Taser International, Inc. v. Ward

Arizona Court of Appeals, Division One · 2010 · Corporations

231 P.3d 921 (2010)

Updated August 22, 2026

Corporationsfiduciary dutyduty of loyaltycorporate opportunityemployee competitionprepare to competeactive competitionconfidential information

Facts

Ward was Taser's vice-president of marketing and an at-will employee who had signed no employment contract, non-compete, or non-disclosure agreement. While still employed, he explored developing first an eyeglass-mounted camera and later a clip-on camera, consulted attorneys, sought patent searches, contacted a product development company, and worked on a business plan, but did not solicit Taser employees or customers, form a business, enter supplier agreements, or sell products before resigning. After resigning, Ward formed Vievu, which marketed a clip-on camera device. Taser sued, alleging among other things that Ward breached duties of loyalty and fiduciary duty by competing, using Taser resources and confidential information, usurping a corporate opportunity, and failing to disclose his plans.

Issue

Whether Ward breached his duty of loyalty or fiduciary duty as a matter of law by preparing a competing camera business while still employed by Taser. More specifically, whether summary judgment for Taser was proper on theories of pre-termination competition, use of Taser resources or confidential information, usurpation of corporate opportunity, and failure to disclose plans or activities.

Rule

An employee owes the employer a fiduciary duty of loyalty and may not actively compete with the employer during employment, but absent an enforceable non-compete agreement may make reasonable, not otherwise wrongful, preparations to compete after termination. The line between preparation and competition depends on the nature of the acts and the surrounding circumstances; substantial design and development efforts in a business engaged in research and product development can constitute competition, but business planning, legal consultation, patent research, and preliminary investigation generally do not. An agent also may not use the principal's property or confidential information for personal purposes, but may use general skills and knowledge. The corporate opportunity doctrine does not reach all possible business ideas discussed or learned during employment, and an employee generally has no duty to disclose mere plans to compete, though competitive or improper activities may have to be disclosed.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Patel is an at-will marketing director for a drone-accessory company in Denver. While still employed, she drafts a business plan for a future startup, meets with patent counsel about whether a helmet-mounted camera would infringe existing patents, and researches potential market segments, but she does not form a company, contact customers, or begin building a product until after she resigns.

Has Nina most likely breached her duty of loyalty to her employer?

Explanation. An employee owes a fiduciary duty of loyalty, but absent an enforceable non-compete may make reasonable, not otherwise wrongful, preparations to compete after termination. The majority treated business-plan drafting, legal consultation, and patent research as preparatory rather than direct competition. At-will status does not eliminate the duty of loyalty; it affects post-employment freedom to compete.