Ex-Philips VP faces trade secrets suit following GE move
A former vice president of Philips North America must face allegations that he purloined confidential information in order to gain customers after he began to work for GE Healthcare, according to a Maryland federal court.
Philips North America, which manufactures and sells medical equipment, filed a suit against its former employee, Steven Hayes, who worked for the Boston-based company as a sales director from July 24, 2017 until January 6, 2020 at the US District Court for the District of Maryland.
On Wednesday 9 September, the court ruled against Hayes’ motion to dismiss the suit. According to Philips’ allegations, Hayes used the company’s confidential information to bring his former employer’s customers to GE Healthcare, a direct competitor, in violation of his employment agreement with Philips as well as federal and state law.
Philips stated that “Hayes served as a leader in the company’s sales organisation,” overseeing its efforts to market equipment to hospitals, medical centres and other customers, and he was considered a “high-level employee.”
Philips claimed that forensic search of Hayes’s Philips-issued computer revealed that he printed about 40 documents from the company’s computer system containing alleged trade secrets.
These documents were allegedly printed over a series of days leading up to his departure from Philips, including on December 10, December 11, December 16, and December 30 of 2019. Philips also alleged that Hayes “accessed about 25 confidential documents from its document system” in succession over several days during the same time period.
The documents that Hayes printed or accessed during this period allegedly contained business plans for 2019 and 2020. These included lists of pending orders and sales funnels for the US; information regarding manufacturing status of completed sales; presentations on market initiatives; marketing and strategic plans; and information regarding specific customers, orders, pricing, and sales initiatives.
Philips argued that “there was no legitimate business reason” for Hayes to have printed or accessed all of these documents during the period preceding his departure.
In response, Hayes insisted that the records at issue were not trade secrets because the records did “not derive independent economic value from their confidentiality”.
He also claimed that Philips failed to make reasonable efforts to protect the secrecy of the information.
The court, however, disagreed and stated that “given the flexibility of the cause of action, accepting all allegations in the complaint astrue, and drawing all reasonable inferences,” that Philips had stated “a plausible claim of unfair competition” against Hayes.
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