Software Company Sues Former Employee for Breaching Confidentiality Clause

702 a.2d 1273, 1276 (n.h. 1997); technical aid corp. v. allen, 591 the district court explained that it found credible the the relevant hardships, and (4) any impact that the court's ruling we engage in a three-part inquiry: first, whether -7- non-competition covenant adds something to the protection available reasonable under new york law to the extent that it barred similar -8- to determine whether a restrictive covenant united states court of appeals restriction is injurious to the public interest. cir. 2009). the district court denied ansys's motion on the as a result, ansys argues, it has shown dr. caraeni was his departure from ansys), will not be assigned "to perform any perhaps recognizing how poorly drafted this clause is, particular and urges that it constitutes clear error. even if2 for instance, a maintenance worker; and (2) the clause only applies irreparable injury. ansys's claim that its showing of breach was ansys sought a preliminary injunction to enforce the ansys asserts that holding it to any greater showing on unreasonable and unenforceable." merrimack valley wood prods., (n.h. 2007). a covenant that fails any one of these criteria "is -9- ansys emphatically attacks the third of these findings in is affirmed. so ordered. involve policy choices that have not been explicitly decided in for the noncompete clause to have any meaning, the clause must be first two factual findings support its conclusion, and we cannot employee, but not involving trade secrets." syncom indus., inc. v. directly on point, as the vast majority of noncompetition agreement new employer. this interpretation, of course, requires judicial suggestion at oral argument that because of the difficulty of to cause," the plaintiff harm, id. 1087. second, whether the restriction imposes an undue in breach of his contract and that it will succeed on the merits of ansys would not be useful to work on cdna's cfd software because of from the actual use of confidential material, we should deem its not to compete is enforceable. in any event, we reject ansys's testimony of dr. wayne smith, who is the general manager of cdna. only "if the restraint is reasonable, given the particular is strict: "we will reverse such a denial only if the district a.2d 262, 266-67 (n.h. 1991).1 its claims. since likelihood of success on the merits normally public policy discourages covenants not to compete, allowing them civ. no. 09-cv-284-sm, 2009 wl 4403745 (d.n.h. nov. 25, 2009). we remedy at law inadequate. we further reject its related claim that only applies to those employees who have access to confidential irreparable harm if the injunction was denied, (3) the balance of factor, likelihood of success, is usually given particularly heavy we begin our review of the district court's decision with our standard of review for denials of injunctive relief employee from working for a competitor in a narrow field, upholding lynch, chief judge, covington & burling llp were on brief for appellees. created a high risk of disclosure of its confidential information reconstruction of the broadly drafted contract language. information or trade secrets--thus, the clause would not apply to, september 2001. it reads, in relevant part, "i agree that for a february 12, 2010 both parties note a single case in which the new1 no. 09-2634 client who had transacted business with his employer in the past its trade secrets claim. crediting dr. smith's testimony, urging that his statements were to the may 2010 date for expiration of the one-year period since in particular, the court accepted three aspects of dr. smith's incidents of the employer-employee relationship or from a secrecy confidential or trade secret information;" and (3) that any trade this context by the new hampshire courts or legislature. absent dr. caraeni would not perform any tasks that might require before issues, such as the protection of employers' interest in customer information. ansys urges that the district court erred by discretion when it found ansys had not shown the likelihood of ratigan, plc, michael a. schlanger, shelli l. calland, and of the district of massachusetts, sitting by designation.* against the backdrop of these constructions, ansys argues . information." instead, it cited specific evidence "that the period of one (1) year following termination of my employment with dr. caraeni from january 2002 to may 2009 to develop code for cfd this showing is sufficient to merit preliminary injunctive relief. -3- criteria by which we may assess ansys's claims: proprietary information. the district court concluded that even lynch, chief judge. ansys, inc. ("ansys") is a company were that so, "ansys has failed to demonstrate that [dr. caraeni] while at ansys and that he is in a position to use this knowledge contract: that dr. caraeni had access to confidential information wood, 920 a.2d 1178, 1185 (n.h. 2007). injunctive relief, the district court was required to weigh four 4403745, at *5-7. injunction." mcclure v. galvin, 386 f.3d 36, 41 (1st cir. 2004) agreement." id. at 844. here, the contract clause could be that the defendant's "use and disclosure of . . . information to or new hampshire courts have further clarified that employers' to the employer beyond what he would expect from the normal has not adopted that approach. testimony: (1) "that cdna maintains and enforces a strict policy good will. see, e.g., concord orthopaedics prof'l ass'n v. forbes, its noncompetition clause is enforceable. however, new hampshire's company] to help" his new employer, id. at 1083, 1085 (internal construed is quite a different matter. ansys's arguments presume information they may have acquired from prior employers;" (2) that defendants, appellees. factors: (1) whether ansys had shown a likelihood of success on the ansys, inc., misappropriation of trade secrets, and unfair trade practices. preventing its employees from using confidential and trade secret employment agreement. the district court denied the request, relief. see ansys, inc. v. computational dynamics n. am., ltd., will accept arguendo that dr. caraeni had access to confidential modeling and simulating fluid and gas flows. ansys had employed conclude that the district court abused its discretion by finding dynamics north america, ltd. ("cdna"), in the federal district -4- finding clear error. more pertinently, the district court reasoned is likely to use that [confidential] information during the course there were reason to be skeptical of the third finding--after all, otherwise abused its discretion in granting the preliminary inc., 876 a.2d at 762; see also id. at 763-64 (affirming that an the parties have pressed. employee, dr. doru caraeni, and his new employer, computational for the benefit of [his new employer] has caused, and will continue ansys offers two pertinent narrowing constructions: (1) the clause -5- caraeni of the noncompetition and confidentiality clauses in his simulation software. association were on brief for appellant. for the first circuit on the merits and also failed to show that it would suffer such guidance, we cannot say ansys has clearly demonstrated its "legitimate interests" include "trade secrets that have been expedited the appeal. after oral argument this court issued an district court credibility determinations, e.g., jennings v. jones, read to give ansys some greater benefit than the protection it provisions of a one-year noncompetition clause in dr. caraeni's at the one-day evidentiary hearing before the district court. -6- protect the legitimate interests of the employer; doru a. caraeni, ph.d., self-serving and speculative. given our traditional deference to vaughn, and mclane, graf, raulerson & middleton, professional defendant intended to use his knowledge learned at [plaintiff's finding that ansys had not met the requirements for injunctive for the district of new hampshire "confidential information communicated by the employer to the irreparable harm absent injunctive relief. ansys, inc., 2009 wl likelihood of success on the breach of contract claim, nor can we weight. waldron v. george weston bakeries inc., 570 f.3d 5, 8 (1st error. e.g., mcclure, 386 f.3d at 41. software codes. ansys, inc., 2009 wl 4403745, at *6. defendant's sphere of customer goodwill, and was more restrictive grounds that the company had failed to demonstrate likely success employment at a direct competitor working to develop an identical agreement that broadly barred an employee from working with any ansys also argues that proving breach, and no more, was sufficient 80 percent of the market for cfd software, which is used for of trade secrets or an injunction to enforce a covenant not to fluid dynamics ("cfd"). in august 2009, ansys sued its former hampshire supreme court addressed a superficially similar attempt ansys employment contract, interference with contractual relations, this alleged inadequacy would justify equitable relief for breach [ansys], i will not become an employee . . . or in any way engage v. is not irrational and one might well be sympathetic to it. see cases considered by the state's supreme court have turned on other inc. v. rhode island, 418 f.3d 36, 46 (1st cir. 2005). the first what he learned in his prior employment--that would not make the a district court's determination that the noncompetition agreement justified as a prophylaxis, protecting ansys in a situation that may have on the public interest. see wine & spirits retailers, mischaracterizes the court's holding. the court did not, as ansys computational dynamics north america, ltd.; new hampshire courts have, however, articulated general near, 876 a.2d 757, 762 (n.h. 2005). no new hampshire cases are acas acquisitions (precitech) inc. v. hobert, 923 a.2d 1076, 1084 (internal quotation marks omitted). while we think this case is order affirming the denial of preliminary injunctive relief. we of his employment at cdna." this conclusion was based on factual that the test for enforcing a noncompetition covenant should be the circumstances of the case." merrimack valley wood prods., inc. v. to protect its legitimate interests, imposed no undue hardship on confidential information he had obtained at ansys. the court's of the covenant without any showing of injury. new hampshire law to demonstrate irreparable harm and further support its request for after all, ansys notes, it did not seek a preliminary injunction on findings, which we cannot set aside unless they constituted clear to employees who are in a position to use that information at their enjoys under common law for its trade secrets and confidential eliminate the noncompete clause from the contract. ansys says that decision was an abuse of discretion. court for the district of new hampshire, alleging breach by dr. than necessary to protect the plaintiffs' legitimate interests"). product). as judge newman observed in that case, it is unclear as to the district court's analysis of ansys's injury, we howard, circuit judge, and woodlock, district judge.* -2- same as would be used in obtaining an injunction to bar disclosure now, and judgment would not enter until we had done so. hardship upon the employee; and third, whether the at issue was enforceable. see acas acquisitions (precitech) inc. it has to show two things, and no more, to establish breach of 587 f.3d 430, 444 (1st cir. 2009), we cannot say the court's [hon. steven j. mcauliffe, district judge] disclose trade secrets. the court explained, "[t]he cont'l group, inc. v. kinsley, 422 f. supp. 838, 843 (d. conn. that ansys had failed to make this showing. whether new hampshire law would enforce an agreement so -10- v. hobert, 923 a.2d 1076, 1089 (n.h. 2007). however, acas relied i. proving damages from breach of the covenant, as opposed to damages ancillary to an employment contract is reasonable, secret or confidential information dr. caraeni had acquired at the contract clause in question, which dr. caraeni had signed in geoffrey j. vitt with whom elizabeth k. rattigan, vitt & the district court's denial of the preliminary injunction sufficient to show irreparable harm again assumes that the covenant cdna and ansys are competitors; together they occupy approximately at cdna. ansys asserts it met this burden on the evidence produced to a competitor. see id. at 845. suggests, "presume[] irreparable harm from the presumed use of . . ansys's argument about the import of its contract clause dr. caraeni, and was not inconsistent with the public interest--all analyzing this case as though it was simply a trade secrets case. appeal from the united states district court there is no need to discuss the myriad other arguments merits, (2) whether ansys had shown that it would suffer cdna chose to hire dr. caraeni for reasons that may have included communicated to the employee during the course of employment" and year was unenforceable, reasoning that it went "far beyond the quotation marks omitted), and affirmed the district court's holding whether ansys's construction of the noncompete clause was the different architecture of the two companies' respective that produces propriety software in the field of computational say that they were clearly erroneous. wilbur a. glahn, iii with whom cameron g. shilling, cathryn e. when deciding whether to grant ansys preliminary the preliminary injunction. by an employer to enforce a covenant not to compete to prevent an dr. caraeni had not been assigned and, in the near term (that is, weighs heavily in the preliminary injunction calculus, ansys urges on a variety of facts not presented by this case. id. at 1087-89. the restriction is greater than necessary to we also cannot say that the district court abused its the likelihood of success or irreparable harm would effectively ansys also argues that the district court erred in2 moreover, to the limited extent that ansys relies on acas, it in or contribute my knowledge to a competitor of [ansys]." ii. work at cdna that might allow him to use any of ansys's reasonable­-that is, whether it went no further than was necessary court mistook the law, clearly erred in its factual assessments, or 1976) (finding a covenant not to compete for eighteen months plaintiff, appellant, close, we cannot say the court abused its discretion. also said we would later issue our opinion in this case, as we do