SW Legal Educational Publishing

Known Components Can Constitute Trade Secret
Description Georgia high court upheld injunction against competitor that hired employee who had been in charge of development of complicated company logistics system that saved substantial sums. Trade secret protection extends to known facts combined in original ways that give competitive advantage.
Topic Intellectual Property
Key Words Trade Secrets
C A S E   S U M M A R Y
Facts Southwire sued a former employee and his new employer, Essex, to enjoin the employee from disclosing any Southwire trade secrets, especially those involving Southwire's logistics system. Lower court issued a five year injunction against the employee working in Essex's logistics department and appointed an impartial verifier to confirm Essex's compliance. Essex appealed.
Decision Affirmed. "Southwire's logistics system is a warehouse organizational system with components extending from architectural layout features to customized equipment and modified computer software." The system was designed over three years, cost over $2 million, and was headed by the former employee. It saved Southwire $12 million a year. Contrary to Essex's claims, even though the components of the trade secret are known facts, that does not prevent their protection for a secret combination, compilation, or integration.
Citation Essex Group, Inc. v. Southwire Co., 501 S.E.2d 501 (Sup. Ct., Ga., 1998)

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