## Facts

- Aetna Building Maintenance Company employed James A. West for about three years as a salesman and supervisor in the janitorial and building-maintenance business.
- West signed an employment agreement requiring him to keep Aetna’s business information confidential during employment and for two years after termination, return company records, and refrain for two years from “solicit[ing], serv[ing] and/or cater[ing] to” customers he had served while employed.
- The agreement provided for $1,000 in liquidated damages (and possible exemplary damages) for breach and contemplated injunctive relief.
- West resigned and started a competing building-maintenance business.
- Evidence showed West told three of roughly 50–75 establishments he had worked with that he was going into business for himself; one was told before he left, and two were told after they learned he had left.
- West visited one firm three times without invitation, but the testimony was that he did not solicit business.
- West submitted estimates to two firms only after being invited; the estimates resembled those firms’ existing Aetna contracts.
- Aetna did not show it used any secret pricing or estimating system beyond common industry factors; customer contracts were generally short-term and easily canceled.
- Aetna sued for unfair competition (misappropriation of alleged trade secrets and customer solicitation) and for breach of the written contract; the trial court awarded damages, enforced the liquidated-damages provision, and permanently enjoined West from soliciting Aetna’s customers.

## Issues

1. Whether the customer-related and pricing/cost information West learned during employment constituted protectable trade secrets or confidential information.
2. Whether West committed unfair competition by informing certain customers of his new business and responding to requests for estimates.
3. Whether a two-year covenant barring a former employee from soliciting, serving, or catering to customers he previously served is enforceable or an unlawful restraint of trade.
4. Whether Aetna could recover the contract’s $1,000 liquidated damages on the record presented.

## Decision

- The California Supreme Court reversed the judgment for Aetna.
- The court held the information identified by Aetna was not shown to be a protectable trade secret under the circumstances.
- The court held the evidence did not establish actionable unfair competition or improper solicitation.
- The court held the non-solicitation/non-service covenant was an invalid restraint of trade to the extent it barred ordinary competition for former customers without a legitimate trade-secret justification.
- Because the asserted bases for breach failed, the liquidated-damages award could not stand, and the injunction was improper.

## Legal Principles

- An employer may protect bona fide trade secrets or genuinely confidential business information, but may not prevent a former employee from using general knowledge, skill, experience, and customer familiarity gained in ordinary employment.
- Customer identities, service needs, and pricing/cost information are not trade secrets absent proof of secrecy and competitive advantage not readily obtainable by others in the market.
- A broad post-employment restriction barring a former employee from soliciting or doing business with customers he previously served is unenforceable as a restraint of trade unless supported by a recognized exception or a narrowly tailored trade-secret rationale.
- Mere notice to customers of a change in employment, and providing bids or estimates upon customer request, does not by itself constitute unfair competition.
- A liquidated-damages provision is not recoverable where the claimed breach depends on an unenforceable restraint or unproven misappropriation of protected information.

## Conclusion

The court rejected an attempt to use trade-secret and contract theories to block a former employee’s ordinary competition, reversing an injunction and damages where the employer failed to show protectable secrets or improper solicitation and where the covenant effectively restrained lawful post-employment work.


Aetna Bldg. Maint. Co. v. West, 39 Cal. 2d 198, 246 P.2d 11 (Cal. 1952)