Interference with Prospective Business Advantage

Topic: Interference with Prospective Business Advantage

Introduction: Interference with another’s business is a very serious accusation with big dollar damages. A small infringement on one’s business or potential business can be millions of dollars. The following case explains a typical example.

Question: Dear Mr. Cheng: I am the owner of a large factory in Riverside. One of my top employees left my company because he was going to be paid a better salary somewhere else. The problem is that the employee also took with him many of our clients and secrets of our company. We were greatly injured by his actions and are looking to sue. What can we do? Alex – Riverside

Answer: Dear Alex, employees that are leave is a very serious issue. Many times, an employee that leaves with customer information and company information can collapse the company they leave. I will delineate the requirements needed to file a lawsuit against your ex-employee. To prevail in a lawsuit regarding the above facts you need to show: 1) An existing or prospective business relationship. 2) a duty of care between your ex-employee and your company. 3) Wrongful Interference and 4) Damages to the business.

To show a duty of care you need to show a special relationship. I have recommended in my previous articles and I do so again here that you need to have a contract that delineates your relationship. In addition, your contract should state that your relationship will encompass trade secrets. Having this contract creates the special relationship and the duty of care needed to actions like what happened with your employee. If you have the contract that delineates the relationship showing wrongful interference is much easier. One exception to wrongful interference; mere competition is not interference. As such, not only do you need to show a special relationship but you need to show that the interference was not just business competition.

If you are able to show all the points stated above you will damages which include lost profits. In addition, before the case is over you can also get injunctive relief. Injunctive relief allows the judge early in the case to prevent the person from disclosing your secrets to his new employer.

Alex, I wish you the best, good luck!

Categories: Business Law