Utah Court Employs Strong Presumption Against Employee When Trade Secrets Are Involved

The Utah Supreme Court recently issued a sweeping decision favoring the employer in a case involving misappropriation of trade secrets and confidential information.  In the 3-2 decision, the Court concluded that where an employer establishes a prima facie case of misappropriation of trade secrets under the Utah Trade Secrets Act, a strong presumption exists that the employer has been irreparably harmed – entitling the employer to injunctive relief.   In order to refute this presumption, the offending employee bears the formidable burden of showing that it is “absolutely clear” that the wrongful behavior cannot reasonably be expected to recur.  InnoSys, Inc. v. Mercer, 2015 UT 80, ___ P.3d ___ (issued Aug. 28, 2015).

A prima facie case of misappropriation under the Utah Trade Secrets Act requires the existence of a protectable “trade secret” and demonstration of “misappropriation.”  Misappropriation may be established by either unlawful disclosure or unlawful acquisition.  Upon a showing of that prima facie case, the employer gets the “benefit of the doubt” as to the threat of future harm, and the burden shifts to the offending employee to show that the misappropriation cannot reasonably be expected to recur.  The Court pointed out that the presumption of irreparable harm gives the employer a right, under the Utah Trade Secrets Act, to issuance of an injunction against the offending employee – even “without regard to proof of measurable economic injury” to the employer.

This case is a powerful new weapon in the arsenal of employers seeking to protect trade secrets and enforce confidentiality agreements.

For more information about this case, or other employment law or trade secret related legal issues, please contact Camille Johnson at cnj@scmlaw.com, or Keith Call at kac@scmlaw.com, or (801) 521-9000.