Massachusetts Trade Secrets Statute Still Uncertain

Trade secret law in Massachusetts is governed by common law (generally following the Restatement (First) of Torts, § 757) and statute (General Laws chapter 93, §§ 42 and 42A).  While section 42 addresses the existence and general requirements of the cause of action as well as the availability of money damages (including multiple damages), section 42A addresses under what circumstances injunctive relief will be appropriate.

Section 42A provides as follows:

Any aggrieved person may file a petition in equity in the supreme judicial court or in the superior court for the county in which either the petitioner or the respondent resides or transacts business, or in Suffolk county, to obtain appropriate injunctive relief including orders or decrees restraining and enjoining the respondent from taking, receiving, concealing, assigning, transferring, leasing, pledging, copying or otherwise using or disposing of a trade secret, regardless of value. The term “trade secret” as used in this section shall have the same meaning as set forth in section thirty of chapter two hundred and sixty-six.

In an action by an employer against a former employee under the provisions of this section for the conversion of a trade secret and where such conversion is in violation of the terms of a written employment agreement between said employer and employee, said employer shall, upon petition, be granted a preliminary injunction if it is shown that said employee is working in a directly competitive capacity with his former employer in violation of the terms of such agreement and that in violation of the terms of such agreement said employee has used such trade secret in such competition.

The most interesting aspect of section 42A is that its two short paragraphs create significant ambiguity as to whether a restrictive covenant (presumably a noncompete) is necessary in order to obtain injunctive relief against a former employee under the statute. Specifically, while the first paragraph addresses the rights of “[a]ny aggrieved person” to seek injunctive relief in order to protect trade secrets, the second, more specific, paragraph is specifically tailored to actions arising in the employment context.

The interaction between these two paragraphs has never been directly addressed.

The case that has come closest is Lantor Inc. v. Ellis, 98-01064, 1998 WL 726502 (Mass. Super. Oct. 2, 1998) (Gants, J.). In that case, the court found that there was no enforceable written employment agreement between the plaintiff-employer and its former employee, the defendant.  Because “there was no enforceable written employment agreement between [employer and employee] at the time of [employee’s] separation,” the court denied the employer’s request for a preliminary injunction under M.G.L. c. 93, § 42A, stating that the employer “cannot meet the requirements of this statute.”  Id. at 12.

Recently, we had the opportunity to raise this issue in a case we were handling. However, because the motion was resolved without the need to reach this specific issue, we will all continue to wait for a direct and authoritative ruling.

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