## Facts

- Raven Industries developed a string-reinforced plastic film production line over approximately thirteen years.
- Clark Lee worked as an engineer on the production line and signed written nondisclosure obligations at hiring and again in a February 2006 separation/severance agreement.
- After leaving Raven, Lee joined Integra Plastics, a competitor.
- Within months, Integra established a competing string-reinforced film line, including specialized equipment described as identical to Raven’s and not commonly used in the industry.
- Raven alleged Lee used and disclosed Raven’s confidential/proprietary information to help Integra replicate Raven’s process and gain a competitive advantage.
- Raven sued Lee and Integra for injunctive relief and tort claims including tortious interference with contract and unfair competition.
- After a nine-day bench trial, the circuit court found Raven had protectable confidential information/trade secrets, Lee breached his nondisclosure duties, Integra committed unfair competition and tortious interference, and entered an injunction (time-limited to two years) barring use of Raven-derived information in Integra’s operations.

## Issues

1. Whether the South Dakota Uniform Trade Secrets Act (UTSA) preempted Raven’s common-law tort claims based on the same conduct.
2. Whether Lee’s nondisclosure agreements were enforceable despite arguments that Raven did not specify confidential information and allowed some third-party access.
3. Whether Raven’s production methods and related information qualified as trade secrets or protected confidential/proprietary information, and whether Raven used reasonable secrecy measures.
4. Whether Lee and Integra’s conduct supported liability for unfair competition and tortious interference with contractual relations.
5. Whether the two-year injunction was justified and properly limited in scope and duration.

## Decision

- The Supreme Court of South Dakota affirmed the judgment for Raven.
- The UTSA did not preempt Raven’s tortious interference and unfair competition claims under the circumstances presented.
- The nondisclosure agreements were valid and enforceable, and Lee breached them by using Raven-derived information at Integra.
- Raven proved the existence of protected trade secret and/or confidential information and reasonable efforts to keep it secret.
- The findings of unfair competition and tortious interference against Integra (and related liability tied to Lee’s breach) were supported by the record.
- The two-year injunction was not an abuse of discretion and was sufficiently tailored to prevent continued harm.

## Legal Principles

- Nondisclosure agreements are enforceable when an employee stands in a confidential relationship and the employer shows reasonable efforts to maintain secrecy of proprietary information.
- Trade secret/confidential status may be shown by uniqueness, competitive value derived from secrecy, lack of general industry knowledge, and reasonable protective measures; limited disclosures for business purposes do not automatically destroy protection.
- UTSA preemption does not necessarily bar common-law tort claims where the claims address interests or elements not wholly coextensive with statutory trade-secret misappropriation.
- Using confidential information obtained through a breach of duty to obtain a competitive advantage can support unfair competition and tortious interference liability, including where a competitor knowingly benefits from the breach.
- Injunctive relief is appropriate when continued use of confidential information threatens ongoing competitive harm and damages are difficult to quantify; the injunction must be reasonably limited in time and scope.

## Conclusion

The court affirmed liability and a two-year injunction where a former engineer and his new employer used Raven’s protected manufacturing information to rapidly replicate a unique production line, holding that the nondisclosure obligations were enforceable and that UTSA did not preclude related tort remedies on these facts.


Raven Indus., Inc. v. Lee, 783 N.W.2d 844 (S.D. 2010)