Proof of Competition Not Required Under Trade Secrets Act

The Virginia Supreme Court last week rejected the argument that an employer must prove that a former employee who took trade secrets to his current employer was actually in competition with the prior employer.

The trial court dismissed the GSI’s (the former employer) claim against the employee, now employed by Boeing. GSI argued the employee took its trade secrets and was using them at Boeing. The trial judge ruled that GSI’s claims must be dismissed because it failed to prove that the employee was “in competition” with GSI in his current role at Boeing.

The Virginia Supreme Court reversed. It held that the Trade Secrets Act does not require the former employer to prove direct competition. The Court did, however, remind that the Trade Secrets Act requires a showing of concrete damages, which may effectively require a showing of competition to prove.

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