Requisite Proof to Demonstrate Irreparable Harm in Connection to Breach of Non-Compete
by
Joseph C. Maya on Mar. 06, 2024
Summary: VBrick Systems, Inc. v. Stephens, 2009 U.S. Dist. LEXIS 45835
Case Background
VBrick Systems, Inc. was a Delaware corporation with primary business operations based in Wallingford, Connecticut that provided networked streaming video products and services. The company employed Mr. Robert Stephens as its Army Federal Territory Manager from July 2005 until April 1, 2008, when he tendered his resignation from the company and began to work at Optibase, Inc as its Director of Federal Sales. Optibase is a direct competitor that also sells networked video products and services to government, military, and private sector customers. Mr. Stephens traveled to Connecticut after he was hired by VBrick to attend a training session at the company’s headquarters and signed an employment agreement that contained non-compete and non-disclosure clauses.
The Employment Agreement
In the agreement, he agreed to refrain from working at a competing company during an eighteen-month period after his termination from VBrick. The non-disclosure covenant stipulated that Mr. Stephens be legally obligated to maintain the confidential nature of VBrick’s business operations and information that he had access to during his employment with the company. The employment agreement stated that Connecticut law would govern any legal disputes but failed to enumerate any geographical limitations for the restrictive covenants.
VBrick alleged that Mr. Stephens breached the covenants by accepting a position with a competitor within eighteen months of his termination and by using VBrick’s proprietary information in his role as an Optibase employee. VBrick sued in federal court and requested that the court enforce the provisions contained in the restrictive covenants. The court ultimately found in favor of Mr. Stephens and denied VBrick’s request for injunctive relief. The court found that VBrick did not meet the burden of proof to demonstrate that it would suffer irreparable harm if the court did not issue an injunction.
The Court’s Decision
The court held that VBrick failed to present adequate and convincing evidence that Mr. Stephens actually possessed or had access to any of its trade secrets or confidential information. He had familiarized himself with the products he was marketing and selling by using the company’s training programs and corporate website, both of which are accessible by the public.
Additionally, VBrick did not convince the court that Mr. Stephens’ action as an Optibase employee had “affected or will significantly affect VBrick’s sales or revenues”. This meant that VBrick was unable to show that it had been adversely affected by Mr. Stephens’ actions or that it was likely to be in the future. VBrick’s testimony offered evidence to the contrary when it stated before the court that its sales and revenues remained strong despite Mr. Stephens’ termination and the national economic downturn. In light of inadequate evidence to show that Mr. Stephens’ action at Optibase created an imminent danger for VBrick’s business operations, the court had no option but to deny VBrick’s request for injunctive relief.
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