Trade Secrets, Non-Competes and E-Mail Do Not Go Well Together (Unless You Like Punitive Damages) - Part 4

2.26.10    By Joe Kelly    Tags , ,

Tammy Keymon learned that e-mailing her former employer’s client information to herself violated Tennessee’s trade secret statute. Even though most of the information could have been gathered from public sources, the aggregation and speed of acquisition from her former employer (which the Court found took reasonable steps to protect the information by password-protecting its computer network), constituted a misappropriation of trade secrets.

Having found liability, the Court determined what damages were appropriate. Tennessee’s version of the Uniform Trade Secret Act provides for an award of exemplary damages in cases of “willful and malicious misappropriation.” T.C.A. ยง 47-25-1704(b) (2001). However, the Trade Secrets Act does not have a statutory definition of “willful and malicious.” The Court set about providing one. Keymon argued the definition of “willful and malicious” should be the one traditionally used for punitive damages, which requires a showing of “hatred, ill will or spite.” Keymon argued that while she may have intended to take the information, she was not motivated by “hatred, ill will or spite” and therefore no exemplary damages should be awarded.

Citing cases from other jurisdictions interpreting the Uniform Trade Secrets Act, the Court held that the standard for “exemplary damages” under the Tennessee Act was different from the standard for traditional punitive damages. No showing of “hatred, ill will or spite” was necessary to prove malicious intent in a trade secret misappropriation case. The Court agreed with the trial court that the proof showed malicious intent where Keymon drew unemployment compensation and accepted a severance while “surreptitiously utilizing Hamilton-Ryker’s trade secret information to purloin Verizon’s telephone directory business, even utilizing Hamilton-Ryker employees to do so.” So, exemplary damages were awarded. Next post: how much this cost Keymon.


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  1. Trade Secrets, Non-Competes and E-Mail Do Not Go Well Together (Unless You Like Punitive Damages) - Part 6
  2. Trade Secrets, Non-Competes and E-Mail Do Not Go Well Together (Unless You Like Punitive Damages) - Part 5
  3. Trade Secrets, Non-Competes and E-Mail Do Not Go Well Together (Unless You Like Punitive Damages) - Part 3

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