Chicago Business Litigation Lawyer Blog
The resignation lands on a Friday and feels routine until Monday. Your top salesperson is gone, and so, it turns out, is the customer list, the pricing model, and the quarterly pipeline she pulled the week before she left. By the following week your best accounts are getting calls from her new employer, the one across town that competes with you for the same business, and the quotes coming back are suspiciously well aimed. You signed her to an agreement years ago, but you are not sure it still holds, and you do not know whether what she took counts as a trade secret or just as the ordinary knowledge an employee carries out the door. You need answers that are fast and correct, and you need them before the damage hardens.
Illinois gives employers real tools in this situation. It also sets traps for the employer who moves on instinct instead of analysis. The rules changed in 2022, the enforceability of restrictive covenants turns on facts most owners overlook, and a clumsy lawsuit can convert a strong case into a fee-shifting loss. The difference between recovering your business and paying the other side’s legal bills usually comes down to choosing the right theory before you fire off a cease and desist letter.
Begin with trade secrets, because they protect you whether or not the employee ever signed anything. The Illinois Trade Secrets Act, 765 ILCS 1065/1 and following, protects information, including customer lists, pricing data, formulas, and business methods, that is sufficiently secret to give it economic value and that the owner has taken reasonable steps to keep secret. Those last two requirements do the work. Information you guarded with passwords, access limits, and confidentiality agreements looks like a trade secret. Information you let every employee see, email home, and discuss freely does not. The Act gives a wronged employer an injunction to stop the misappropriation, damages measured by actual loss plus the wrongdoer’s unjust enrichment or, where those are hard to prove, a reasonable royalty, exemplary damages of up to twice the award when the misappropriation was willful and malicious, and attorney fees in cases of willful and malicious conduct or bad faith. It also displaces overlapping common law theories, so the trade secret claim is usually the centerpiece, not an afterthought.
Illinois courts have gone a step further with the inevitable disclosure doctrine. In PepsiCo, Inc. v. Redmond, the Seventh Circuit, applying Illinois law, allowed an employer to show misappropriation by demonstrating that the departed employee could not perform the new job without inevitably relying on the former employer’s trade secrets. That doctrine will not fit every case, and courts apply it carefully, but where an executive moves into a mirror-image role at a direct competitor, it can support relief even without a smoking-gun document. Continue reading ›