Missouri law involving non-compete agreements and trade secrets continues to evolve, as shown by a recent decision of the Missouri Court of Appeals.
The Balancing Test: Freedom vs. Protection
This much is clear. The law of non-compete agreements in Missouri seeks to balance the competing concerns between an employer and employee in the work force. A court must consider the practical business concerns of the former employee’s freedom to compete, versus the former employer’s right to utilize non-compete agreements to protect itself from unfair competition by misuse of its trade secrets or misuse of the employee’s customer contacts developed at its expense.
Court Addresses a Geographic Issue
First, the non-compete agreement did not contain a specific geographic restriction. The company argued that this was reasonable because the non-compete targeted companies that could exploit their trade secrets to their competitive advantage on a global basis.
The Court of Appeals disagreed, finding that the non-compete provision created a global prohibition in which the former employer attempted to ban employees from working for any of its competitors globally in any capacity. Rather than a valid prohibition of unfair competition, the court found such a provision to be unreasonable.
Was Website Work a Trade Secret?
Second, the court focused its analysis on whether the non-compete agreement was narrowly tailored such that the restrictions protected the employer’s trade secrets.
The former employee was responsible for the “user experience” on the company’s website. He and his team worked on upgrading the appearance for marketing products and acquired an understanding of customers and their purchasing habits, needs and preferences by interviewing scientists using the website. The newly designed website rolled out in 2010.
The company argued that the former employee was in possession of its current trade secret information, which would present a current threat if known to a competitor.
However, the Court of Appeals ruled that the company did not meet its burden in demonstrating that the information the former employee possessed was not known outside the business, that the information was not widely known within the company or to others involved in the business, or that the company had taken measures to guard the secrecy of the online information.
As such, under the Missouri Uniform Trade Secrets Act, the information sought to be protected under the non-compete did not constitute a trade secret or protectable confidential information.