court as unreasonable for an employee to claim that not being able to disclose his employer’s confidential information is an unenforceable restriction on employment.” The Court denied Defendants’ motion for summary judgment as to this claim as well because it found the NDAs not unreasonable.
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