In the case of Tanium v. Yago et al. the US District Court for the Northern District of Georgia recently reminded us of a few things: (1) customer contact information may constitute a trade secret; (2) the Georgia Restrictive Covenant Act (“RCA”) gives a court more freedom to modify an otherwise overly broad restriction; (3) a provision prohibiting workers can be liberally enforced; and (4) bad acts committed by an employee before leaving a company affect how a court decides.
Tanium is a cybersecurity management company. Tanium hired Yago as a salesperson ultimately responsible for servicing Tanium’s largest customers. Tanium had Yago sign an Employee Invention Assignment and Confidentiality Agreement (“Agreement”) that prevented him from soliciting Tanium customers and employees and from using or disclosing Tanium Confidential Information.
In January 2021, Yago accepted a job offer at Wiz, a competitor of Tanium. Around the same time, Wiz hired four other senior Tanium employees. Tanium discovered that while Yago was employed, he had accessed and created a report summarizing around 60,000 customer contacts and sent the report to at least one of the other employees Wiz had also hired. Yago also had text contact with at least one of the other employees, discussing whether they “. . . about” the other employees that Wiz has hired.
Based on these and other facts, Tanium sought an injunction against each defendant and Wiz for, among other things, a breach of the Convention and a violation of the Georgia Trade Secrets Act. The court first dealt with the question of whether the list of customer contacts is a trade secret. The court recognized that “although customer lists, which are simply compilations of public information and which could just as easily be compiled by third parties, are not to be considered trade secrets,” the court ruled that such lists are still entitled to trade secret protection If so, the company that creates such a list may expend significant time, effort and expense in creating the list and may keep the list confidential in its business. Here the court held that the company had adequately protected the list as confidential and it showed that the list of 60,000 customers and contact information could not be assembled without significant effort and time. Accordingly, the court found that the customer contact reports constituted trade secrets and that Tanium’s allegation that Yago misused the report had a significant likelihood of success. The court also ruled that Tanium had demonstrated a significant likelihood of success in its allegation that Yago had violated the confidentiality provision of the agreement with the same conduct.
The court also addressed the non-solicitation clause for employees in the agreement. This provision prohibited Yago for a period of 12 months from “soliciting, encouraging or causing others to solicit or encourage” a Tanium employee to resign from Tanium. As in some other recent cases, it found that the RCA regulates a non-solicitation of workers and, unlike some recent cases, found that restrictive agreements “relating to solicitation of workers are enforceable when reasonable in time limited and non-lethal are vague or ambiguous.” Based on cases decided prior to the enactment of the RCA, the court found the worker prohibition provision to be enforceable.
Finally, the court considered the solicitation prohibition provision, which barred Yago from soliciting, encouraging, or causing “directly or indirectly an existing customer” of Tanium to end or terminate his relationship with Tanium for a period of 12 months to change. Defendants argued that the provision was unenforceable because it was not limited to those customers with whom Yago had significant contact. Acknowledging that OCGA §13-8-53(b) specifically contemplates that excessive non-solicitation of customers “may be restricted according to the parameters set forth in OCGA §13-8-53(b),” the court restricted the Restriction to only those customers with whom Yago has had significant contact.
