After termination of the employment, a sales director breached the non-competition clause he had signed by brokering a deal between a company's supplier and one of its main clients and received a commission for the said transaction, and the company claimed that the use of its client list constitutes embezzlement of a trade secret.
The Court held that the brokering of the transaction between the supplier and the customer constitutes a breach of the director's contractual non-competition agreement, however there has not been embezzlement of trade secrets due to the usage of the client list. Employment relationships are special contractual relationships, which impose increased obligations on the parties towards each other. Therefore, there is a duty of good faith imposed on the employee towards the employer, especially in cases of commercial secrets and business relationships, which obligates the employee to a duty of significant caution and requires him not to take advantage of knowledge and connections acquired during his employment, post employment. However, in order for a client list to be considered a trade secret, the company must show that it had made significant efforts to keep the list secret. Here, while the manager usurped the knowledge acquired in the company in order to close a deal directly between a supplier and the company's client, which is contrary to the non-competition obligation signed as part of the employment contract, the mere use of the list does not constitute embezzlement of a trade secret because the company made no efforts to preserve the list of clients a secret and hence the employee is only liable for compensation for the non-competition breach.