Raven Industries, Inc. v. Lee

While employed at Raven Industries, Inc. (Raven) (plaintiff), engineer Clark Lee (defendant) developed a production line for manufacturing string-reinforced plastic film. The line, which was unique to Raven, took 13 years to perfect. Raven fired Lee in 2006. Both when hired and when fired, Lee executed agreements containing nondisclosure provisions. Specifically, Lee’s severance agreement stated that Lee agreed not to use or disclose to any third party confidential or proprietary information Lee obtained during his employment at Raven. After leaving Raven, Lee began working for Integra Plastics, Inc. (Integra) (defendant). Lee helped Integra establish a production line for string-reinforced plastic film within months, having special equipment built that was identical to Raven’s and not used by other manufacturers in the industry. As a result, Integra quickly developed a product directly competing with Raven’s product. Raven sued Lee and Integra, alleging that they unfairly competed against Raven by using confidential or proprietary information that Lee was contractually obligated not to disclose. Lee and Integra argued that the nondisclosure agreements were unenforceable because (1) Raven never directly informed Lee of what information it considered confidential and proprietary, (2) Raven had disclosed the relevant information to consultants and contractors by allowing them to view the line without executing nondisclosure agreements, and (3) the allegedly confidential or proprietary information was legitimately discovered and openly used by others, negating protection. The trial court held in Raven’s favor, finding that the nondisclosure provisions were enforceable and issuing a permanent injunction prohibiting Lee and Integra from using information Lee learned at Raven. Lee and Integra appealed.