What is a "trade secret"?
- A trade secret is defined in the Commercial Torts Law, 5759-1999, as follows:
"'Trade secret,' 'secret' – business information of any kind, which is not in the public domain and which cannot be easily disclosed by others, the confidentiality of which gives its owner a business advantage over its competitors, provided that the owner takes reasonable measures to maintain its confidentiality."
- The employer has the burden of persuading that we are dealing with a trade secret and that the employee's activity constitutes theft of a trade secret. Afterwards, the limitations to liability as stated in section 7 of the law must be examined, including the alternative set out in section 7(b)(2) of the Commercial Torts Law: "The knowledge inherent in the trade secret came to him during his employment with the owner of the trade secret, and this knowledge became part of his general professional skills."
FBC did not prove the existence of a "trade secret"
- In his affidavit, Mr. Frenkel[29] claimed that the employees were exposed to internal and confidential information of indescribable value to the company, in particular to the prices of working hours, module prices, folders of professional specifications, notes from software developers, difficulties or business problems as a result of software developments, designs, new software code developments, the customer document system, the company's information system, prices, invoices, payment terms, other potential customers, Contact information and more.
- In the aforementioned judgment in the Check Point case, it was held that a "trade secret" is not a "magic word", and an employer claiming the existence of a "trade secret" must prove its existence:
"In other words, he must describe and elaborate on what the secret is. A general description or a general claim about the existence of a "secret" should not suffice, but rather point to a certain software, formula, formula, a certain customer list, a certain process, etc. As part of proving the "trade secret", the previous employer must also prove the scope of the trade secret and the time it must remain a "secret". Moreover, the previous employer must prove that it is a "secret" and that it has taken reasonable measures to ensure the protection of the trade secret, such as: exposing it to employees who need it for their work and not exposing it to other employees or keeping the material in a protected place."
- Although FBC claimed the existence of confidential information, it did nothing to describe it and in any case did not act to prove it. It is not enough to let vague and complicated expressions from the world of technology into the air in order to create the impression of confidential information, and a company that accuses its employees of serious acts of stealing protected trade secrets is not enough to meet the burden of proof, at least according to the balance of probabilities, in order to substantiate the alleged suspicion. FBC did not seek to substantiate its claims with any references, even before the court alone, as the law permits it. Frenkel agreed that the plaintiff did not present documents in support of the claim of trade secrets[30] and that the company therefore left its claims in this regard orphaned.
- The company also did not prove that it took reasonable measures to maintain the alleged "confidential information." The employees testified that all the information in the company's systems is exposed to all employees, including freelancers, and that they were not required to have special permissions to access this information[31], and their testimony in this regard was not concealed.
- Moreover, in his testimony, Mr. Frenkel hinted that the main object of the lawsuit is not specific information that an occasional employee can "collect from the ready" and pass it on to another, but rather the concern is that in his opinion, an employee who worked for a period of time, "learned the needs of the customers, the correct characterization and the right processes and moved to a competing company."[32] From this it emerges that the company claims the existence of a trade secret that becomes the employee's professional skills over time, and therefore it appears that in any case the employees have the protection set forth in section 7(a)1 of the Commercial Torts Law , which states that a person will not be liable for the theft of a trade secret if the knowledge contained in the secret came to him during his employment with the owner of the trade secret and this knowledge became part of his professional skills.
- However, Mr. Frenkel added in his testimony that the company had invented a "budget control system in the field of spaces" that no other company has, and that he feared that the employees would transfer it to Medatech[33]. However, he testified that he had no evidence that it had actually been transferred and that it was only his assumption[34]. In any case, this is a mere claim that was not made in the main statement of claim, and in any case no attempt was made to prove it.
- As for the claim that the company's list of customers constitutes a trade secret, it was determined in the matter of Data Pool [35]that in order for a list of customers to constitute a trade secret, the information in the list must constitute a commercial advantage for its owner, not accessible to the public, and that its creation involves an investment of effort, time and money.
- Alma's claim regarding the existence of a "customer list" is not a "miracle solution" that immediately entitles to trade secret protection, and FBC had to prove that an effort was required to obtain it, and that there was a garage value in receiving it "from the ready".[36] Indeed, as was determined in the Har Zahav case [37] , in many cases, the importance of a customer list does not stem from the identity of the customer, but rather from the terms of the contract with him, the products he purchases and the treatment he receives. However, not only did the plaintiff not prove the existence of a secret list of customers, but she did not point out, even at the outset, signs that could distinguish such a list and give it a special status.
- FBC did not describe or specify what are the confidential elements of the terms of the contract with its customers, what is the secret inherent in this data, what is special about it, how it kept this information a "secret" and what measures it took to prevent the information from being leaked. Moreover, in any event, it has not been proven that the employees transferred the list of the company's customers to MedaTech or that Mediatech served FBC customers – for example, Ms. Karko testified that as part of her work at MedaTech, she did not provide services to companies that belonged to the plaintiff at all[38].
- Hence, we did not find that FBC had lifted the burden of proving the existence of a defensible "trade secret."
The company provided employees with some training for the job
- It seems that the company has given some of the employees, or at least provided them with the opportunity to undergo training to perform their work. According to the testimony of the employees, it seems that this has magnified the scope of the training, because it is short-term and limited training that is given to every new employee who is hired. Some of the employees even trained themselves, whether as part of their studies or independently in parallel with their work at the company[39].
- The company did not prove the scope, quality, and cost of training the employees, and we were not impressed that it invested special and expensive resources in accordance with the requirement of the ruling.
Special Value
- The plaintiff did not show that the employees were paid special compensation for their undertaking not to compete with it after the termination of the employment relationship between the parties, on the contrary. Most of the workers began their work at low wages, and in any case they were not paid any separate compensation for their undertaking not to compete with it.
- Hence, in the absence of proof of the existence of a trade secret, and for all the reasons detailed above, we found that there is no reason to give effect to the non-competition clause in the employment agreement between the parties. In any event, we were persuaded that the employees did not steal any trade secret from the plaintiff, and therefore, her claims in this matter should be dismissed.
Good faith of the parties and breach of employment agreements
- There is no dispute that most of the employees (Ms. Ghibli, Ms. Karko, Mr. Ghanem, Mr. Kahlon and Mr. Elhanati) were hired as undergraduate students[40], started with a low hourly wage of about NIS 40[41], and were hired without extensive work experience.
- The employees were all signed similar labor agreements dictated by the Van Group[42], and it has not been proven before us that it was possible to negotiate the wording of these agreements.
- In addition, the table above shows that the employees were employed for short periods.
- Although the employees' signature on employment agreements is binding, and as a rule, contractual agreements of mature and competent parties who express these agreements in their signatures should be given validity, in no case do we appear to be acting in bad faith in requests to be released from contractual obligations. However, in the circumstances of the case, we got the impression that these were young workers, at the beginning of their professional careers, who wished to integrate most of them directly from educational institutions into a professional career, without previous experience. Tiing such workers to agreements that impose restrictions on the development of their professional careers at the beginning of their careers, without special compensation, greatly reduces their professional horizons, contradicts public policy, and harms competition in the economy. Therefore, in the circumstances of the case, the employees' release from the condition of engaging in employment agreements will not be considered as bad faith and a breach of the duty of loyalty.
- In these circumstances and all the reasons detailed, we found that the employees' undertaking to non-competition should not be given binding validity, and as a result, their contractual obligation, including the undertaking of the employees who signed agreed compensation, is contrary to public policy and is not valid.
The Counterclaim