DeGiorgio et al. v. Megabyte International, Inc.
468 S.E.2d 367 (1996)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The Georgia Trade Secrets Act protects only tangible, misappropriated customer and vendor lists. It does not extend to an employee's personal knowledge or memory of customer and supplier information, which can only be restricted through a separate restrictive covenant.
Facts:
- DeGiorgio worked as a salesman for Megabyte International, Inc. (Megabyte), a computer hardware distributor, for several months.
- DeGiorgio left Megabyte and began working for a newly formed competitor, American Megabyte Distributors, Inc. (AMDI).
- After DeGiorgio's departure, Megabyte searched his former desk and discovered that customer lists which had been given to him were missing.
- During the search, Megabyte also found a single-page fax, prepared by DeGiorgio, which listed Megabyte's top vendors and was addressed to AMDI's president.
- DeGiorgio admitted to preparing the vendor list fax but denied ever sending it.
- After DeGiorgio left, Megabyte received numerous complaints about his activities from its top customers.
Procedural Posture:
- Megabyte International, Inc. sued its former employee, DeGiorgio, and his new employer, American Megabyte Distributors, Inc. (AMDI), in a trial court for misappropriation of trade secrets.
- The trial court granted Megabyte's motion for an interlocutory injunction, restricting DeGiorgio and AMDI from contacting certain customers and vendors.
- DeGiorgio and AMDI, as appellants, appealed the trial court's order granting the injunction to the Supreme Court of Georgia.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an interlocutory injunction that prohibits a former employee from soliciting any customer or vendor they knew from their previous employment exceed the scope of the Georgia Trade Secrets Act by improperly enjoining the use of personal knowledge rather than just tangible, misappropriated trade secrets?
Opinions:
Majority - Carley, Justice
Yes, such an injunction is overly broad and exceeds the scope of the Act. The Georgia Trade Secrets Act's protection is limited to tangible forms of information, not an individual's personal knowledge. The court found there was sufficient evidence that DeGiorgio had misappropriated tangible lists (the missing customer lists and the created vendor fax list), which could qualify as trade secrets because they were not readily ascertainable and Megabyte had made reasonable efforts to maintain their secrecy. However, the trial court's injunction went too far by prohibiting all contact with customers DeGiorgio 'knew or had reason to know' were Megabyte's customers. Citing Avnet, Inc. v. Wyle Laboratories, the court clarified that the Act protects only 'tangible lists,' not an employee's memory. Preventing an employee from using their personal knowledge of customers or suppliers can only be accomplished through a restrictive covenant (like a non-compete or non-solicitation agreement), which was not at issue. Therefore, the portion of the injunction that barred the use of personal knowledge was reversed as overly broad, and the case was remanded for the trial court to issue a narrower order.
Analysis:
This decision establishes a critical distinction in trade secret law between tangible, proprietary information and an employee's intangible personal knowledge. It reinforces that the Georgia Trade Secrets Act cannot be used as a de facto non-compete agreement. The ruling forces employers to be proactive by using specific contractual tools, such as restrictive covenants, if they wish to prevent former employees from soliciting customers based on relationships and knowledge developed during employment. For future cases, this clarifies that a claim of trade secret misappropriation regarding customer information must be tied to a physical or digital list that was actually taken or used, not just the employee's memory.
Unlock the full brief for DeGiorgio et al. v. Megabyte International, Inc.