Varonis Systems v. Guanciale — DTSA Claim Survives but Global Non-Compete and Non-Solicits Held Unenforceable in Cyera Hiring Dispute

Background

Varonis Systems, Inc. sued two former sales engineers, Matthew Guanciale and David Schmid, and their new employer, competitor Cyera US Inc. Varonis alleged that the engineers breached their employment agreements by leaving to work at Cyera, that they misappropriated Varonis’ trade secrets in violation of the federal Defend Trade Secrets Act (DTSA) and the Delaware Uniform Trade Secrets Act (DUTSA), and that Cyera tortiously interfered with their agreements. In February 2026 the court dismissed the amended complaint because Varonis had not identified its alleged trade secrets with enough specificity, dismissed the state-law claims without deciding them because the only federal claim was gone, and granted leave to amend “strictly” to cure those deficiencies. Varonis filed a Second Amended Complaint (SAC) on March 3, 2026, describing its trade secrets in more detail, alleging four specific lost enterprise sales opportunities, and adding a new count of tortious interference involving unnamed employees. Defendants moved to dismiss.

The Court’s Holding

Judge Gregory B. Williams granted the motions in part and denied them in part.

New count struck. The court struck the new count (Count VII) alleging that Cyera interfered with agreements with unnamed employees, because it exceeded the scope of leave to amend and did nothing to remedy the earlier deficiencies. But it allowed the allegations of specific lost sales opportunities, which respond directly to the earlier criticism that the alleged harm was speculative.

DTSA claim survives. The SAC now identifies six categories of trade secrets with enough particularity to let defendants ascertain the boundaries of the secrets: internal product roadmap repositories, non-public information about internal product limitations, a structured sales methodology, internal competitive intelligence such as “battle cards” and “win documents,” confidential prospective customer information, and pricing strategies and related business information, with named repositories such as SharePoint, Highspot and Varonis University. Varonis alleged reasonable secrecy measures, including confidentiality agreements, access restrictions and exit reminders, and facts showing independent economic value, such as the risk that competitors could undercut its pricing. Defendants’ arguments that the information could be reverse engineered, was on Varonis’ website, or was just general sales know-how failed at the pleading stage: the possibility of reverse engineering is not a defense to misappropriation, the website is outside the complaint, and specific sales techniques and known product weaknesses can be trade secrets even though an employee’s general problem-solving skill is not. On misappropriation, the court held that circumstantial allegations suffice if there are “plus factors” beyond mere access plus employment by a competitor. Here, both engineers allegedly concealed information about their new jobs (one ignored requests for a termination certification and for confirmation of compliance, while the other allegedly said he was not joining Cyera), and Varonis alleged four lost enterprise opportunities involving accounts they had managed. The court did not reach the unsettled inevitable disclosure doctrine.

DUTSA claim dismissed without prejudice. Delaware’s act has no extraterritorial effect, and the SAC alleged no misappropriation in Delaware. Varonis may amend strictly to plead a claim under a state law that reaches the conduct or facts to which the Delaware act would apply, but may not add claims about other employees.

Restrictive covenants unenforceable. Applying Delaware law under the agreements’ choice-of-law clause, the court held the 12-month non-compete facially overbroad because it applied to “activities in every part of the world” and to any business “competitive with or otherwise similar to” Varonis’ without defining those terms, and the SAC alleged nothing linking the engineers’ actual work to a global reach. The Delaware Supreme Court’s Payscale decision, which held that a claim on an 18-month nationwide non-compete had been improperly dismissed, was distinguished on the specific allegations and definitions in that case. The customer non-solicit covered anyone who had merely inquired about Varonis’ services in the prior two years, regardless of whether the engineers knew of them or whether the contact was competitive, and the employee and contractor non-solicit would even reach asking an internet provider to serve one’s home if the provider also contracts with Varonis. The non-interference provision was broader still. The court declined to blue-pencil, noting that Delaware courts seldom do so because it encourages employers to overreach, and the agreements’ severability clauses invited exactly that.

Contract claims partly survive. Because defendants did not challenge the non-disclosure provisions, the breach of contract claims against the engineers may proceed on those provisions only.

Tortious interference against Cyera dismissed. Because the non-compete and non-solicit provisions are unenforceable, there was no contract to interfere with as to those provisions. As to the non-disclosure agreements, Varonis did not allege that Cyera’s hiring was itself an intentional act that caused a breach, or that Cyera told the engineers to disclose confidential information, and employing experienced salespeople is not without justification.

Key Takeaways

• After an initial dismissal for vagueness, a plaintiff can cure a trade secret identification problem by listing specific categories, repositories and document types.
• A trade secret misappropriation claim based on circumstantial evidence needs “plus factors” such as concealing a new job or evasive responses to a former employer’s inquiries, not just access and competitive employment.
• Delaware’s trade secrets act does not apply to misappropriation that happened elsewhere.
• Worldwide non-competes and broad non-solicits that are not tied to the employee’s actual role are at high risk of being held unenforceable and unlikely to be rewritten by the court.
• Non-disclosure obligations can remain enforceable even when other restrictive covenants fall.

Why It Matters

Employers who rely on broad restrictive covenants and on trade secret claims against departing employees and their new employers should note the split result. The trade secret claim and the narrower confidentiality obligations survived, but the sweeping covenants did not, and the hiring company escaped tortious interference claims at this stage. For employees and competitors, the decision shows that moving to a rival does not by itself establish misappropriation, but that evasive conduct after leaving can supply the additional facts needed to proceed.

The ruling is a pleading-stage decision. It does not decide whether any trade secret was actually taken or used.