Preliminary Injunction Granted in Non-Competition Agreement Violation Claim

January 2, 2013

In Harlan Laboratories, Inc. v. Campbell, the defendant worked as a regional sales manager for a company that provided laboratory animal test products and services to various medical and scientific entities. When the defendant left the company to work for a competitor, the company sued the defendant, claiming that he had violated the noncompetition agreement he had signed with the company, and sought a preliminary injunction to prevent him from violating the noncompetition agreement. To secure the injunction, the burden of proof was on the company to show that the defendant had access to valuable and/or confidential information that would be of value to a competitor.
The company presented evidence that the defendant had access to the company's valuable and confidential information, which included customer accounts, inventory reports, pricing data, revenue data, strategic planning, and marketing strategies. Further, the company presented computer records that showed that prior to leaving the company, the defendant downloaded onto a flash drive thousands of pages which contained company documents. Finally, it was shown that after taking this information the defendant later used the company's client information, various reports, and PowerPoint presentations for select customers, to work on a project for his new employer. Because the defendant allegedly lost the flash drive, the flash drive could not be presented at the injunction hearing.
The district court held that "the noncompetition agreement is reasonable in light of the narrow and competitive nature of the industry, the substantial overlap between services and products provided by the named direct competitors, and the legitimate interest in protecting sales information useful to the two competing companies. ... [since the defendant had a] clear understanding of what conduct is prohibited' by this agreement." The court then concluded that the company had made a successful showing of its likelihood of success on the merits of the non-compete claim, as well as the potential for irreparable harm.
Accordingly, the court issued a preliminary injunction preventing the defendant from working for a company that directly competes with the plaintiff in specific areas.