Israeli Court Rejects Company's Lawsuit Against Former Employee

The Regional Labor Court in Tel Aviv has dismissed a lawsuit filed by Agentech against a former employee, Yael Friedman Gayer, who established a competing business after her resignation. Agentech, an importer and distributor of analytical chemistry, biotechnology, and life science equipment, had accused Friedman Gayer of stealing trade secrets and breaching her duty of trust and good faith. Friedman Gayer worked for Agentech as a sales and support representative for scientific and analytical instrumentation from May 2016 until her resignation in June 2020. During her employment, she was the primary technical contact for FOSS, a Danish manufacturer whose equipment Agentech distributed in Israel.

Agentech claimed that Friedman Gayer acted to sever ties with FOSS while still employed, presenting a negative image of Agentech to the manufacturer and offering her services at lower rates. The company sought approximately 2 million shekels in damages, alleging that Friedman Gayer copied sensitive information and trade secrets, including developing a business plan for her future company on a company computer while on unpaid leave and later deleting files and installing software to cover her tracks. Friedman Gayer resigned after Agentech requested employees return from unpaid leave to a four-day work week, using accumulated vacation days for the fifth day.

Friedman Gayer subsequently founded Soltech Analytics, specializing in laboratory equipment for food plants. Two months after her resignation, FOSS terminated its contract with Agentech and later approached Soltech for a business partnership, eventually making Soltech its exclusive representative in Israel. Friedman Gayer and Soltech denied the allegations, stating that FOSS decided to end its relationship with Agentech due to poor service, customer complaints, and a lack of investment. They asserted that FOSS approached Soltech after Friedman Gayer's departure and that she did not use any of Agentech's trade secrets.

Judge Tomer Silora ruled that Agentech failed to prove the existence of trade secrets, emphasizing that merely claiming information is secret is insufficient. The court found that Agentech did not specify any particular document, software, or process that constituted a trade secret. The court also noted that Agentech's claim was essentially about losing FOSS as a supplier, rather than trade secret theft. Professional knowledge gained during employment, including contacts, was deemed not to be a trade secret.

The court further dismissed claims that Friedman Gayer acted to damage Agentech's relationship with FOSS, citing evidence that FOSS was already dissatisfied with Agentech's performance. The court also found that while copying files might be improper, Agentech did not prove the copied files were trade secrets or were used against the company. The claim of breaching trust and good faith was also rejected, with the court distinguishing this case from those involving senior employees systematically copying business information. The court ordered Agentech to pay Friedman Gayer and Soltech 50,000 shekels in legal expenses.