Designer Skin LLC v. S & L Vitamins, Inc., et al.
DoubleClick, Inc. v. Henderson, et al.
1997 WL 731413 (N.Y. Sup. Crt., Nov. 7, 1997)
Plaintiff DoubleClick, a company engaged in the sale of advertisements that appear on web sites, sought to enjoin two former high level employees from working for a competitor for at least one year. Plaintiff contended that defendants had, inter alia, misappropriated company trade secrets and proprietary information, which they had and planned in the future to utilize in competition with their former employer. Plaintiff also contended that defendants breached duties of loyalty owed their employer by attempting to set up a competing concern while still in plaintiff's employ. The Court agreed, and enjoined defendants from advising any competitors of plaintiff concerning advertising on the Internet for a period of six months.
The Court found that defendants had access to proprietary and confidential information concerning plaintiff's business operations, including the percentage of ad revenues generated by plaintiff that plaintiff charged web site owners for its services (or "site share") and the traffic the advertisements plaintiff placed generated. When combined with evidence that demonstrated that defendants intended to use this information to garner business from plaintiff's clients for a competing concern, and the likelihood that defendants would inevitably disclose the same to any future employer, the Court determined that plaintiff was likely to prevail on its claim that defendants had misappropriated proprietary information belonging to plaintiff.
The Court further held that defendants had breached duties of loyalty owed to their employer by using company time and resources, while still employees of plaintiff, to set up a business that competed with their employer. This wrongdoing included defendants' solicitation for their new competing concern of one of plaintiff's potential clients while defendants were still in plaintiff's employ.
Notwithstanding its finding of misappropriation of trade secrets, breach of duties of loyalty and unfair competition, the Court was unwilling to enjoin defendants from competing with plaintiff for a full year. Instead, it limited its injunction to a period of six months because "[g]iven the speed with which the Internet advertising industry apparently changes, defendants' knowledge of DoubleClick's operation will likely lose value to such a degree that the purpose of a preliminary injunction will have evaporated before the year is up."