On January 28, 2026, the Court of Chancery for Delaware issued an opinion detailing an extensive trade secret misappropriation by an employee and former owner and awarding $50 Million in damages.  The details provide a cautionary tale of why protocols should be imposed and verified to protect confidential information.

After Michael Henry elected to sell the business he founded, Enviro Tech Chemical Services, Inc., to Arxada Holdings NA Inc. for $450 Million, he became disgruntled with the new owners.  Such an outcome was not unforeseeable, so Arxada ensured provisions in the sales directed to protecting Enviro Tech’s goodwill, which included Henry committing to work for Arxada as an employee after closing and three restrictive covenants, each for five years: 1) a non-compete, 2) an employee non-solicitation, and 3) and customer and supplier non-solicitiation.  As an employee, Henry disagreed with the new owner’s imposition of a new corporate structure and increased prices.

Henry then began working against his employer.  This began with coaching customers on how to obtain better pricing and working with a corporate partner to evade its contractual obligations.

Henry was terminated and then undertook an extensive plan to steal confidential corporate information.  This included a delay of his date of separation, instructing the IT personnel to set up an email forwarding instruction which forwarded corporate emails to a non-corporate account then deleted them from the corporate email system, and downloading some 1,700 electronic documents and 1,051 Company formula sheets.  His family members, who had also been employees, likewise downloaded 23,000 documents and 220 Company formula sheets. When Arxada offered severance packages with confidentiality agreements, the family members refused to sign.  With this information and family funds, they set up a competing company.

As can be appreciated, the competing company damaged Arxada.

Trial took less than four days.  The Court, in a 100-page opinion, awarded $900K in lost profits, over $24.2M in disgorgement based on avoided costs, a further $25M in exemplary damages, and attorneys’ fees.  It is unclear from the opinion with Arxada can collect the entirety of the damages and attorneys’ fees expended or fully recover from the injury.

As a cautionary tale, the story highlights why every business should take precautions to protect its confidential information.  Terminated employees should be monitored through the date of departure.  Confidential information should be subject to protections to limit access to appropriate personnel, which access should be revoked when no longer appropriate.  Computer systems should monitor and flag access to confidential information and any mass downloads. Finally, separation agreements should be demanded at the time of notification of termination, and, if refused, should prompt increased scrutiny of any actions.

For an annual list of some of the actions which may be taken to protect a business’s trade secrets, see the checklist at here

The full opinion can be found at https://courts.delaware.gov/Opinions/Download.aspx?id=390650