## Facts

- Taser International, Inc. manufactured electronic control devices and related accessories, including a personal audio/video recording device.
- Steve Ward worked for Taser from January 2004 to July 24, 2007 as vice president of marketing and vice president of international sales.
- Ward was an at-will employee and signed no employment contract, noncompete agreement, or nondisclosure agreement.
- Through his executive role, Ward had access to confidential business information and participated in internal discussions about product concepts and strategy.
- In December 2006, while still employed, Ward began exploring development of a personal camera concept, sought legal advice, and hired patent counsel to perform a patent search.
- After learning an eyeglass-mounted camera was patented, Ward pursued a clip-on camera concept and, before resigning, directed additional patent searching, contacted a product-development firm, and received a product-development proposal (June 12, 2007).
- Before leaving, Ward prepared substantial business-planning work for a post-employment camera business, but did not disclose the plan to Taser.
- About ten months after Ward resigned, Taser announced an audio/video-recording system (AXON) that Ward had helped develop while employed.
- Taser sued Ward alleging, among other claims, breach of the duty of loyalty and breach of fiduciary duty; Ward denied wrongdoing and characterized his actions as lawful preparation to compete.

## Issues

1. Whether Ward’s pre-resignation work on a clip-on camera concept and business plan constituted impermissible competition (rather than permissible preparation) and therefore breached his duty of loyalty to Taser.
2. Whether Ward breached fiduciary duties, including by usurping a corporate opportunity, based on developing a potentially competing product while employed and having access to confidential information.
3. Whether partial summary judgment on loyalty and fiduciary-duty liability was proper given disputed facts about use of confidential information, overlap with Taser products, and diversion of opportunities.

## Decision

- The Court of Appeals reversed the trial court’s partial summary judgment holding Ward liable for breach of the duty of loyalty and breach of fiduciary duty.
- The court directed entry of summary judgment in part for Ward on legally unsupported theories that treated pre-resignation preparation or mere access to confidential information as sufficient for liability.
- The court remanded for further proceedings on matters presenting genuine disputes of material fact.

## Legal Principles

- An employee owes a duty of loyalty during employment, but an at-will employee generally may make pre-resignation preparations to compete, provided the employee does not actually compete while employed or misuse protected confidential information.
- Duties of loyalty and fiduciary duty will not be expanded to create, in effect, contractual noncompete or nondisclosure limits the employer did not obtain by agreement.
- Determining whether conduct is permissible preparation or impermissible competition is commonly fact-dependent; summary judgment is improper where material disputes exist regarding misuse of confidential information, product overlap, diversion of opportunities, or corporate-opportunity entitlement.

## Conclusion

The court held that, on the summary-judgment record, Ward’s pre-resignation planning for a camera business did not establish breach of loyalty or fiduciary duty as a matter of law, and that key questions about misuse of confidential information and related conduct required factfinding rather than liability being imposed through partial summary judgment.


Taser Int’l, Inc. v. Ward, 224 Ariz. 389, 231 P.3d 921 (Ct. App. 2010)