Opinion
03-CV-466
November 4, 2003
MICHAEL B. CARLINSKY, ESQ., JAMES RITTINGER, ESQ., ROBERT C. JUMAN. ESQ., QUINN, EMANUEL, URQUHART, OLIVER HEDGES, LLP, New York, NY, for Plaintiff
CHRISTOPHER A. DI PASQUALE, ESQ., HARRIS BEECH LLP, Pittsford, NY, for Defendant
MEMORANDUM DECISION AND ORDER
BACKGROUND
Plaintiff Colonize.Com, Inc. ("the Company") is a direct marketing firm that specializes in providing marketing services in the form of web site traffic, leads registrations and orders ("Customer Acquisitions Services"). In this undertaking, the Company uses permission-based e-mail marketing, banner advertising, related types of web site advertising, media buying/brokering and other mechanisms to perform its services. The Company employs many distribution methods, including its numerous partnerships with e-mail list owners, high traffic web sites and advertising networks, as well as the Company's own high-traffic web site, and its proprietary permission-based e-mail database to generate large scale customer and lead acquisition programs on behalf of its customers. The Company also develops and markets its own online subscription products, and participates in other online direct marketing activities, all as a supplement to customer acquisition business.
The Company's web site recites that Colonize is a leading direct marketing firm that specializes in acquiring large numbers of customers for business. Colonize serves hundreds of customers ranging from Fortune 500 Companies to small businesses in a variety of sectors including banking, insurance, travel, entertainment and publishing.
Noah and Jonah Goodhart are the sole stockholders of the Company, and make up its Board of Directors.
Defendant Steve Perlow ("Perlow") and Jonah and Noha Goodhart became acquainted when they were attending Cornell University in Ithaca, New York. In November 1999, Perlow was employed by First Manhattan Consulting Group as a senior analyst at a salary exceeding $100,000 per year. At that time, the Goodhardt's had established a business named Blanketmail.com. They asked Perlow to assist them in making the endeavor successful. Jonah was then an undergraduate at Cornell and Noah was pursuing a political science degree in graduate school. Neither had any appreciable business, sales or direct marketing experience.
The three then developed a business plan listing the Goodharts and Perlow as co-founders in a partnership named Blanketmail.com, an e-mail marketing company specializing in customer acquisition business that was achieved through a website where customers would register to receive e-mail marketing information. The resulting e-mail list would then be offered to businesses for use in their efforts to acquire customers. In January 2000, the partnership was converted into a New York Sub-chapter-S corporation.
In February 2000, the Goodhart's made a written employment offer to Perlow. to work for Blanketmail.com. The offer included a provision giving Perlow an incentive stock option program. Perlow states that his primary concern in joining the company was not salary, but obtaining an equity position, and that he would not have joined if it was not obtainable. The employment offer also provided that Perlow would execute with Blanketmail.com a comprehensive employment agreement and other detailed contracts, and a one year non-compete agreement. The parties executed the non-compete agreement on February 27, 2002. The non-compete agreement was a preprinted form contract and there is no indication that Perlow was able to negotiate any of its terms.
In March 2000, the Company was organized as a New York Sub-Chapter S corporation. The new corporation, named Colonize.Com, took over the business of Blanket.mail along with its limited assets and business relationships.
On May 14, 2000, the Company offered Perlow an employment contract. In addition to the terms of employment, the contract included an incentive stock option provision, but it was lower in value than the one set forth in the February 2000, employment offer, nevertheless, Perlow accepted and singed the agreement. Plaintiff now claims that this contract was never binding because it was never approved by the Company's board of directors which consisted of Noah and Jonah Goodhart.
As time passed, the business expanded and both the Company and Perlow did very well financially. Perlow, however was troubled by his inability to get a firm equity share contract in place and felt it was being delayed unnecessarily despite his efforts to effectuate it. When he concluded that an acceptable equity arrangement would not be forthcoming, he decided to terminate his employment with the Company and start his own business. He advised the Goodhart's of his decision, and resigned from the company on January 13, 2003. His last day of employment was January 31, 2003, and, thereafter, he began operating his own commercial enterprise, Insite Direct, Inc.
On April 16, 2003, the Company commenced an action alleging in the complaint that defendant violated the non-compete agreement and the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, misappropriated trade secrets, inevitable and imminent disclosure of trade secrets and breached a fiduciary duty to plaintiff. The complaint seeks declaratory relief, compensatory and punitive damages, costs and attorneys' fees. Currently before the court is the Company's motion for a preliminary injunction.
DISCUSSION
The court has supplemental jurisdiction over The Company's state law claim which seeks a preliminary injunction. Under New York's choice of law rules, Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1998), a federal court adjudicating a supplemental state law claim applies the choice of law rules of the forum state. New York law properly applies to this case in which all of the parties are based in New York and the relevant contracts and transactions appear to have been executed and occurred in New York.Lazard Frers Co. v. Protective Life Insurance Co., 108 F.3d 1531, 1539 (2d Cir.) (New York applies the law of the state having the most significant contacts to the underlying transaction), cert. denied, 522 U.S. 864, 118 S. ct. 169, 139 L.Ed.2d 112 (1997)
The Company did not move for an immediate injunction because it entered into settlement discussions with defendant, while still seeking additional information about Perlow's activities. When it appeared that the settlement negotiations would not succeed, an injunction motion was filed on August 4, 2003, requesting that Perlow be enjoined from violating the terms of his non-compete agreement with the Company, and misappropriating the Company's confidential and proprietary business information and trade secrets.
Defendant answered the complaint with several affirmative defenses, and counterclaims asserting that plaintiff breached his employment contract when it did not carry out its obligation under the Incentive Stock Option Grant included therein, and also breached an implied good faith and fair dealing in doing so. Defendant also entered opposition to plaintiffs injunction motion.
"A Party seeking a preliminary injunction must establish that 1) absent injunctive relief it will suffer irreparable harm, and 2) either that it is likely to succeed on the merits, or that there are sufficiently serious questions going to the merits to make them fair ground for litigation, and the balance of hardships decidedly in favor of the moving party." Otokoyama Co. v. Wine of Japan Import. Inc., 175 F.3d 266, 270 (2d Cir. 1999); accord Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir. 1997). The plaintiff bears the burden of establishing that each of these factors supports granting the injunction. Technical Publishing Company v. Lebhar-Friedman. Inc. 729 F.2d 1136. 1139 (7th Cir. 1984).
A preliminary injunction is extraordinary relief, to be granted only if no adequate remedy at law exists, and the moving party clearly establishes the requisite entitlement. Federal Leasing. Inc. v. Underwriters at Lloyd's, 650 F.2d 495.499 (4th Cir. 1981). By requiring a district court to cast judgment, while acting on an incomplete record, the preliminary injunction remedy is inherently problematic. Hughes Network Systems. Incorporated v. Interdigital Communications Corporation, 17 F.3d 691, 693 (4th Cir. 1994). Because the court's decision on the motion is an appealable order under 28 U.S.C. § 1292(a)(1), motions for preliminary injunction often lead to repetitive litigation, with significant costs for all parties involved. Id. at 694.
A showing of irreparable harm is the "single most important prerequisite for the issuance of a preliminary injunction." Cortland Line Co., Inc. v. Vincent, 1998 WL 542332, (N.D.N.Y.) (citing Bell Howell v. Masel Steel Supply Company, 719 F.2d 45 (2d Cir. 1983)). A preliminary injunction will not be issued without a threshold showing or irreparable harm. Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974). "Irreparable harm is an injury that is not remote or speculative but actual and imminent, and for which a monetary award cannot be adequate compensation." Tom Doherty Associates. Inc. d/b/a Tor Brooks v. Saban Entertainment. Inc., 60 F.3d 27, 37 (2d Cir. 1995). 415 U.S. 61, 90, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974)
The Company contends that plaintiffs actions violated the non-compete agreement by running a competing business, soliciting plaintiffs clients, and misappropriating plaintiffs confidential information and trade secrets. Furthermore, defendant created his competitive business while in plaintiffs employ, and has performed competitive services for some of plaintiffs customers with whom he dealt directly when working for plaintiff. Defendant's conduct has compelled the Company to bring this motion for injunctive relief.
A covenant not to compete in an employment setting will be specifically enforceable only to the extent that it is also "necessary to protect employer's legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee." Reed. Roberts, 40 N.Y.2d at 307, 386 N.Y.S.2d 667. The New York Court of Appeals has stated that specific enforcement of an employee's agreement not to compete should not be ordered "unless necessary to protect trade secrets, customer lists or good will of the employer's business, or perhaps when the employer is exposed to special harm because of the unique nature of the employee's services." American Broadcasting Companies v. Wolf, 52 N.Y.2d 394, 403, 438 N.Y.S.2d 482 (1981). In the instant case, Perlow's services can hardly be characterized as special and unique. Such characteristics have traditionally been associated with "various categories of employment where the services are dependent upon an employees's special talents; such categories include musicians, professional athletes, actors and the like." Ticor Title Co. v. Cohen, 173 F.3d 63, 70 (2d Cir. 1999). However, employees who do not fit such categories can qualify if the employer establishes that the employee's "services are of such character as to make his replacement impossible or that the loss of such services would cause the employer irreparable harm." American Institute of Chemical Engineers v. Reber-Friel Co., 682 F.2d 382 n. 9 (2d Cir. 1982). The Company has not shown that Perlow's services meet these articulated standards.
The Company states that it is likely to succeed on the merits on its claims that Perlow breached the non-compete agreement by doing business with the Company's customers, trade secret misappropriation and inevitable disclosure.
Perlow states in his affidavit that he is providing only brokerage services to four firms that also use the Company's services, but the brokerage service is not the same or similar and does not compete with the sale or rental of e-mail lists for online marketing which the Company provides to its hundreds of customers. Additionally, these four customers still do business with the Company and dozens of other e-mail list owners. (Perlow Aff'd. Paras. 89, 90, 91)
The record contains no factual proof discrediting these statement, shows no loss by the Company or that Perlow's broker activity here posed an imminent threat to the business of the Company.
To prevail on a claim for misappropriation of trade secrets, the plaintiff must show that it (1) possessed a trade secret and that (2) the defendant used the trade secret in breach of an agreement of confidential relationship or duty, or as a result of discovery by wrongful means.
The Company has not made the requisite showing for misappropriation of trade secrets. The Company alleges the taking of confidential information concerning its customers and use of the information by Perlow in his business. More particularly, the Company has indicated that the particular trade secrets consists of the Company's customer lists containing confidential information regarding its client relationships, including its pricing terms for each customer; information regarding the success of its ad campaigns, its strategic marketing and business information; and, data regarding the company's relationships with vendors and third party suppliers.
Customer lists are generally not considered confidential information.Arnold K. Davis Co. v. Ludemann, 160 A.D.2d 614, 615, 559 N.Y.S.2d 250 (1st Dept. 1990); Cool Insuring Agency v. Rogers, 112 A.D.2d 758, 759, 509 N.Y.S.2d 18 (3d Dept. 1986), appeal dismissed, 69 N.Y.2d 1037, 517 N.Y.S.2d 1030 (1987). In addition to the names of its customers, a typical confidential list would contain such sales information such as, precise discounts given to customers, pricing book and data, usage reports and details of ordering and purchase histories. H. Meer Dental Supply Company v. Commisso, 269 A.D.2d 662, 702 N.Y.S.2d 463, 464 (3d Dept. 2000) In order to establish confidential customer information status, it is incumbent upon plaintiff to demonstrate that its customers are not known to the trade and are discoverable only by extraordinary methods. Empire Farm Credit v. Bailey, 239 A.D.2d 855, 856, 657 N.Y.S.2d 211 (3d Dept. 1997). The Company has not done so, and Perlow's affidavit points out in detail how customers' names and related sales information can easily be acquired by anyone desiring it. (Perlow Aff. Paras. 21-33). As to the remaining information, the Company has not provided enough evidentiary proof to show what specific information Perlow misappropriated and used in his business. It is well settled that an employee's recollection of information pertaining to specific needs and business habits of particular customers is not confidential. Walter Karl. Inc. v. Wood, 137 A.D.2d 22, 28, 528 N.Y.S.2d 94, 98 (2d Dept 1988). Restrictions against the use by a former employee of his accumulated experience, skill, appreciation of intangibles and judgment in his new employment would effectively bar him from all employment and are beyond legal limits and would have to be declared void. Great Lakes Carbon Corporation v. Koch Industries. Inc., 497 F. Supp. 462, 471 (S.D.N.Y. 1980).
The Company submitted investigatory reports indicating that Perlow may have used his company computer to secure a domain name, file certain state required documents for his new company and contacting a web site designer. The Company claims that Perlow's action violated the non-compete agreement he had with the Company. An employee may secretly incorporate a business prior to his departure, but may not use his employers time or facilities while so doing. Maritime Fish Products. Inc. v. World Wide Fish Products, 100 A.D.2d 81, 88, 474 N.Y.S.2d 281 (1st Dept. 1984 appeal dismissed, 63 N.Y. 675 (1984). Perlow's unrefuted reply is that the Goodharts knew that all of the Company's employees used their laptops as both a company and a personal computer This was necessary because of the long hours they worked. The long work periods also made it virtually impossible to ascertain whether a computer was used on company or personal time. (Perlow Aff'd. ¶ 66)
The Company postulates that it is also likely to succeed on its claim based on the inevitable disclosure of its trade secrets. This doctrine is premised on the reality that once employees have knowledge of a competitor's confidential information, it is almost impossible to compartmentalize that knowledge and avoid using it when they go to work on a similar job in the same industry. As it was not demonstrated that there was an actual misappropriation of trade secrets by Perlow, the misappropriation then must emanate from the presumption that there will be an inevitable disclosure of trade secretes by him because he competes with the Company and has highly confidential knowledge of the direct marketing industry.
The doctrine of inevitable disclosure is disfavored in New York because of the State's strong public policy against restrictive non-competition agreements Marieta Corporation v. Fairhurst, 301 A.D.2d 734, 754 N.Y.S.2d 62 (3d Dept. 2003). Federal courts have also displayed reluctance in using the doctrine, EarthWeb. Inc. v. Schlack, 71 F. Supp. 299, 310 (S.D.N.Y. 1999); aff d. 2000 WL 1093320 (2d Cir. May 18, 2000)("[I]n its purest form the inevitable disclosure doctrine treads an exceedingly narrow path through judicially disfavored territory. Absent evidence of actual misappropriation by an employee, the doctrine should be applied in the rarest of cases"). New York courts have used the doctrine very sparingly to grant injunctive relief only in circumstances where other evidence of theft of trade secrets exists. Double Click. Inc. v. Henderson, 1997 WL 731413 (Sup.Ct. N.Y. Co. Nov. 7, 1997). That is not the case in this action. The Company's claim here is insufficient to support the theory that Perlow has used or threatened to use any of the Company's trade secrets. Absent any wrongdoing that would constitute a breach under the non-compete agreement, mere knowledge of the intricacies of a business is simply not enough. Catalogue Service of Westchester v. Henry, 107 A.D.2d 783, 784, 484 N.Y.D.2d 615 (2d Dept. 1985).
Based on the record in this case, the court finds that the Company has not established that without injunctive relief it will suffer irreparable harm, or a likelihood of success on the merits, and that the balance of the equities manifestly fall to Perlow.
Since the court has determined that a preliminary injunction is not warranted because there has been no showing of harm pendente lite, it need not decide at this time if the instant non-compete agreement is over broad. The documents lack geographic limits, and its one year restriction could be excessive given the dynamic nature of today's online marketing industry.
Accordingly,
The Company's motion for a preliminary injunction is DENIED.
IT IS SO ORDERED.
The doctrine is a method of proving misappropriation through the following circumstantial evidence (1) that the employee had prior access to the ex-employer's trade secretes, (2) that the employ's old and new job responsibilities are similar, and (3) that the employee and/or his new employer appear unable or unwilling to protect the ex-employer's trade secrets.
"[I]n its purest form the inevitable disclosure doctrine treads a exceedingly narrow path throught judicially disfavored territory. Absent evidence of actual misappropriation by an employee, the doctrine should be applied only in the rarest of cases. Earth Web. Inc. v. Schlack, 71 F. Sull.2d 299, 310 (S.D.N.Y. 1999) Even though there may be no evidence defendant disclosed the Company's trade secrets, the court could properly enjoin him from in order to prevent inevitable disclosure.
The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret. Maters which are completely disclosed by the goods which one markets cannot be his secret. Substantially, a trade secret is known only in the particular business in which it is used. It is not requisite that only the proprietor of the business know it. He may without losing his protection communicate it to employees involved in its use. Nevertheless, a substantial element of secrecy mus exist, so that, except by the use of improper means, there would be difficulty in acquiring the information. An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one's trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and other involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.Speedry Chemical Products. Inv. v. Carter's Ink Company, 306 F.2d 328, 330 (2d Cir. 1962); Universal Reinsuring Co., Ltd, v. St. Paul Fire and Marine Insurance Co., 1999 WL 771357 (S.D.N.Y. Sept. 29, 1999).
The Company states that its trade secret information consists of its pricing terms for each client, information regarding the success of ad campaigns, strategic marketing and business information and information regarding the Company's relationships with vendors and third-party suppliers.
To obtain a preliminary injunction, the Company must "put forth sufficient evidentiary proof to show what specific data the individual defendant appropriate In his reply affidavit, Perlow describes the operation of the Company's business, and his career there.
The Core business of the Company is customer acquisition, which it does principally through its e-maim and web site. (¶ 21).
The Company does not maintain a customer list, as all of it customers are public information because, by submitting an e-mail address on the Company's web site, the customers and products it is promoting are available. Anyone can also join the Company's e-mail list and receive daily e-mails to determine the customers the Company is promoting. (Aff'd. ¶ 22)
Identifying prospective customers in the direct marketing industry is not difficult. They are found by observing what businesses are advertising on other web sites, then contacting those businesses and offering the Company's services to complement the e-mail lists and web sites they were currently using. (Aff'd. ¶ 25)
Companies in the direct marketing business industry are constantly looking for new e-mail lists to which they can market their products. There are hundreds of companies like Colonize.com that rent or sell their e-mail lists to various commercial enterprises. (Aff'd. ¶ 26).
Pricing information in the customer acquisition business are not confidential as pricing is quite similar throughout the industry. Most direct marketing companies offer the same pricing to all businesses on a cost per action basis ("CPA") ( e.g., lead, order, registration, sale), and may offer higher pricing tiers based on the volume of sales a business reaches. The pricing strategy was not to be cost competitive, but to obtain the highest per CPA. There is nothing secret about the Company's pricing information.(Aff'd. ¶ 29, 31, 32).
The Company does not partner with e-mail list owners or broker media buys it discontinued do so prior to his leaving its employ. (Aff'd. ¶ 33).
Perlow's career with the Company.
The Company provided no training in the operation of the business, in fact, he had more business, marketing and sales experience than either of the Goodhart brothers at the time the company was formed. (Aff'd. ¶ 41).
The company had no proprietary business techniques or marketing strategies of which he knew about. He used his general knowledge of sales and business to sell the Company's products and manage its sales department. The Goodhart's oversaw the technology including the web site and e-mail list data base and marketing for the Company (Aff'd. ¶¶ 42-43).
He did not have access to any specific knowledge of the Company's technology for storing and sending e-mails or its web site, nor access to the Company's priority e-mail list. His duties were on the sales of the Company's products, not the technical aspect of the Company. He had so reason for access to that information. Additionally, he had scant opportunities to develop special relationships with customers because 99% of the business he conducted was done by telephone. (Aff'd. ¶¶ (44-45)
In all probability, none of the Company's customer relationships were exclusive. All of it customers work wit myriad other direct marketers in addition to the Company because no one e-mail/website marketer has the capacity to generate the volume that customers are looking for. (Aff'd. ¶ 46)
The identity of the Company's customers was known to all the company's employees its millions of e-mail subscribers and all the people that signed on Colonize.com. No confidential customer database at issue here. (Aff'd. ¶ 46)
His hard work as a salesman produced a sizable revenue for the Company, was not privy to any non-public information and had no special exclusive relationships with its customers. (Aff'd. ¶ 47)
Defendant, has a contractual and fiduciary obligation to plaintiff to maintain the secrecy of this information, but his solicitation of the Company's customers he has violated his express non-solicitation restriction in the non-compete agreement, and also constitutes a misappropriation of the Company's customer related trade secret information. His additional use of this information to attract other customers, or establish relationships with affiliates or suppliers also constitutes misappropriation.
Courts have recognized that even where there has been no actual theft of trade secrets, a court may issue injunctive relief where a former employee's new position will inevitably lead him to rely on trade secrets belonging to a former employer.
The Company will suffer irreparable harm if defendant is nor enjoined because it can be presumed that such harm will take place as a result of breach of a no-compete agreement or where unique relationships an/or trade secrets are at risk. The Company's relationships produce indeterminate amounts of business, and the loss of even one customer's business to defendant and his new corporation could undoubtedly result in irreparable harm.
Defendant replies that anti-competitive agreements are judicially disfavored, and the Company's is invalid because it is unreasonable in time, scope and extent. Plaintiff has failed to demonstrate the existence of trade secrets. The alleged trade secrets the Company seeks to protect "pricing information, contract terms and confidential marketing and business strategies," consist of public and non-specific information and do not qualify as protected trade secrets. Trade secrete covenants are enforceable only if the confidential information is not easily attainable from independent sources, and then only to the extent necessary to protect an employer from unfair competition. The facts of this case show that there are no trad secrets at issue here. Pricing information in the Company's industry are generally well known within the industry. It may also be obtained from the customers themselves, it is not confidential. Additionally, the goal of the industry is not provide the lowest price, because companies in the industry are compensated on a cost per action — lead, order, registration sale — basis. There are hundreds of companies like the plaintiff who rent or sell their e-mail lists to businesses, and businesses are willing to spend as much money as the can with e-mail lists they can find that suits their demographic.
The Company has also not identified the aspects of its marketing business techniques that are proprietary and how they differ from general and common marketing strategies and expertises. The Company, also, has not established that it has a confidential customer list
In view of the above, the Company is not likely to succeed on its trade secret misappropriation claims.
Assuming that the no-compete agreement was enforceable, the Company cannot enforce such an agreement when it has materially breached the terms of defendant's employment contract by not providing him with an equity interest in the Company.
The Company has not shown that it will suffer irreparable harm without injunctive relief. It has not demonstrated that defendant's employment with his new corporation jeopardizes its business, threatens it with loss of clients, diminishes it reputation or will result in loss of future business. Moreover the Company's six month delay in seeking injunctive relief negates any inference of irreparable harm, and it has not that not presented any evidence that it cannot be made whole by compensation via money damages.
Enforceability of a non-compete restrictive covenant is a threshold question that must resolved before it can be determined whether the agreement has been breached. Banker's Aid v. Hussmann Food service Co., 730 F. Supp. 1209, 1213 (E.D.N.Y. 1990). Under New York law, covenants not to compete are viewed unfavorably and narrowly construed. Columbia Ribon Carbon Manufacturing Company v. A-1-A Corp., 42 N.Y.2d 496, 499, 398 N.Y.S.2d 1004 (1977). "Contracts to restrain competition are generally against public policy, illegal and void." Atkin v. Union Preceding Corp., 77 A.D.2d 790, 791. 430 N.Y.S.2d 735, 736 (4th Dept. 1980). Covenants restricting competition are enforceable only to the extent that they satisfy the overriding requirement of reasonableness.Reed Roberts Associates. Inc. v. Strauman, 40 N.Y.2d 303, 307, 386 N.Y.S.2d 677 (1976) "Reasonableness must be measured by the circumstances and context in which enforcement is sought." Gelder Medical Group v. Webber, 41 N.Y.2d 680, 684-85, 394 So.2d 867, 863 (1977) To determine the standard by which to judge a restrictive covenant, the court must consider the type and breath of the restriction as well as the nature of the business service involved and the totality of the circumstances., Greenwich Mills Co. v. Barrie House Coffee Co., 91 A.d.2d 398, 400, 459 N.Y.S.2d 454, 456 (2d Dept. 1983).
Plaintiff claims that defendant has breached the non-compete agreement in operating his own business by presenting himself and his new company to the some of the people he had as customers while in plaintiffs employ, and has solicited and performing services for one or more of plaintiff s customers. The services he provides is of the same nature as those provided by plaintiff and clearly competitive and are prohibited by the non-compete agreement.
Plaintiff also believes that because most of its customers have limited advertising budgets, some of them may decrease or eliminate the business they engage in with plaintiff as a result of the services defendant provides to them.
To succeed on a claim for the misappropriation of trade secrets under New York Law, a party must demonstrate; (1) that it possessed a trade secret, and (2) that the defendant used those trade secrets in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means. Hudson Hotel Corp. v. Choice Hotels International, 995 F.2d 1173, 1176 (2d Cir. 1993).
A trade secret is defined as any formula, pattern, device or compilation of information which is used in one's business and which gives him an opportunity to gain an advantage over competitors who do not know or use it. Kewanee Oil Co. v. Bicron Corp., 16 U.S. 470, 474-476, 94 S.Ct. 1879, 1882, 40 L.Ed.2d 315 (1974).
seeking to enjoin Perlow from violating the terms of his non-compete agreement with the Company and misappropriating the Company's confidential and proprietary business information and trade secrets