Unfair Competition

An employee may not unfairly compete with his or her former employer by stealing or utilizing confidential information in their subsequent employment or business venture.

A claim of unfair competition arises when an individual misappropriates the property that has a commercial or pecuniary value of his or her former or current employer. Such misappropriation can consist of cases in which fraud and deception are practiced by one in disparaging or capturing the trade of a competitor. The essence of a claim of unfair competition is fair play in one’s trade or business practices. Thus, stealing confidential information of an employer, such as customer lists and using it in his or her new employment or other business endeavor, would likely give rise to a claim of unfair competition. A claim for unfair competition may arise in this situation regardless of whether the employee and employer entered into a formal confidentiality agreement that expressly prohibited this type of devious and malicious conduct.

The information learned by an employee during his or her employment, however, need not rise to the level of a trade secret to be legally protected from a claim of unfair competition. In fact, specific information that is provided to an employee by his employer in the course of employment for the sole purpose of servicing the employer’s customers may be legally protectable as confidential and proprietary information. The key to determining the misuse of information is the relationship of the parties at the time of disclosure and the intended use of the information.

A claim of unfair competition may arise when an employee uses a learned business practice and method of a prior employer that results in injury when disclosed to a competitor. While the law respects the principles of free competition, an employee’s taking of confidential and proprietary property and then using it effectively against a former employer is contrary to the notion of free competition that is fair.

Claims of unfair competition have become more and more common as technology has advanced in the workplace. Electronically stored information is the most common way in which employees can use proprietary information against their former employers. It occurs far too often that an employee, who is on their way out or has been laid off, transfers their former employer’s confidential information onto a flash drive or other transmitting device. These actions are against the law, both criminally and civilly, regardless of whether the employee intends to use, or ever uses the confidential information against the former employer. It is also easily provable that the employee downloaded or transferred the confidential information through computer forensics and other readily available methods.

If you or your business are the victim of unfair competition or are being accused of unfairly competing against a former employer, it is imperative you retain legal counsel to properly represent you and mitigate the effects of the unlawful conduct. Claims of unfair competition can be very expensive in attorney fees and forensic computer experts, which makes it essential that you retain competent legal counsel as soon as possible. Our New Jersey Employment attorneys represent and defend both small employers and employees in claims of unfair competition. If you have legal questions or concerns in connection with a claim of unfair competition, please feel free to contact our Monmouth County law office to speak to one of our employment attorneys about the specifics of your situation.