Dilution of Trademarks

It is often necessary for employers to make confidential information, including trade secrets, accessible to their employees. Employers certainly want to protect trade secrets from leaking to competitors, so they often make employees sign confidentiality agreements as a term of employment. The question is: what happens to trade secret information when an employee is discharged or voluntarily resigns?

The Solicitation of Customers by a Former Employee
A discharged employee who remains in a similar, if not identical, field of business after termination may face potential liability under trade secret law. For example, a former employee might benefit from soliciting the customers from former employment. Whether or not such solicitation constitutes a trade secret violation, when the customer list of a former employer was stored in a confidential file, depends on the accessibility of customer names elsewhere.

The solicitation of customers will probably not constitute a violation of trade secret law if:

A former employee did not copy or memorize the confidential customer files

Employers’ customers were known users of employers’ merchandise

Customers engaged in business at advertised locations

Customer names were readily ascertainable in the trade as likely users of employers’ services

Criminal Penalty for Government Employees
A federal statute imposes a criminal penalty for any United States government employee who discloses trade secret information that is revealed to him during the course of his employment. This means that government employees are obligated to keep the trade secret information confidential. Imposing a penalty for the violation of a trade secret fosters business and, subsequently, the economy, by:

Discouraging government employees from capitalizing on confidential information they become privy to during the course of employment

Arming owners of a trade secret with a sufficient remedy in the case of disloyalty

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