Trade Secret Case Law Reportc

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					                                    2011 Trade Secret Case Law Report

1st Circuit


Woodfords Family Services, Inc. v. Casey, 2:11-CV-445-DBH (D. Me. Dec. 14, 2011). Plaintiff’s motion
for preliminary injunction due to appropriation of trade secrets was denied. The court found that
defendant did not take from plaintiff any technical knowledge. The court held that the dispute was over
an idea, and, therefore, plaintiff failed to establish a likelihood of success on its claim that it had a trade

Anastos v. Town of Brunswick, 2011 ME 41, 15 A.3d 1279. Plaintiff’s appeal as to the states court’s
granting summary judgment in favor of defendant’s denial of study under the Freedom of Information
Act was denied. A document that contains a commercially advantageous collection or analysis of
information may be found to be confidential as a whole and thus protected from disclosure pursuant to
proprietary information exception to Freedom of Access Act.


Aspect Software, Inc. v. Barnett, 787 F. Supp. 2d 118 (D. Mass. 2011). The court granted plaintiffs
motion for preliminary injunction since it was reasonably likely to prevail with regard to its assertion
that defendant breached the non-compete Agreement by accepting a position as Vice President and
General Manager in a competitor, in a field in which defendant had encyclopedic knowledge of
plaintiff’s trade secrets. Whether defendant had actually employed, revealed or utilized plaintiff’s trade
secrets was irrelevant since at the very least it was reasonably likely that he would do so.

Optos, Inc. v. Topcon Med. Sys., Inc., 777 F. Supp. 2d 217 (D. Mass. 2011). Plaintiff motion for
preliminary injunction granted in part. Plaintiff sued its former sales manager and its subsequent
employer alleging breach of ex employee’s non-disclosure and non-solicitation agreements, and
defendants’ theft of trade secrets. Specifically, plaintiff alleged that ex-employee retained a confidential
list of its customers and used it to steal plaintiff’s customers.

Defendants argued that plaintiff's public website provided the name and address of its customers, and
the remaining information acquired by defendant—customer contact information beyond mere name
and address information, the length of individual customer contracts, the size of customers' monthly
fees, the number of patients seen by customers, the number of scans performed by plaintiff’s
equipment, and specific customer service issues identified by customers could be easily acquired by
contacting each customer directly and asking them for the information. The Court rejected the
argument since defendants acknowledged that it would be “practically impossible” for someone to
“familiarize themselves with the 3,500 businesses on the list,” and convince the proprietor to disclose
information about the cost, duration and substance of his or her rental relationship with plaintiff.
Moreover, even the initial step of compiling a comprehensive list of the names and addresses of
plaintiffs' customers would be difficult; since searches on plaintiffs' website are limited by zip code,
compiling a comprehensive list would require methodically entering each zip code in the country, one at
a time.

Jagex Ltd. v. Impulse Software, 273 F.R.D. 357 (D. Mass. 2011). Plaintiff’s motion for protective order
was granted in part and denied in part. Plaintiff sued defendant for misappropriation of a trade secret
source code. Dispute arose as to an order to protect the source code’s secrecy during discovery. The
court held that because both plaintiff and defendant have counsel in the District of Massachusetts,
providing access within this district is reasonable; requiring defendants' counsel to go to the United
Kingdom to view the source code, constituted an unreasonable burden, since plaintiff chose to file suit
in Massachusetts; the seven day advance notice required for the “initial inspection” was reasonable in
light of the necessity of foreign travel but was unnecessary for subsequent inspections; three days’
notice for such inspections was reasonable; defendants' request that the producing party deposit an
identical copy of the source code with the Court was appropriate.

JPS Elastomerics Corp. v. Specialized Tech. Res., Inc., 769 F. Supp. 2d 17 (D. Mass. 2011). Defendant’s
motion to dismiss for failure to state a claim was granted. Plaintiff filed stating that defendant had filed
a state claim for misappropriation of trade secrets, which it was losing badly; therefore, the state claim
constituted a sham. In the state case, the jury determined that plaintiff possessed a trade secret and
that a former executive of plaintiff breached a non-disclosure agreement when he was employed by a
competitor. The jury found that plaintiff failed to prove that the executive and competitor had
misappropriated that trade secret. However, the state judge, reserving for herself a finding on the claim
under Massachusetts law, concluded that both the executive and competitor had misappropriated
plaintiff's trade secrets. The state court's findings were emphatic, holding that the competitor had
engaged in “pernicious wrongdoing,” and that the executive had demonstrated a “willingness to lie
under oath.” The state court awarded treble damages and attorney's fees against defendants and
enjoined them from manufacturing products through the use or disclosure of plaintiff's trade secret.
These facts showed that plaintiff’s claim was triumphantly successful, both before the jury and before
the judge; therefore, the lawsuit was by definition a reasonable effort at petitioning for redress and not
a sham.

Maine Pointe, LLC v. Starr, CIV.A. 10-12270-GAO (D. Mass. Feb. 3, 2011). Plaintiff’s motion for
preliminary injunction to prohibit former contractor and competitor from soliciting clients, potential
clients and employees was denied. The plaintiff failed to provide sufficient evidence that it was
protecting a legitimate interest. The plaintiff alleged that the defendants contacted executives at two
large Canadian companies. The evidence did not sufficiently demonstrate, however, that this contact
information was a “trade secret” or “confidential information.”

Specialized Tech. Res., Inc. v. JPS Elastomerics Corp., 80 Mass. App. Ct. 841, 957 N.E.2d 1116.
Defendant’s appeal on judgment granting permanent injunction for plaintiff was denied. Manufacturer
brought action in state court against former employee and competitor, alleging claims of breach of
contract, misappropriation of trade secrets, and violation of unfair trade practices statute. After a jury
trial on common law claims at which jury found that defendants had not misappropriated
manufacturer's trade secret, and after a bench trial on the statutory claim, the state court entered
judgment in favor of manufacturer, awarding damages, injunctive relief, and attorney fees. The appeals
court held that a permanent injunction against use of a trade secret manufacturing process is not
unreasonable merely because it is permanent. In fashioning the duration of an injunction against use of
a trade secret manufacturing process, the amount of time necessary to reverse engineer the technology
without improper use of trade secrets is relevant to determining the scope of any injunctive relief. The
trial judge specifically found that plaintiff’s product was not susceptible of “reverse engineering,”;
therefore, there was no error or abuse of discretion in the imposition of a permanent injunction.

Life Image, Inc. v. Brown, 29 Mass. L. Rptr. 427 (Mass. Super. Dec. 22, 2011). Plaintiff’s motion for
preliminary injunction was granted. The proceeding arose out of plaintiff's action to enforce non-
competition and non-solicitation clauses in an employment agreement with its former Vice President of
Business Development. The former VP moved to a competitor, and plaintiff sought a permanent
injunction and a declaratory judgment. Since the VP was privy to the most sensitive discussions and
debates regarding plaintiff's strategic strengths and weaknesses and future planning, the motion was

New Hampshire

Contour Design, Inc. v. Chance Mold Steel Co., 794 F. Supp. 2d 315 (D.N.H. 2011). The court granted
plaintiff’s motion to exclude defendant’s expert’s opinion as to the reach of the Uniform Trade Secret
Act and how courts define trade secrets. Such evidence was inadmissible, since it is not for witnesses to
instruct the jury as to the applicable principles of law, but for the judge.

Adhesive Technologies, Inc. v. Isaberg Rapid AB, 2011 DNH 085 (D.N.H. May 26, 2011). Defendant’s
motion to dismiss for failure to state a claim was denied. Plaintiff’s specific allegations gave rise to a
reasonable and plausible inference that defendant obtained plaintiff’s trade secrets under
confidentiality obligation. Factual allegations describing the expertise and services plaintiff provided
defendant under the contract, plausibly suggested that plaintiff used or developed its own trade secrets
in performing its contractual design obligations. The written Agreement incorporated into the
complaint, contemplated that plaintiff would integrate current or innovative components to fit the
defendant’s suggested design. For pleading purposes plaintiff plausibly alleged the existence of trade
secrets and, thereby, gave defendant adequate notice of the claim against it.

Paper Thermometer Co., Inc. v. Murray, 10-CV-419-SM (D.N.H. Oct. 20, 2011). Defendant’s motion to
compel discovery was granted in part and denied in part. Plaintiffs claimed that defendants
misappropriated a trade secret formula. Dispute arose as to the contours under which the formula
should be shared for discovery purposes. The court held for defendants and granted a protective order
limiting custody of the confidential documents to defendants' counsel and requiring any review by the
defendants and their experts to be conducted in counsels' presence and under their supervision.
Violations of the protective order would constitute contempt and be punished accordingly. At the close
of the case the documents would be, pursuant to plaintiffs' instructions, either returned or destroyed.

ANSYS, Inc. v. Computational Dynamics N. Am., Ltd., 09-CV-284-SM (D.N.H. Feb. 10, 2011). Plaintiff’s
motion for voluntary dismissal with prejudice is granted. After one of plaintiff’s highly skilled physicists
left to work for defendants, its primary competitor, plaintiff brought suit seeking to enforce its former
employee's covenant not to compete. It also sought damages from both the former employee and the
competitor for misappropriation of trade secrets. Failing to obtain temporary injunctive relief in district
court, or the court of appeals, plaintiff decided to withdraw its claims against both defendants and
moved to dismiss all claims, with prejudice. Defendants objected, and moved to condition dismissal of
the claims on the payment of costs and attorney's fees. The court denied defendants' motion as to the
award of attorney's fees. The applicable statute provides that the court may award reasonable
attorney's fees to the prevailing party when a claim of misappropriation is made in bad faith. The phrase
“bad faith” has a well-accepted meaning in New Hampshire's common law and requires the claim to be
frivolous. A frivolous claim lacks any reasonable basis in the facts provable by evidence, or any
reasonable claim in the law as it is, or as it might arguably be held to be. The court held that failure to
obtain temporary injunctive relief is not evidence by itself that the claim was frivolous.

Forrester Envtl. Services, Inc. v. Wheelabrator Technologies, Inc., 2011 DNH 212 (D.N.H. Dec. 16, 2011)
reconsideration denied, 2012 DNH 022 (D.N.H. Jan. 30, 2012). Defendant’s motion for summary
judgment is granted in apart as to the claims for misappropriation of trade secrets. Plaintiff sued
defendants for interfering with its contractual relationship with a client. Plaintiff claims that, after client
became dissatisfied with defendant's technology, he invented a special treatment for the client. Plaintiff
further alleges that when defendant learned that client had switched to plaintiff's treatment, it made
false claims that its patents covered plaintiff's treatment and demanded that client pay it for using that
treatment. Plaintiff asserted a claim for trade secret misappropriation in violation of the Uniform Trade
Secrets Act. Defendant’s Motion for Summary Judgment is granted as to the trade secret
misappropriation claim since plaintiff did not present evidence that defendant acquired, disclosed, or
used any of their trade secrets, or even possessed the secrets at issue.

Hansa Consult of N. Am., LLC v. Hansaconsult Ingenieurgesellschaft mbH, 163 N.H. 46, 35 A.3d 587.
Plaintiff’s appeal as to state court’s dismissal of claims was granted in part and denied in part.
Misappropriation of trade secrets allegations and the claims originating from them arose under
distribution agreement between the parties, and therefore claims were subject to forum selection
clause in the agreement, which required that related disputes be brought in Hamburg, Germany. The
agreement contained a provision regarding business and trade secrets, and the fact that some of the
underlying facts occurred after the termination of the agreement did not remove the claims from the
forum selection provision as the trade secrets clause expressly provided for post-agreement disputes of
this nature. Therefore, the trade secret misappropriation claims were dismissed.

Puerto Rico

Abarca Health, LLC v. PharmPix Corp., 806 F. Supp. 2d 483 (D.P.R. 2011). Plaintiff’s motion to compel
discovery was denied. Plaintiffs brought action alleging copyright infringement, unfair competition,
misappropriation of trade secrets, and breach of contract and fiduciary duty. Plaintiff’s sought the
disclosure of the entirety of the defendant’s software's source code. Defendants opposed the request
and moved for a protective order staying production of the Source Code until plaintiffs provided more
specific allegations regarding their copyright claim. Defendants challenged both the relevance and the
necessity of revealing the entire Source Code as evidence regarding plaintiffs' copyright claim. They
argued that the Source Code was a trade secret whose production would burden defendants more than
it would benefit plaintiffs, since divulging it would have ruinous consequences for them. Defendants
submitted an affidavit attesting to the “tremendous commercial value” of the Source Code. The court
declined to compel defendants to reveal their most valuable trade secret based on one unsworn
declaration and an expert report premised in part on code plaintiffs did not write and do not own.
Defendants had shown that good cause existed to deny plaintiffs' request for the production of the
Source Code in its entirety. Having not yet fleshed out their copyright claim, plaintiffs had not made a
proper showing that the needs of the case merit the disclosure of an asset central to defendants'

Capability Group, Inc. v. Am. Exp. Travel Related Services Co., Inc., 658 F.3d 75 (1st Cir. 2011).
Plaintiff’s appeal of district court’s decision denying a motion for preliminary injunction was denied. The
parties entered into a Confidential Disclosure Agreement to negotiate a possible joint venture. Under
the terms of the CDA, plaintiff provided defendant with trade secrets on a confidential basis. The CDA
stipulated that breaching the confidentiality provisions would amount to “irreparable and continuing
damage or injury” entitling the non-breaching party to request an injunction, as well as attorneys' fees

incurred for that purpose. The court of appeals held that such agreement could not bind the district
court, since it had found that no further threat of improper disclosure existed.

2nd Circuit

Argilus LLC v. PNC Financial Services Group, Inc., Nos. 10-518-cv, 10-527-cv (2d Cir. 2011). Argilus and
PNC entered a joint bid to acquire an oil company, which failed. Argilus then sued PNC for breach of
contract, joint venture claims, and a plethora of tortious claims, as well as misappropriation of trade
secrets. The Second Circuit, applying de novo review, affirmed the district court’s grant of summary
judgment for defendants. Regarding trade secrets, the Court found Plaintiff had failed to provide any
evidence that the Defendant actually “used” Plaintiff's trade secrets, citing to Integrated Cash Mgmt.
Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 (2d Cir. 1990) for the proposition that a
plaintiff claiming misappropriation of trade secrets must prove that “’defendant is using that trade
secret in breach of an agreement’ (emphasis added, internal quotation marks omitted)).”

IDG USA, LLC v. Schupp, Nos. 10-3405-cv (L), 10-3955-cv (Con) (2d Cir 2011). Yet another employee
non-compete and non-disclosure case with trade secret overtones where, here, Schupp was a former
IDG employee who joined a competitor in the same field. Not surprisingly IDG sought an injunction
preventing him from doing so, soliciting IDG’s customers, or revealing IDG’s trade secrets.

The district court found for IDG at the preliminary injunction stage, and upon Schupp’s appeal the Court,
applying an abuse of discretion standard of review, concluded the district court was within its discretion
to find the district court’s grant of an injunction supportable upon the evidence presented at the
proceedings stage. However, the Court vacated in part and remanded in part on the grounds that the
district court’s injunction had not met with Rule 65(d)’s requirement to adequately define the specific
trade secrets and confidential information Schupp was enjoined from disclosing. As the Court noted:
“An injunction that simply prohibits the disclosure of trade secrets or confidential information, with no
additional description of what secrets or confidential information are to be protected, is insufficiently
specific to satisfy Rule 65(d). Corning Inc. v. PicVue Elecs., Ltd., 365 F.3d 156, 157-58 (2d Cir. 2004).
Because with respect to trade secrets and confidential information, the district court's injunction here is
no more specific than the one rejected in Corning, we vacate that portion of the preliminary injunction
and remand to the district court to add additional specificity. The district court may consider tracking
the words of the NCA, which defines trade secrets and confidential information. While an order granting
a preliminary injunction may not incorporate extrinsic documents by reference, it can track language
from such documents in order to add specificity to the injunction. The language in the NCA should be
sufficient to satisfy Corning and Rule 65(d).”


Charter Oak Lending Group LLC v. Janet August, 127 Conn.App. 428, 14 A.3d 449 (Conn. App. Ct.
March 22, 2011). The Defendants were all former employees of the Plaintiff, a mortgage broker and
lender, who left to work a competitor of Plaintiff. In response Plaintiff sued them all, claiming that they
had conspired to misappropriate its proprietary and confidential information, including a list of contact
information for the Plaintiff’s clients in violation of, among other statutes, the Connecticut Uniform
Trade Secrets Act (CUTSA), C.G.A. 35-50 et seq. The lower court after trial in defendants’ favor, granted
defendants’ earlier motion to dismiss on the CUTSA counts. On appeal, the Court found that the lower
court had improperly dismissed the Plaintiff’s contention that its trade secrets had been
misappropriated, the result of applying the incorrect legal standard, and that the Defendants had

breached their fiduciary duty not to disclose said trade secrets, and therefore that the lower court had
improperly concluded that the other charges were without merit. As such, the Court overturned the
ruling of the lower court and found in favor of the Plaintiff.

Notably the case highlights the intertwined nature of CUTSA and the Connecticut Unfair Trade Practices
Act (CUTPA), a relationship shared by most states with similar “Mini-FTC Act” statutes, and concluded
the customer list was a “trade secret” under CUTSA’s definition of same as “"information, including a
formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or
customer list that: (1) [d]erives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy."

Reviewing the evidence presented in the lower court’s memorandum the Court found the case had been
made for a prima facie violation of CUTSA, observing that “the plaintiff’s evidence met the relatively low
standard necessary to withstand the defendants’ Practice Book 15-8 motion [made at the end of
plaintiff’s case-in-chief and moving for dismissal on the basis that plaintiff failed to make out a prima
facie case]” and remanded for a new trial on the CUTSA count, as well as several other counts.

New York

Turbon International, Inc. v. Hewlett-Packard Co, 769 F.Supp.2d 262 (S.D.N.Y., March 8, 2011). Plaintiff
Turbon acted as a laser printer cartridge refiller that HP approached in connection with Turbon
potentially supplying such re-manufactured products. After extensive review HP awarded Turbon the
right to produce three such re-manufactured cartridges, but subsequently terminated the relationship
after receiving the initial orders.

Several months later HP initiated a negative advertising campaign urging consumers to avoid such re-
manufactured cartridges on the basis that they were of lower quality. Turbon continued to compete
directly around the world with HP in the cartridge market, resulting in various HP subsidiaries making a
variety of written claims that such cartridges “will not work,” “should not be used,” and “will be
hazardous to your health.”

In response Plaintiff sued Defendant for, among other claims, unfair competition, false advertising, and
misappropriation of trade secrets, applying New Jersey law. Defendant moved to dismiss the claims. In
order to “state a claim for misappropriation of trade secrets, Turbon must allege facts that, if proven,
could establish that: (1) a trade secret exists; (2) that plaintiff took reasonable precautions to maintain
the secrecy of the information; and (3) the defendant used the secret information to the detriment of
the plaintiff." Turbon, 769 F.Supp2d at 267. The Court ruled that the Plaintiff had failed to make a case
for misappropriation of trade secrets on the grounds that it failed to demonstrate a connection between
HP’s knowledge of Turbon’s “trade secrets” and HP’s later campaign against Turbon, stating “[t]o find
that HP’s recycling program could establish use of Turbon’s secret information, the Court would have to
find that the ‘very idea’ of refilling empty printer cartridges for sale is a trade secret.”

Island Sports Physical Therapy v. Kane, 84 AD 3d 879, 923 NYS 2d 158 (N.Y. App. Div., 2d Dept., May
10, 2011). Kane was a former employee of ISPT who started her own, similar business while still
employed by ISPT, but without the use of any of ISPT’s time or facilities. The Plaintiff alleged her actions
constituted a breach of Kane’s fiduciary duty to her employer, and that she had misappropriated its
trade secrets in the form of a list of clients.

Defendant successfully argued that she was within her rights to form another business as long as she did
not use any of her current employer’s facilities or resources in order to do so, and that she had
established as a prima facie matter that a list of ISPT’s clients did not constitute a trade secret. The Court
observed several bedrock precepts under New York law, most notably that “[s]olicitation of an entity's
customers by a former employee or independent contractor is not actionable unless the customer list
could be considered a trade secret, or there was wrongful conduct by the employee or independent
contractor, such as physically taking or copying files or using confidential information,” citing to Starlight
Limousine Serv. v Cucinella, 275 AD2d 704, 705 (2000)

As such, Defendant was granted a motion of summary judgment dismissing the complaint.

Barclays Capital Inc. v., 700 F.Supp. 2d 310 (S.D.N.Y. 2010), rev’d, 650 F.3d 876
(2d Cir. 2011). The Plaintiffs, a group of financial services companies, claimed the Defendant, a paid
subscription news service, misappropriated its trade secrets and confidential business practices.
Defendants had obtained inside information on Plaintiffs’ business practices and client
recommendations and published an expose of this information. The Plaintiffs sued the Defendant for
“hot news” misappropriation of their confidential business practices under New York state law.

The Court reversed the district court’s hot news misappropriation ruling, finding that the nature of the
information at issue, under its previous opinion in Nat’l Basketball Assoc. v. Motorola, Inc., 105 F.3d 841
(2d Cir. 1997) as applied to the facts, meant federal copyright law preempted Plaintiff’s
misappropriation claim. The Court therefore reversed in part and remanded to the district court.

Blackman Plumbing Supply Co. Inc. v. Connelly, 2011 NY Slip Op 32404(U) (Sup. Ct. Nassau County N.Y.
Aug. 23, 2011). Connelly was a former employee of Plaintiff who during his employment had signed a
non-compete agreement that stipulated he could not seek employment with the Plaintiff’s competitors
on Long Island, NY, nor solicit Plaintiff’s customers, nor use any of Plaintiff’s trade secrets for a two-year
period after the termination of his employment. Several years after signing the agreement, the
Defendant left his position with Plaintiff and assumed a new position with a competitive plumbing
supply company.

Plaintiff sought injunctive relief to enforce the terms of the contract, preventing Defendant from
working for any competing business, doing business with any of Plaintiff’s customers, or using Plaintiff’s
trade secrets. With little but passing mention of the trade secrets issue, and the bulk of the opinion
focusing on the reasonableness of the employment restrictions, the Court granted a limited injunction
against Defendant’s use of any trade secrets but denied Plaintiff any other relief.

3rd Circuit

Figueroa v. Precision Surgical, Inc., 423 Fed. Appx. 205 (3d Cir. 2011). An independent sales
representative accused the company of violating their written agreement with him to permit the
representative to operate as an independent contractor by increasingly directing day-to-day
management of the representative’s business. The agreement had non-solicitation, non-competition,
and confidentiality covenants. The company directed the representative to form a limited liability
company, required daily reporting and attendance at regular meetings, getting permission to provide
quotes outside his territory, and even how to dress, among other requirements, which irked the

After the district court denied the company’s motion for a preliminary injunction, the company appealed
and the 3rd Circuit found that the lower court did not abuse its discretion in denying the motion. On
appeal, the court concluded in a non-precedential decision that evidence existed to show that the
company treated the representative as an employee rather than as an independent contractor and
failed to pay commissions owed to the representative in violation of the agreement. Additionally,
because the written agreement was signed months after the parties entered into a contractual
relationship, the appellate court found that there was insufficient consideration to warrant a restrictive
covenant after a contractual relationship has been formed, as required under state law.

New Jersey

IDT Corp. v. Unlimited Recharge, Inc., 2011 WL 6020571 (D.N.J. Dec. 2, 2011). The plaintiff asserted
claims of trademark and trade dress infringement, copyright infringement, misappropriation of trade
secrets, and other torts against another company and one of its sales representatives for trying to sell an
identical international calling service that similarly does not require a physical calling card or PIN to IDT’s
partners and retailers by setting up an alternative system through a competitor. The parties had non-
disclosure agreements in place prohibiting disclosure of confidential proprietary information without
prior written consent. The court denied IDT’s application for injunctive relief on the grounds that it
failed to allege with sufficient particularity what was unlawfully disclosed. IDT argued that “a court
should enjoin an individual from working for an employer where it is inevitable that the individual will
disclose or use confidential, proprietary and/or trade secret information of a former employer.” The
court observed that this argument relies on the existence of confidential information, which IDT failed to
show with sufficient particularity. The 3rd Circuit applies the ten-part Lapp test to determine whether
there is a likelihood of confusion, but the plaintiff here failed to apply the test to its claim of false
designation of origin whatsoever. In New Jersey, a party must show the following in claiming trade
secret misappropriation: “(1) the existence of a trade secret, (2) communicated in confidence by the
plaintiff to the employee, (3) disclosed by the employee in breach of that confidence, (4) acquired by the
competitor with knowledge of the breach of confidence, and (5) used by the competitor to the
detriment of the plaintiff.” The court found that IDT did not allege with sufficient particularity what was
disclosed with authorization. The court also denied the motion as to the remaining counts.

Syncsort, Inc. v. Innovative Routines, Int’l., 2011 WL 3651331 (D.N.J. Aug. 18, 2011). Syncsort involved
two competing software developers of programs whose languages were incompatible with one another,
but the defendant created a program that could translate scripts from SyncSort UNIX command
language into another command language called CoSort. Syncsort sought injunctive relief, which the
court granted.

Syncsort’s SyncSort UNIX command language was not generally known to others outside the company
and Syncsort required users to enter into license agreements and employees to enter into
confidentiality agreements in efforts to protect the command language, but a Brazilian distributor
provided a copy of the reference guide to IRI. IRI used Syncsort’s reference guide for its UNIX program
and gathered scripts from SyncSort UNIX customers in its development of its ssu2scl translator program.
There were several publicly available sources that revealed aspects of the SyncSort program.

Syncsort argued that limited internet disclosures do not nullify protections awarded to protectable trade
secrets and the company pointed out that it made efforts to protect the command language. For
instance, the reference guide expressly stated that it was to be used for licensees only. The court
agreed, writing that “even if bits and pieces of the command language are publicly available, that does

not necessarily negate trade secrecy if those pieces did not provide enough information to be useful to
IRI in creating its translator.” The court pointed out that there were isolated partial postings of
information that assisted IRI in developing its translator and that Syncsort went to great lengths to
ensure that its employees, agents, and customers would not disclose information without authorization,
including distribution of the reference guide to licensed users. “A trade secret may be disclosed to
others without losing its protected status, as long as the persons to whom it is disclosed agree that they
will not themselves disclose it.” In addition, the court found that Syncsort communicated its program in
confidence to licensees, who were required by the company to not disclose its information and that its
reference guide carried a confidentiality notice. The court concluded that the SyncSort UNIX command
language is a trade secret.

Reckitt Benckiser Inc. and UCB Manufacturing Inc. v. Tris Pharma Inc. and Yu-Hsing Tu, 2004 WL
773034 (D.N.J. February 28, 2011). In a motion to dismiss, the defendants argued that the plaintiffs
failed to identify any protectable trade secret, the plaintiffs had a heightened obligation to disclose the
trade secret under the Patent Act, and the plaintiffs did not properly aver the ownership of the trade
secrets that were allegedly misappropriated and how these were used by the defendants. The subject
of the suit involved an over-the-counter cough syrup, which Benckiser and UCB Manufacturing, Inc.
accused the defendants of misappropriating when Tu, a former employee who worked on the cough
syrup, disclosed confidential information to Tris Pharma in violation of employment and confidentiality
agreements between Tu and the plaintiffs. The court denied the motion as to the claim of
misappropriation of trade secrets.

The court explained that New Jersey law does not require specific pleading and that the Federal Rules of
Civil Procedure do not require that the plaintiffs’ averments must encompass all relevant information
unless heightened pleading requirements otherwise apply. Here, the court was satisfied that the
plaintiffs identified themselves as the developers and owners of the cough syrup, including its formula
and research, and that the plaintiffs received economic value from what was not known to the general
public. The court observed that the Patent Act does not have a heightened pleading standard for a
claim of misappropriation of trade secrets. Finally, the court wrote that the plaintiffs identified
themselves as the owners of the trade secrets and that confidential information pertaining to the cough
syrup was disclosed to Tu in the course of his employment with UCB.


Council for Educational Travel, USA, v. Czopak, WL 3882474 (M.D. Pa. Sept. 2, 2011). This lawsuit arose
from an assertion under the Pennsylvania Uniform Trade Secrets Act (PUTSA) by a company, CETUSA,
specializing in linking foreign exchange students with job opportunities that a former employee and a
competitor withheld confidential documents that should have been returned to CETUSA upon Czopak’s
departure. These confidential documents included information “pertaining to potential contacts,
contracts, coordinators, clients, host families, mailing lists, account information, samples, prototypes,
price lists, [or] pricing information,” CETUSA claimed. The court denied the defendants’ motion to
dismiss for failure to state a claim.

Because PUTSA “only requires that the misappropriating party knew or had reason to know that a trade
secret was acquired under circumstances requiring a duty to maintain secrecy or otherwise limit its
use,” the court first turned its attention to an “acknowledgement” signed by Czopak that requires the
return of confidential information upon her departure from the company. The court concluded that

CETUSA’s assertions allow for the court to reasonably infer that a duty to maintain secrecy arose and
operated like a restrictive covenant.

The court turned to the defendants’ argument that the plaintiff failed to specifically identify any trade
secrets that were allegedly misappropriated. The defendants relied on Bioquell v. Feinstein, in which the
court found that the complaint was “merely a string of conclusory statements devoid of any factual
basis.” The court in CETUSA noted that other courts in the 3rd Circuit did not require particularity. The
court looked to Center Pointe Sleep Assocs., LLC v. Panan, and Ideal Aerosmith, Inc. v. Acutronic USA,
Inc., where general descriptions of alleged trade secrets satisfied other courts.

Finally, the court found that CETUSA sufficiently showed that other trade secrets existed in addition to
client lists, which the defendants asserted that merely amounted to personal business courts and did
not reach the level of being trade secrets.

Sensus USA, Inc. and Elliott Bay Engineering, Inc., 2011 WL 2650028 (W.D.Pa. July 6, 2011). Sensus and
Elliot partnered to design a new remote connect/disconnect feature to be used in an electric meter built
by Sensus. The two companies entered into a confidentiality agreement, so that Elliott would
demonstrate to Sensus representatives how the new design would operate and, later, the two
companies began negotiating an agreement to market the new design. Elliott had previously worked
with another company, Advanced Metering Data Systems, on the new design. After Sensus bought
AMDS’s assets, Sensus began building the design that Elliott had earlier shown Sensus and business
relations soured. Sensus refused a request from Elliot for an audit and Elliot believed that Sensus sold
thousands of these meters without paying any royalties to Elliott. Sensus sought a declaratory judgment
and Elliott counterclaimed, asserting that Sensus misappropriated trade secrets.

The court concluded that Elliott failed to sufficiently identify the allegedly misappropriated trade
secrets. In Elliot’s First Amended Counterclaim, the company asserted that it “developed, designed,
derived, and possessed information that constitutes proprietary trade secrets belonging exclusively and
solely to Elliott.” Elliott turned to Center Pointe Sleep Assocs., LLC v. Panian and Ideal Aerosmith v.
Acutronic USA, Inc. for support, but the court disagreed, concluding that “neither decision suggests that
a complaint that fails to describe the relevant trade secrets at all would survive a motion to dismiss.”
The court observed that the complaints in both cases at least provided a general identification. Here,
Elliott simply referred to “information.” The court concluded that Elliott failed to satisfy pleading
requirements and granted Sensus’s motion to dismiss Elliott’s claim of misappropriation of trade secrets
and permitted Elliott to amend its complaint.

Marci’s Fund Food, LLC v. Shearer’s Foods, Inc., 2011 WL 5360808 (W.D.Pa. Nov. 7, 2011). The court
agreed with the defendant that plaintiff failed to show that defendant misappropriated the plaintiff’s
popcorn recipes, sales strategy, and other trade secrets. The case arose from an agreement by which
the defendant would produce kettle corn for the plaintiff. Marci’s gave Shearer’s a royalty-free license
to use its trademarks and recipes. Several months after the companies made the agreement, Shearer’s
was sold, though it continued to make kettle corn as Poppee’s Popcorn. The defendant ended the
agreement on the grounds that plaintiff failed to live up to its obligations. Applying PUTSA, the court
found that the plaintiff failed to show any evidence that Shearer’s made an unauthorized disclosure of
trade secrets. Finding that Marci’s did not object to defendant’s business being sold and that Marci’s
continued to buy kettle corn from Poppee’s, the court concluded that there was implied consent for
disclosure of trade secrets by Shearer’s to Poppee’s. Incidentally, plaintiff suggested that it could assert

a common law claim for misappropriation of trade secrets, despite the adoption of PUTSA, but the court
indicated that PUTSA replaced the common law tort.

Kimberton Healthcare Consulting, Inc., v. Primary Physiciancare, Inc., WL 6046923 (E.D.Pa. Dec. 6,
2011). DialysisPPO (DPPO), a medical consulting company accused Primary Physiciancare (PPC), a
medical management company, of disclosing confidential information that was learned during contract
negotiations without authorization when PPC used similar benefits claim plan language in PPC’s role as a
third-party administrator. In a motion to dismiss for failure to state a claim, PPC argued that DPPO’s
common law claims of misappropriation, unfair competition, and conversion were preempted by the
PUTSA. PUTSA created a remedy for actual loss caused by trade secrets and unjust enrichment and
replaced common law torts, except for claims involving contractual remedies, other civil remedies not
based on misappropriation of a trade secret, and criminal remedies. Because discovery was not yet
completed, the court did not decide whether DPPO’s common law claims were preempted under

4th Circuit

E.I. du Pont Nemours and Co. v. Kolon Industries, Inc., Nos. 10-1103, 98 USPQ2d 1020 (4th Cir. 2011).
As the leading U.S. manufacturer of para-aramid fibers, E.I. du Pont Nemours and Company (“DuPont”)
sued defendant alleging trade secret misappropriation. In counterclaiming, Defendant, Kolon Industries
Inc., alleged that DuPont monopolized and attempted to monopolize the para-aramid fiber market in
violation of Section 2 of the Sherman Act. The district court granted DuPont’s motion to dismiss the
counterclaim but on appeal, the fourth circuit reversed. Reviewing the district court’s decision de novo,
the fourth circuit found that defendant sufficiently pled a distinct, relevant market along with sufficient
reasons for limiting it to the U.S. in order to survive a motion to dismiss and that the relevant market
need not include all locations where product suppliers are located for Sherman Act Section 2 purposes.
The fourth circuit also held that the district court’s determination that defendant failed to sufficiently
plead anticompetitive behavior was erroneously based upon a statement made by plaintiff’s counsel as
well as other matter outside of the Counterclaim Complaint and before an opportunity for the parties to
conduct reasonable discovery, constituted an inappropriate conversion of the Rule 12(b)(6) motion to
dismiss to one for summary judgment. Reversing in full, the court found that Sherman Act Section 2
monopolization and attempted monopolization counterclaim were adequately pled by the defendant.


RegScan Inc. v. Bureau of National Affairs, Inc., No. 1:11-cv-01129-JCC-JFA, 100 USPQ2d 1635 (E.D.
Virginia Nov. 1, 2011). After entering into a “Mutual Non-Disclosure Agreement” with one another
regarding a regulatory tracking product, Plaintiff, specializing in electronic regulatory publishing and
compliance management, sued defendant for various state-law torts including the misappropriation of
trade secrets under the Virginia Uniform Trade Secrets Act. With the Complaint, plaintiff also filed a
Motion for Preliminary Injunction and sought to seal, by way of an unopposed Motion to File Under
Seal, certain exhibits and portions of its pleadings.

In granting the Motion to File Under Seal, the district court reasoned that the common law right and
First Amendment presumption favoring public access to judicial records were not absolute and that the
release of trade secrets related to new product plans coupled with the fact that no one opposed
plaintiff’s narrowly tailored, publicly filed motion, constituted sufficient, countervailing grounds to seal
in this instance. Insofar as the plaintiff sought to seal only one document in its entirety, prepared public

versions of its Complaint and corresponding motions with just the trade secrets materials redacted and
there was no present motion questioning or disputing the need to maintain secrecy, the district court
further reasoned in favor of sealing.

SCR-Tech LLC v. Evonik Energy Services LLC, Evonik Energy Services GMBH, Evonik Steag GMBH, Hans-
Ulrich Hartenstein, and Brigitte Hartenstein, No. 08 CVS 16632, 2011 NCBC Lexis 27 (E.D. Virginia Nov.
1, 2011). Plaintiff, SCR-Tech, sued several parties including Evonik Energy Services LLC as well as its
subsidiaries, and two of plaintiff’s former employees - Brigitte and Hans-Ulrich Hartensetin - for various
causes of action including misappropriation of trade secrets.               Evonik counterclaimed for
defamation/trade libel, abuse of process, and unfair and deceptive trade practices. Before the court
was the defendants’ joint motion for summary judgment on the non-existence of trade secrets. In it,
defendants claimed that once plaintiff’s selective catalyst reduction (SCR) information became publicly
available online, there was no need to consider any of the following 6 factors used under North Carolina
law to determine the existence of a trade secret: 1) the extent to which information is known outside
the business; (2) the extent to which it is known to employees and others involved in the business; (3)
the extent of measures taken to guard secrecy of the information; (4) the value of information to
business and its competitors; (5) the amount of effort or money expended in developing the
information; and (6) the ease or difficulty with which the information could properly be acquired or
duplicated by others.

Finding that all issues could not be summarily resolved, the defendants’ motion was granted in part and
denied in part. Doing so, the court recognized that a patented technology cannot function as a trade
secret and that the 9 primary steps plaintiff uses to clean, rejuvenate and regenerate SCR catalysts have
been depicted in various online publications. Thus, where the plaintiff has made public a fact, step or
process or there is a patent that discloses the relevant information, it cannot serve as a trade secret.
However, this does not automatically preclude all trade secret protection in the court’s view since trade
secret law and patent law often coexist for the same subject matter and even “subsist” for the
components of a patented item or process. Where further evidence or discovery reveals that the
information identifies, for example, a specific threshold or range, the duration of a critical step or matter
with independent economic value not generally known or readily ascertainable, genuine issues of
material fact exist as to trade secret eligibility. Thus, plaintiff in this case cannot claim trade secrets in
general, published processes for neutralization, cleaning and generating SCR catalysts, certain facts and
the ability to interpret test data. As to specific plans, recipes, steps, amounts, pH levels and ratios,
defendants’ summary judgment motion as well as claims for tortious interference, breach of contract
and deceptive trade practices are denied.

RegScan Inc. v. Bureau of National Affairs, Inc., No. 1:11-cv-01129-JCC-JFA, 100 USPQ2d 1635 (E.D.
Virginia Nov. 1, 2011). After entering into a “Mutual Non-Disclosure Agreement” with one another
regarding a regulatory tracking product, Plaintiff, specializing in electronic regulatory publishing and
compliance management, sued defendant for various state-law torts including the misappropriation of
trade secrets under the Virginia Uniform Trade Secrets Act. With the Complaint, plaintiff also filed a
Motion for Preliminary Injunction and sought to seal, by way of an unopposed Motion to File Under
Seal, certain exhibits and portions of its pleadings.

In granting the Motion to File Under Seal, the district court reasoned that the common law right and
First Amendment presumption favoring public access to judicial records were not absolute and that the
release of trade secrets related to new product plans coupled with the fact that no one opposed
plaintiff’s narrowly tailored, publicly filed motion, constituted sufficient, countervailing grounds to seal

in this instance. Insofar as the plaintiff sought to seal only one document in its entirety, prepared public
versions of its Complaint and corresponding motions with just the trade secrets materials redacted and
there was no present motion questioning or disputing the need to maintain secrecy, the district court
further reasoned in favor of sealing.

North Carolina

Akzo Nobel Coatings Inc. v. David B. Rogers, 11 CVS 3013, 2011 NCBC 41, 2011 Lexis 42 (N.C. 2011).
Plaintiff, Akzo Nobel Coatings Inc., filed a lawsuit against several former employees and two
corporations seeking monetary as well as injunctive relief for multiple claims including breach of
contract, fraud, tortious interference, deceptive trade practices and misappropriation of trade secrets.
Attacking all of the plaintiff’s claims except for one, the former employees, as individual defendants,
moved for judgment on the pleadings under Rule 12(c) of the North Carolina Rules of Civil Procedure.
Granting in part and denying in part, the Court first determined that the Delaware choice-of-law
provisions contained in one underlying covenant not to compete and a non-solicitation agreement
would govern in those instances. To the extent that the respective covenant not to compete
accompanied the sale of a business and the solicitation agreement did not preclude soliciting future
customers but instead prevented related activity with current customers, the motion was partially

However, underlying agreements that sought to prevent one former employee defendant from “directly
or indirectly” competing with the plaintiff as well as “any other company entity” and a separate five year
limit on contacting customers which included a “look-back provision,” were so unreasonable under
North Carolina law that granting the motion was appropriate on these claims.

The Court further found that because the plaintiff had failed to allege the existence of a separate legal
duty owed to it outside of the applicable contractual provisions or identified any actual injury suffered
as a proximate result of anyone’s allegedly unfair trade practices, plaintiff’s fraud, tortious interference
and deceptive trade practice could not survive.

Similarly, as a misappropriation of a trade secret cause of action must be pled with particularity and
plaintiff in this case failed to sufficiently specify the trade secret or improper acts allegedly engaged in
by the defendants, the motion for judgment on the pleadings was also granted on this claim.
Furthermore, broad references to formulas, methodologies, pricing data, proprietary information or
suggestions that misappropriation will be proven via discovery are inadequate for pleading purposes.

5th Circuit

Tewari De-Ox Systems, Inc. v. Mountain States/Rosen, LLC, 637 F.3d 604 (5th Cir. 2011). Plaintiff
owned a meat packing company that developed a unique, patented method to pack the meat. After
making defendant sign a non-disclosure agreement, plaintiff showed defendant, a lamb producer, the
method. Plaintiff tailored the general method to fit defendant's needs and equipment. Defendant
allegedly misappropriated the trade secrets involved in the patented method and plaintiff sued. The
central issue for the court was whether disclosing information in a patent application that never
received a patent subsequently destroys trade secret protection. Plaintiff argued that the district court
erred by focusing on whether information was published, instead of focusing on how the information
was obtained. The court of appeals rejected this argument, holding it is an essential element of trade
secret law that the information maintains secrecy. Although the issue of whether a published patent
application destroys the secrecy of its contents was a matter of first impression for Texas, the court

looked to other circuits and upheld their reasoning that there is little difference between a published
patent application and a published patent. As such, the court reasoned that since Texas law does not
protect information that is readily available, a patent application destroys trade secret protection. The
court distinguished prior cases that involved misappropriation of information before a patent was filed.
Notably, this case was instead about information that was disclosed prior to defendant signing the
nondisclosure agreement but after the patent application was published.

A second issue raised by plaintiff was the argument that although each component of the meat packing
system was disclosed in some form, the combination of the technologies still qualified as trade secrets.
In other words, plaintiff sought protection of the unique combinations of disclosed technologies. The
court held that the combination of disclosed technologies does not render trade secret protection
obsolete per se. The court reasoned that the process and know-how behind combining the technologies
involves secretive information by itself, such as the temperature and amounts of chemicals to use.
According to the court, "a trade secret can exist in a combination of characteristics and components
each of which, by itself, is in the public domain, but the unified process, design and operation of which
in unique combination, affords a competitive advantage and is a protectable secret." In light of the
foregoing legal principles, the court held that although the individual technologies were not trade
secrets because they were disclosed in the patent application, the combination of technologies was
subject to protection so long as the combination was not a simple and obvious change in an existing
process. The court denied the motion for summary judgment.


721 Bourbon, Inc. v. B.E.A., Inc., 2001 WL 3747231 (E.D. La. Aug. 25, 2011). Defendants learned how to
make plaintiff's famous cocktail while they worked at plaintiff bar/restaurant. Defendants opened their
own bar and advertised a knock-off of plaintiff's cocktail. Plaintiff sued under trademark infringement,
unfair competition, and misappropriation of trade secrets. Defendants argued that plaintiff failed to
allege that defendants disclosed the information to anyone since all of the defendants learned the
information during their prior employment. Defendants argued that disclosing secret information is
impossible when the person with whom the information is shared already knows the secret. After
reviewing plaintiff's evidence that the defendants disclosed the information for many years, the court
rejected defendants' argument and denied their motion to dismiss the trade secret claim.

Int'l Mezzo Tech., Inc. v. Frontline Aerospace, Inc., 2011 WL 4481687 (M.D. La. Sept. 27, 2011).
Defendant filed a motion to dismiss plaintiff's claim that defendant violated a nondisclosure agreement
and misappropriated plaintiff's trade secrets. Defendant argued that key testimony supported the
conclusion that plaintiff never disclosed any of the trade secrets to defendant, and therefore plaintiff's
claim must fail. The court held that although the testimony did indicate that plaintiff never disclosed the
information, that testimony alone was not sufficient to destroy plaintiff's claim. Because there remained
material facts in dispute, the court denied defendant's motion to dismiss.


Alliantgroup, LP v. Feingold, 803 F. Supp. 2d 610 (S.D. Tex. 2011). Plaintiff sued defendant, a former
employee, for breaching the non-compete and non-disclosure clauses in his employment contract, and
for misappropriation of trade secrets. Plaintiff argued that defendant used plaintiff's client list, which
was a trade secret. The court reviewed Texas trade secret law, which holds that client lists may be
protectable even if the information is readily available when either defendant got the information
directly from his employer, or when plaintiff exerted a lot of time and expense to compile the

information. Here, the client list comprised of fifteen people and contained only the names of the
people. This information was readily ascertainable and as such, the court held that the record was
insufficient to show that the list was confidential or proprietary. The court further held that although it
was more plausible that plaintiff's pricing structure was confidential, plaintiff failed to allege that
defendant used the information or that any use caused plaintiff harm. Therefore, the court dismissed
plaintiff's trade secret claims.

Aquasource Holdings, LLC v. Oxxytec, Inc., 2001 WL 3269320 (S.D. Tex. July 28, 2011). Plaintiff filed suit
in state court for breach of contract and trade secret misappropriation. The court granted defendants
motion to remove to federal court under federal question jurisdiction on the grounds that the case
"arose under" patent law. The district court granted plaintiff's motion to remand because the court held
that determining whether a trade secret exists does not require construing a patent. The court reasoned
that although what information is divulged in a patent application is a necessary component of trade
secret evaluation, such evaluation does not rise to the level of construing substantive patent law. The
court held that pursuing a trade secret claim that involves a patent is not enough to obtain federal
jurisdiction for the trade secret claim.

Bayco Products, Inc. v. Lynch, 2011 WL 1602571 (N.D. Tex. Apr. 28, 2011). Defendant, a former
employee, brought a motion to dismiss plaintiff's claims for misappropriation of trade secrets. Plaintiff
alleged that defendant used its confidential "know-how" regarding the marketing strategies and
packaging on a certain product when defendant's new employer began producing a similar product
shortly after defendant began working there. Defendant argued that plaintiff failed to establish that the
"know-how" was a trade secret and that defendant used the information. Defendant argued that
plaintiff only claimed that its overall "know-how" was a protectable trade secret and in general, "know-
how" is not protected because it is indistinguishable from general knowledge and skills. The court
rejected this premise, finding that plaintiff's claim referred to specific "know-how" regarding marketing
strategies, which is distinguishable from general knowledge. Defendant also argued that packaging
cannot be a trade secret since the whole purpose of packaging is to present the product to the world.
The court rejected this notion and held that it is not the physical packaging, but rather the decision
process and strategies behind the packaging that are the subject of protectable trade secrets.

Defendant next argued that plaintiff failed to establish that defendant used any of plaintiff's trade
secrets. The court agreed with defendant that plaintiff failed to establish a connection between
beginning employment and using trade secret information. The court held that absent specific
allegations such as the new product containing nonobvious design secrets or being sold under secret
pricing and market strategies, a former employee working for a competitor is not a sufficient basis to
conclude the employee used his or her former employer's confidential information. The court held that
plaintiff's "know-how" was protectable, but granted defendant's motion because there were insufficient
facts to reach the conclusion that defendant used the information.

Devon Energy Corp. v. Westacott, 2001 WL 1157334 (S.D. Tex. Mar. 24, 2011). Plaintiff sued defendant,
a former employee, under misappropriation and conversion of trade secret theories for allegedly
deleting the only electronically stored source of the information he created for plaintiff on plaintiff's
hard drive. Plaintiff moved for summary judgment. Defendant argued that even if he did delete such
information, deletion is not "use" that would violate Texas trade secret laws. Plaintiff argued that "use"
simply requires finding that the secret owner was harmed by the use. The court rejected plaintiff's
argument and upheld Texas precedent that requires a defendant's use of information be for a
commercial purpose in order to constitute "use" under trade secret laws.

GlobeRanger Corp. v. Software AG, 2011 WL 3568237 (N.D. Tex. Aug. 11, 2011). After concluding that
plaintiff's claims fell within the subject matter of the Copyright Act, the court held plaintiff's
misappropriation of trade secrets claim was preempted by the Copyright Act since Texas trade secret
laws protect the same interest as the Copyright Act.

Johnson Serv. Grp., Inc. v. Olivia France, 763 F. Supp. 2d 819 (N.D. Tex. 2011). Plaintiff filed a motion to
enjoin defendant from continuing to use trade secret information she received while working for
plaintiff, an employee staffing company. As part of her position with plaintiff, defendant learned what
type of employees a client wanted, as well as the pricing schedule both plaintiff and the client used.
When defendant began working for a competitor, she used that information to place employees with
one of plaintiff's clients. After holding that Illinois law governed, the court held that to prevail under the
Illinois Trade Secrets Act, a plaintiff must show that the information was a trade secret, was
misappropriated, and was used in defendant's business. Because plaintiff employed measures to keep
the information secret through its non-disclosure clauses, the information was not readily available and
gave plaintiff a competitive edge, defendant learned the information through her employment, and
defendant clearly used the information to benefit herself, the court held that plaintiff was likely to
succeed on the merits on its misappropriation of trade secrets claim. Furthermore, the court noted that
Illinois does not typically uphold client lists as trade secrets when the client information is readily
available. However, the facts of the case were such that the information was for a narrow market, and
as a result, the court reasoned that losing any share in a narrow market causes irreparable harm. As
such, the court granted the motion for injunctive relief.

Myriad Dev., Inc. v. Alltech, Inc., 817 F. Supp. 2d 946 (W.D. Tex. 2011). Plaintiff won a jury verdict
against defendant for misappropriation of trade secrets, breach of contract, and unfair competition. The
jury found there was actual malice in the misappropriation and awarded plaintiff actual damages based
on a royalty payment. Defendant filed a motion to enter judgment based on the evidence, arguing that
the record lacked sufficient evidence to establish the damage amount, and that punitive damages were
not recoverable because plaintiff did not prove actual malice by clear and convincing evidence. The
court rejected defendant's argument regarding the actual damage amount, holding there was sufficient
evidence to establish awarding the amount based on a royalty scheme. However, the court agreed with
defendant on its punitive damage argument. The court rejected plaintiff's reliance on a case that stated
that a finding of implied malice is sufficient to receive punitive damages in a misappropriation claim. The
court held that the Erie doctrine made that case moot, and instead, a Texas statute that expressly stated
that only actual malice suffices in a trade secret misappropriation case was controlling. The court held
that plaintiff failed to establish by clear and convincing evidence that defendant had the intent to
misappropriate plaintiff's confidential information. Moreover, the court noted that finding a defendant
guilty of the intentional tort of misappropriation does not automatically mean that the defendant acted
with purposeful malice. As such, the court rejected the jury's award of punitive damages.

Pension Advisory Grp., Ltd. v. Country Life Ins. Co., 771 F. Supp. 2d 680 (S.D. Tex. 2011). Among
defendant's several arguments to dismiss plaintiff's claims, the court granted defendant's motion to
dismiss plaintiff's theft of trade secrets claim. The court held that plaintiff did not fully identify the
specific trade secret it was claiming defendant stole, or identify how defendant used that information.
Furthermore, to state a claim under Texas law, plaintiff must sufficiently plead damages. The court held
that by alleging that plaintiff was "irreparably harmed to an extent not yet determined" and discussing
the financial impact of defendant's actions, plaintiff did not satisfy the pleading standards of Twombly.
The court ordered plaintiff to re-plead its claim for theft of trade secrets.

Ultraflo Corp. v. Pelican Tank Parts, Inc., 823 F. Supp. 2d 578 (S.D. Tex. 2011). Defendant filed four
motions for partial summary judgment on plaintiff's claims for unfair competition by misappropriation,
misappropriation of trade secrets, conversion, and civil conspiracy. Defendant argued that the
information plaintiff claimed was a trade secret was actually copyrighted work that belonged to
defendant. Before reaching the merits of those claims, the court was concerned with whether the
Copyright Act preempted any of the state claims. In regards to the trade secrets claim, the court upheld
precedent cases that held a trade secret claim requires an additional showing of a breach of a
confidential relationship. Due to this additional element, the court held that the Copyright Act did not
preempt plaintiff's trade secret misappropriation claim. The court ordered plaintiff to file an amended
complaint addressing the preemption issue, as well as jurisdictional issues.

Weeco Int'l, Inc. v. Superior Degassing Services, Inc., 2011 WL 2533017 (S.D. Tex. June 24, 2011). While
defendant worked for plaintiff, defendant had access to plaintiff's primary marketing brochure,
customer lists, and pricing information. Defendant left and started his own competing business. Plaintiff
sued for violation of the Copyright Act, misappropriation of trade secrets, and breach of contract.
Defendant filed a motion for summary judgment on all counts. Plaintiff alleged defendant
misappropriated five trade secrets: fabrication of the degassing trailer, procedures for degassing various
tanks, plaintiff's clients, plaintiff's pricing scheme, and various business forms. In regards to the
fabrication of the trailer, the court reasoned that although the exterior of the trailer was obvious to
everyone and could not constitute a trade secret, certain internal components were not well known in
the industry. Because the existence of a trade secret is a fact-intensive inquiry, the court refused to hold
a trade secret did not exist and denied defendant's motion for summary judgment on this portion.
Similarly, the court concluded that although some of plaintiff's procedures were disclosed on plaintiff's
website, the facts were in dispute whether 76 other procedures were trade secrets. The court based its
hesitation on the fact that plaintiff expended significant time and resources to develop the 76
procedures. The court summarily dismissed the remaining trade secret claims because all of the
information was either previously disclosed on plaintiff's website or readily available through common

Wellogix, Inc. v. Accenture, LLP, 788 F. Supp. 2d 523 (S.D. Tex. 2011). Plaintiff created a complex
software program for BP, but BP never had access to the object or source code. BP then contracted with
defendant to create another program. BP terminated its contract with plaintiff and plaintiff was not
involved in creating the new program. Defendant's new program contained portions of plaintiff's object
and source code. Plaintiff sued under a number of theories including misappropriation of trade secrets.
The court held that genuine issues of fact remained regarding each element of a trade secret claim and
therefore denied defendant's motion for summary judgment. The court first determined that it was
plausible that plaintiff's code was a trade secret despite the fact that plaintiff disclosed the code to three
other companies. The court reasoned that because plaintiff only disclosed the information in
furtherance of its economic interests, such disclosure was not fatal to claiming trade secret protection.
The court also held that defendant likely used plaintiff's code in violation of Texas trade secret laws. In
Texas, courts interpret "use" in the trade secret statute as requiring commercial use. Further, any
misappropriation that is followed by an exercise of control and domination is considered a commercial
use. The court held that although defendant used the code in a program that was never piloted,
deployed, or implanted, the facts presented a material dispute whether defendant's use of the code
satisfied the statutory definition. The court also held that a confidential relationship existed between
plaintiff and defendant because the parties entered into numerous agreements that contained
confidentiality provisions. The court held that a reasonable juror could conclude that defendant
discovered plaintiff's trade secrets by improper means, pointing out that defendant was allowed access

to plaintiff's website, which was the end-product of the source code. Finally, the court held that plaintiff
may have suffered damages since a reasonable jury could conclude that plaintiff was denied the
contract for the new software because BP knew defendant could access the same information.

6th Circuit

Brake Parts, Inc. v. Lewis, No. 10-6531, 2011 WL 3510225 (6th Cir. Aug. 11, 2011). In its
misappropriation of trade secrets action, Brake Parts, Inc. (“BPI”) alleged that its competitor Satisfied
Brake Products, Inc. (“Satisfied”) participated in secret correspondence with former BPI employee Lewis,
illicitly procuring confidential, proprietary information about BPI”s product formulations, which Satisfied
then integrated into its own manufacturing process. The district court determined that BPI’s
formulations were trade secrets and held a second evidentiary hearing to determine whether Satisfied
used the formulations it received from Lewis. BPI presented two former Satisfied employees as
witnesses who testified that Satisfied stole and used BPI’s formulations as early as 2000 – years before
Lewis’s alleged misappropriations. Based on these facts, the district court granted BPI a preliminary
injunction, which Satisfied appealed in the Sixth Circuit. Reviewing the district court’s decision to grant
injunctive relief, the court applied the four-part DeLorean Motor Co. Test and affirmed the district
court’s decision to award BPI a preliminary injunction.

The court found that BPI demonstrated a likelihood of success on the merits, showing its formulations
were trade secrets ((1) requiring extensive and costly research; (2) unsusceptible to reverse engineering
by competitors; (3) explaining how to replicate BPI’s manufacturing process; and (4) assiduously
protected by BPI) and that Satisfied received and used these secrets from Lewis in knowing violation of
Lewis’s confidentiality agreement. Without injunctive relief, BPI was vulnerable to irreparable injury,
such as the loss of goodwill loss of competitive advantage, and loss of research incentives. Injunctive
relief only threatened to harm or terminate Satisfied’s business, which was a result of its own bad acts.
Finally, the district court did not clearly err in finding that the evidentiary record suggested that the
public interest weighed in favor of enjoining Satisfied’s behavior. As a result, the court affirmed the
district court’s decision to award BPI a preliminary injunction.


Atlantech, Inc. v. Am. Panel Corp., No. 11-50076, 2011 WL 2078222 (E.D. Mich. May 24, 2011). Plaintiff
had an ongoing relationship with Defendants in which Plaintiff purchased American aircraft displays
from Defendants and exported them to Russian manufacturers. Plaintiff alleged that Defendants
breached several agreements by selling to one of these Russian manufacturers, UIMDB, through an
intermediary company, Nexel Defense (a third party in the case). Plaintiff moved to compel discovery of
documents relating to communications between Nexel and Defendants regarding the relationships
between Nexel and Defendants and between Nexel and UIMDB. The court found that the material did
not qualify as a privileged matter under FRCP 45. However, it determined that the communications were
trade secrets under the Michigan Trade Secrets Act, s. 445.1902(d), and the court exercised its
discretion to deny Plaintiff’s motion. First, the information had economic value because even though
there was a dispute about Plaintiff’s status as an active business, it could re-enter the market and use
the information to compete with Nexel. Furthermore, the information had economic value because it
was not generally known to others. In finding economic value, the court deemed it relevant that the
relationship between Defendants and Nexel was ongoing, and that Nexel specifically indicated to the
court which information would be disclosed and how it would be harmful. Second, both Nexel and
Defendants had taken reasonable efforts to protect the information through a confidentiality and non-

disclosure agreement, and the companies’ proprietary information had, in fact, been kept secret up to
that point.

Dow Corning Corp. v. Xiao, No. 11-10008-BC, 2011 WL 2015517 (E.D. Mich. May 20, 2011). Plaintiff
corporations alleged, among other things, that Defendants, an individual and multiple companies he
formed, misappropriated Plaintiff’s trade secrets by hiring a former employee of Plaintiff and stealing
Plaintiff’s processes for manufacturing a specific chemical compound. Defendant moved to dismiss this
portion of the complaint, arguing that Plaintiff had not identified a specific trade secret that was
misappropriated. In denying Defendant’s motion, the court pointed out that Plaintiff had specifically
described in its complaint the relevant chemical compound and some of the basic processes involved in
the Plaintiff’s manufacture of this compound, and that Plaintiff alleged that those processes, and the
specifications and conditions necessary to run them well, were trade secrets. This amounted to
sufficient factual information to let the court reasonably draw the inference that Defendant was liable.

Gene Codes Corp. v. Thomson, No. 09-14687, 2011 WL 611957 (E.D. Mich. Feb. 11, 2011). Plaintiff
alleged that Defendant misappropriated the identities of a number of Plaintiff’s customers as well as
Plaintiff’s plans to possibly incorporate a new type of software into its products. In granting Defendant’s
motion for summary judgment, the court held that there were no protected trade secrets involved.
Plaintiff had not identified a customer list and claimed nothing more than that Defendant knew who
some of Plaintiff’s customers were; and Plaintiff’s plans to utilize new software were not trade secrets
because Plaintiff had already publicly announced them. Even if Plaintiff had identified trade secrets, the
court found that it could not demonstrate misappropriation. Plaintiff conceded that no actual
misappropriation had occurred, but alleged threatened misappropriation through the doctrine of
inevitable disclosure. Noting that Michigan courts had mentioned in neutral terms but not endorsed the
concept of inevitable disclosure, the court found no threatened misappropriation. Plaintiff argued that
disclosure was inevitable as evidenced by Defendant’s duplicity, specifically her communications with a
competitor about changes in the market and a client’s enthusiasm for the competitor’s product, her
solicitation of and employment with the competitor, and her contact with several of Plaintiff’s
customers after accepting a job with the competitor. The court declared that Defendant’s contact with
some of Plaintiff’s customers showed only that Plaintiff and Defendant’s new employer had overlapping
customers. It found that discussing employment with a competitor was not duplicitous. The court noted
that Defendant’s communications with the competitor either amounted to small talk or concerned
matters already publicly known.

Sulfo Technologies, L.L.C. v. Schmoyer, No. 294246, 2011 WL 445808 (Mich. Ct. App. Feb. 8, 2011).
Plaintiff accused Schmoyer, a former employee and shareholder, of misappropriating information
regarding Plaintiff’s processes as well as its vendors and customers by sharing the information with a
competitor, SAT, after his employment with Plaintiff ended. The court upheld the lower court’s decision
in favor of Defendants. Plaintiff had failed to show that Defendants used any of Plaintiff’s confidential
information. Schmoyer had not been a part of SAT’s sulfonation design and engineering process. More
importantly, the equipment utilized in the sulfonation process was publicly and readily available, and
while Plaintiff averred that its particular machinery configuration was a secret, the court found that
because such configurations are simply a matter of trial and error and are products of the particular
item to be treated, there was no evidence that SAT had used Plaintiff’s configuration.

International Technologies Consultants, Inc. v. Stewart, No. 07-13391, 2011 WL 4014403 (E.D. Mich.
Sept. 9, 2011). International Consultants complained that Stewart wrongfully and without justification,
sent two letters sent to Arabian United Float Glass Company (“Arabian”) and a project’s financing

company, questioning Plaintiff’s reliability and its ownership of relevant technology rights and the
quality of International Consultants’ work product after the parties competed for a job with Arabian.
International Consultants claimed it suffered damages and injuries to its reputation within the business

In an effort to protect its business interests, International Consultants filed this lawsuit in which it
specifically accused Stewart of (1) unfair competition in violation of the Lanham Act, 15 U.S.C. Section
1125(a)(1)(B), (2) unfair competition in violation of Michigan common law, (3) intentional interference
with contract relations, (4) libel, and (5) interference with a business opportunity. Stewart responded to
the foregoing charges with a written denial and the filing of a counter-complaint in which it alleged that
International Consultants unlawfully and unethically disclosed certain information which had been
considered by the parties to be confidential trade secrets, pursuant to a confidentiality agreement
signed by the parties nearly 20 years ago. Stewart asserted counter causes of action for (1) breach of
contract, (2) interference with an existing business relationship, and (3) violations of the Michigan
Uniform Trade Secrets Act (“MUTSA”), Mich. Comp. Laws Section 445.1901 et seq.

The court denied Stewart’s motion to dismiss for lack of subject matter jurisdiction, as the deadline for
dispositive motions had long since passed, but noted that International Consultants had yet to
adequately demonstrate its constitutional standing to pursue a lawsuit under Article III of the U.S.
Constitution. By filing a subsequent pleading, waiving its right to pursue any legal remedies,
International Consultants was left to pursue equitable relief through a permanent injunction. However,
the court found no continuing threat of future injury that could be addressed through permanent
injunction, as International Consultants’ lawsuit was based on alleged misconduct by Stewart that had
already occurred. As International Consultants could not be made whole for alleged wrongs it may have
already suffered, the court ordered International Consultants to show good cause within 10 days as to
why its complaint should not be dismissed for lack of standing under Article III.

Mogul World Wide, Inc. v. Mahle GMBH, No. 11-10675, 2011 WL 4485080 (E.D. Mich. Sept. 27, 2011).
Plaintiff, Federal-Mogul, an automotive supply manufacturer, sued Defendants, rival auto-part
manufacturers, claiming infringement upon two patents, breach of contract, misappropriation of trade
secrets, and unfair competition. Plaintiff believed Defendant Mahle was soliciting GM and Caterpillar,
Inc. business with a friction-welded steel piston, which allegedly infringed upon Plaintiff’s ‘472 Patent,
and filed an a petition for a preliminary injunction. Plaintiff also claimed infringement on its’ ‘457
patent, which Defendants also tried to market to GM, but did not petition the court for a preliminary
injunction. Plaintiff also contended that certain engineer employees of its subsidiary company, M Tech,
were supplying Defendant Mahle with replica friction-welded steel pistons. Defendants filed motions to
dismiss and/or motions for summary judgment as to all aspects of Plaintiff’s amended complaint. As to
the ‘472 patent, the court denied Defendants’ request for dismissal based on lack of subject matter
jurisdiction and denied Defendants motion for summary judgment, finding that a jury could reasonably
find that the Defendants were offering to sell products that allegedly infringed a specific claim of the
‘472 patent. Alternatively, the court granted Defendants’ motion for summary judgment as to the ‘457
patent, reasoning that Plaintiff failed to point to a specific allegedly infringing product which would
indicate that its exclusive rights to the ‘457 patent had been infringed. In order to withstand summary
judgment in this instance, Plaintiff would have had to present evidence that Defendant Mahle, or its
affiliates under its direction or control, performed each and every step or element of its claimed
methods as articulated in the ‘457 patent. Further, the court granted Defendants’ request for dismissal
of Plaintiff’s breach of contact claim, as it was brought outside Michigan’s six year statute of limitations
for breach of contract actions. The court did not toll the statute of limitations, citing Plaintiff’s

insufficient allegations that Defendant Mahle made specific affirmative representations with the intent
that Plaintiff would rely upon them to their detriment. The court denied Defendants’ request for
dismissal of Plaintiff’s misappropriation of trade secrets claim, finding that Plaintiff adequately advanced
a purported violation of the Michigan Uniform Trade Secrets Act (“MUTSA”). Plaintiff alleged the
presence of what would qualify as a protectable trade secret under the MUTSA, both parties went to
great lengths to keep the information at issue confidential, lending credence to the notion that the
material was of a sensitive nature and that the Defendants should have known not to disclose it. The
Defendants’ request for summary judgment was granted in regards to Plaintiff’s common law unfair
competition claim, as Plaintiff was unable to point to a breach of a legal duty outside any contract
obligation between the parties. Finally, the court considered Plaintiff’s request for immediate injunctive
relief, rejecting injunctive relief as to the ‘472 and ‘457 patents due to an inability to establish likelihood
of success on the merits in its claims for infringement and finding insufficient evidence that Plaintiff
would be irreparably harmed in the absence of court intervention.

Dura Global Technologies, Inc. v. Magna Donnelly Corporation, No.2:07-cv-10945-SFC-MKM, 2011 WL
4527576 (E.D. Mich. Sept. 29, 2011). In this trade secret and unfair competition case, the Court allowed
Plaintiff Dura to argue at trial the additional trade secrets identified in its Proposed Final Pretrial Order
and its response brief. Dura showed that it obtained new evidence of trade secret misappropriation
through the documents produced by Defendant Magna near or after the discovery deadline and through
discovery that took place in a related case in Oakland County, Michigan Circuit Court. The court also
found that Dura timely sought to include the additional trade secrets and held that Dura was not
dilatory or seeking to ambush Magna with the new trade secrets. Throughout the course of its opinion,
the court emphasized the importance of articulating allegedly misappropriated trade secrets with
“reasonable particularity,” while warning that a continued failure to do so could warrant sanctions. The
court asked Dura to create a list, rather than a document in the style of a brief, omitting general
references and work instructions and replace them with “specific references to concrete documents.”
Dura’s second amended list of trade secrets was found to be too vague, using general language to
describe trade secrets, such as “information related to Dura’s confidential employee information,”
“Dura’s costing information and creation of ‘Lessons Learned’ database for key upcoming rear back light
programs,” and “confidential customer information.” Although the court denied Dura’s motion to
amend its complaint and list of trade secrets and other requested relief, it stated that the critical issue of
“whether or not the documents produced by Magna established trade secret misappropriation ‘is a
question for summary judgment motion or for the jury.’”


Capitol Specialty Ins. v. Indus. Electronics, No. 09-6368, 2011 WL 96521 (6th Cir. Feb. 23, 2011).
Defendants, an industrial electronics repair company and a company employee, were sued by the
employee’s former employer for allegedly using that company’s confidential information, in violation of
a confidentiality agreement. Plaintiff, Defendant company’s liability insurer, sought a ruling that it did
not have to defend the suit. The Court of Appeals agreed. Putting aside legal issues regarding trade
secret law in Kentucky, the court found that the insurance policy precluded claims arising out of any
alleged breach of contract.


Litigation Mgmt., Inc. v. Bourgeois, No. 95730, 2011 WL 2270553 (Ohio Ct. App. 8 Dist. June 9, 2011).
Plaintiff, having secured damages at the trial court level for breach of nondisclosure agreements and for

trade secret misappropriations, appealed that court’s refusal to permanently enjoin Defendants from
utilizing the misappropriated information. The Court of Appeals reversed. First, the court noted that in
the context of permanent injunctions, assessing whether Plaintiff has shown irreparable harm and
whether damages are an inadequate remedy are essentially the same issues, and therefore are
combined into a single analysis. The court found that damages were an inadequate remedy because
they would merely remedy Plaintiff’s past injury from losing business to Defendants, and would do
nothing to prevent future, similar injury. Without an injunction, the Defendants would obviously
continue to use Plaintiff’s trade secrets, to Plaintiff’s detriment. Because the context was a trade secret
misappropriation, Plaintiff was entitled to a rebuttable presumption of irreparable harm from losing its
confidential information. Plaintiff prevailed despite not making a showing of future harm because the
burden on this issue fell on Defendants in the trade secret context.

R.C. Olmstead, Inc. v. CU Interface, LLC, No. 5:08CV234, 2011 WL 557599 (N.D. Ohio Feb. 16, 2011).
After garnering summary judgment in their favor on a misappropriation claim, Defendants moved to
recover costs and attorneys’ fees under state and federal law. The court found that the
misappropriation claim may have been brought in bad faith as Plaintiff’s president admitted that the
product in question was not a trade secret and had not been protected. The claim was not frivolous,
however, because Plaintiff would have brought its other claims, even if it had not brought the
misappropriation claim. However, costs and fees were awarded starting from the point in trial when it
became obvious that the misappropriation claim would not succeed. Specifically, after Plaintiff’s expert
testimony was stricken from the record, it was clear to all concerned parties that Plaintiff’s claims would
inevitably fail.

Kendall Holdings, LTD. v. Eden Cryogenics, LLC, No. 2:08-cv-390, 2011 WL 3652696 (S.D. Ohio Aug. 18,
2011). Eden moved the court to exclude evidence or argument concerning Kendall’s claim that Eden
misappropriated trade secrets. The court declined to exclude evidence or argument on the trade secret
issue, while clarifying what Kendall asserted to be the trade secrets upon which its claim was based.
Overall, the court found Kendall’s discovery responses to be sufficient, giving Eden fair notice of the
essential details of the trade secret claim so that they could conduct appropriate discovery and file
appropriate motions concerning the merits of the claim. Narrowing the scope of Kendall’s trade secret
claims, the court focused on a set of drawings which Eden concededly took with them without Kendall’s
permission and used in the manufacture and production of four products which Kendall identified in its
interrogatory answers. The information in the drawings and other information needed to interpret or
implement the drawings, such as separate lists of tolerances or specifications, were the matters for
which plaintiff sufficiently claimed trade secret protection. The court excluded other information, not
pleaded with requisite specificity, such as pricing information or customer lists, limiting Kendall’s claim
to information related to the design and manufacture of the four specific products at issue.

Riverhills Healthcare, Inc. v. Guo, M.D., No. C-100781, 2011 WL 3847262 (Ohio App. 1 Dist. Aug. 31,
2011). Plaintiff-appellee Riverhills Healthcare, Inc. (“Riverhills”) filed a complaint against Defendant-
appellant Z. George Guo, M.D. (“Guo”), alleging breach of an employment agreement and
misappropriation of trade secrets. The trial court granted summary judgment in favor of Riverhills on
both claims, and awarded it damages. Guo has filed a timely appeal from that judgment. The appellate
court found merit in Guo’s four assignments of error (Assignments of Error on the Construction of the
Misappropriation of Trade Secrets, the Breach of Contract/Reasonability and Construction of the Non-
Compete Clause, and Damages) and reversed the trial court’s judgment. Guo contended that genuine
issues of material fact existed as to whether he misappropriated the trade secret patient lists and other
information. Riverhills and Guo presented two different versions of what Guo did when logged into the

Riverhills software system and whether he misappropriated trade secret information, which could not
be resolved by summary judgment as the outcome would be dependent on the parties’ credibility. Guo,
who had been repeatedly reminded of his alleged lack of productivity, maintained that he was merely
attempting to determine his level of productivity by reviewing the confidential information when
searching the Riverhills database and that he did not memorize or take any information with him. The
trade secret information included Riverhills’s referring physician list, fee schedules, and patient list
(including names and addresses). Because there was no way to tell whether Guo memorized or took the
trade secret information with him or not, the trial court erred in granting summary judgment. Although
the appellate court found the non-compete clause to be reasonable as a matter of law (it applied for
one year and to an area within 5 miles of Riverhills), there remained a genuine issue of material fact as
to whether certain discussions between Guo and Riverhills regarding Guo’s shareholder status were
sufficient to allow Guo to terminate the contract pursuant to the language of the contract. Damages
awarded as a result of the trial court’s granting summary judgment were also erroneous, as the
appellate court held that the trial court erred in granting summary judgment.

Solar X Eyewear, LLC v. Bowyer, No. 1:11-cv-763, 2011 WL 3921615 (N.D. Ohio Sept. 7, 2011). Bowyer
moved the court to reconsider its denial of the parties’ joint motion for a protective order. The
proposed order asserted that several general categories of business information were relevant in the
case and that information designated as confidential would be subject to a series of restrictions to
prevent the information from entering the public domain. The parties claimed the proposed protective
order was necessary to protect information that “may qualify as trade secrets or confidential
information,” or “could harm the other party’s business interests.” The court disagreed, stating that
such vague, conclusory representations provided no basis for the issuance of a protective order. Merely
alleging potential disclosures of trade secrets does not justify a protective order. Not only did Bowyer
fail to make the requisite showing of good cause in its broad and speculative proposed order, their
motion to reconsider offered only unsubstantiated allegations that Solar X seeks to discover classes of
documents that may, under circumstances not suggested by Bowyer, describe information entitled to
trade secret protection. Without specific, definitive showings of cognizable harm, the court had no basis
to overcome the public’s interest in access to open court proceedings. Thus, due to the utter absence of
any showing of particularized harm the parties were not entitled to secrecy in light of the public’s right
to information and the court denied the motion.

Zarwasch v. SKF Economus USA, Inc., Nos. 1:10-cv-1327, 1:10-cv-1548, 2011 WL 4628745 (N.D. Ohio
Oct. 3, 2011). Plaintiff SKF USA (“SKF”) filed suit against former employee Defendant Zarwasch
(“Zarwasch”)and his company, Heza Seal, LLC (“Heza”), alleging that Zarwasch set up his own company,
Heza, to compete with SKF USA and used confidential information obtained from subsidiary, SKF
Economus in Heza’s operations. The court found that Zarwasch copied extensive amounts of
confidential information belonging to SKF to which he had access by virtue of his position at SKF
Economus; he took this information with him when he left SKF Economus; he used SKF’s confidential
information in conducting Heza’s business; when ordered by the court to produce all relevant electronic
devices and documents, he deliberately and intentionally failed to do so; his testimony regarding his
use, location, possession, and failure to produce these devices and documents was “incredible,” and in
many respects, false; the court concluded that Zarwasch spoliated evidence and that SKF was entitled to
adverse inferences from this intentional failure to produce that evidence; these inferences supported
the conclusions that Zarwasch extensively used SKF’s confidential information in conducting Heza’s
business and he remained in possession of extensive amounts of SKF’s confidential information. The
court concluded that given Zarwasch’s willful and malicious misappropriation of SKF Economus’s trade
secrets, an award of reasonable attorney’s fees was appropriate. Further, the court found that the

litigation was unnecessarily and substantially protracted by Zarwasch’s repeated spoliation of evidence
and failure to fulfill his discovery obligations. Thus, the court awarded attorney fees pursuant to the
Ohio Uniform Trade Secrets Act (OUTSA) in an amount equal to the damages awarded as a sanction for
spoliation of evidence.

MAR Oil Company v. Korpan, No. 3:11CV1261, 2011 WL 5023263 (N.D. Ohio Oct. 20, 2011). Plaintiff,
MAR Oil Company, an oil and gas company, sued Korpan, Brock, and associated exploration companies
in 2008, claiming that Korpan, while in possession of its trade secrets, improperly shared those secrets
with the other defendants. The court never reached the ultimate issue of whether a trade secret
existed, and if so, whether it was misappropriated, as substantial questions of material fact remained
unanswered respective to those issues. Plaintiff claimed Defendants’ use of its two and three-
dimensional seismic readings in the pursuit of oil and gas deposits in northwest Ohio constituted the
misappropriation of confidential trade secrets. Although Plaintiff filed its claim within the 4-year statute
of limitations, the court was not persuaded that a preliminary injunction would benefit the public
interest. Applying the 6-part Plain Dealer test, adopted by the Ohio Supreme Court in State ex rel. The
Plain Dealer v. Ohio Dep’t of Ins., 80 Ohio St.3d 513, 524-25, 687 N.E.2d 661 (1997), to determine the
existence of trade secrets, the court applied the test’s six prongs and found there was not enough
information to determine whether or not a trade secret existed and whether it was misappropriated:
the agreement by which Defendant Korpan was bound to keep Plaintiff’s seismic readings confidential
ended by its own terms in January, 2005; the parties had yet to address the extent to which Plaintiff’s
employees or employees in the oil and gas business would know the information in dispute; Plaintiff did
not have written confidentiality agreements with any entities with which it was working at the time and
specified no other active effort to maintain the secrecy of its trade secrets; the information at issue did
have at least some economic value; the information at issue allegedly cost Plaintiff over $500,000 to
acquire; and it was unclear from the pleadings how much time and money others would have to spend
to replicate the information in dispute. Thus, the court denied Plaintiff’s request for a preliminary


Universal Delaware, Inc. v. Comdata Network, Inc., No. 3:10-mc-00104, 2011 WL 1085180 (M.D. Tenn.
Mar. 21, 2011). Defendant, an issuer of “fleet cards” for trucks, was being sued in a separate case for
monopolistic behavior and violations of the Sherman Act. Defendant moved to subpoena non-party
FleetOne, a major competitor, to acquire information for its defense in that suit. FleetOne moved to
modify the subpoena, arguing that the identities and number of customers won from Defendant, the
reasons these customers switched companies, and FleetOne’s cooperation with truck stop chains to
secure customers were trade secrets and should not have to be provided. The court applied an already-
established three-prong test, asking whether each piece of information was a trade secret, and then
asking whether each was necessary and relevant, and if both were the case, balancing the two interests.
The court found all of these items to be trade secrets, despite what it called FleetOne’s conclusory
arguments, because the confidential nature of such strategic information on competition and customers
is self-evident, particularly where the disputing parties are direct competitors. As to the reasons
customers switched companies and any coordination by FleetOne with truck stop chains, the court
granted FleetOne’s motion because Defendant had failed to show why these were relevant to the
Sherman Act suit. However, the number and identity of customers were plainly relevant to Defendant’s
claim in the antitrust suit that competition was not lacking in the market. Balancing the two parties’
interest, the court denied FleetOne’s motion regarding this information because it was central to
Defendant’s antitrust case and because the subpoena was limited to certain customers, not FleetOne’s

entire customer list. The court noted FleetOne’s argument that the information was unnecessary
because Comdata could determine on its own which customers had switched, and found this to be
evidence that the damage from the subpoena to FleetOne would be slight because the information was
not truly secret.

Otter’s Chicken Tender, LLC v. Coppage, No. M2010-02312-COA-R3-CV, 2011 WL 2552663 (Tenn. Ct.
App. June 27, 2011). Plaintiff, a restaurant, sued its former CEO for breach of non-compete and non-
disclosure agreements, which provided for an award of attorney fees to the prevailing party in the event
of litigation. The trial court granted Plaintiff a temporary restraining order prohibiting Defendant from
working for a competitor of Plaintiff and requiring Defendant to return confidential information to
Plaintiff. After trial, the court dismissed Plaintiff’s claims and refused to issue a permanent injunction,
but because the non-compete provision would not expire for another three months, extended the
temporary injunction until the provision’s expiration date. The trial court denied Plaintiff an award of
fees, reasoning that Plaintiff had not prevailed because the court had dismissed Plaintiff’s complaints
and denied Plaintiff a permanent injunction. Defendant appealed the extension of the injunction,
arguing that temporary injunctions are intended only to maintain the status quo until a decision on the
merits, and, as such, should not last past that decision. The court of appeals affirmed the extension of
the injunction because the injunction merely served to enforce the agreement that both parties had
agreed was valid and binding during the course of litigation. Regarding the court’s denial of fees to
Plaintiff, however, the court reversed. The injunction the trial court had awarded Plaintiff did more than
maintain the status quo – it altered Defendant’s behavior by forcing him to return the confidential
information. The portion of the trial court’s injunction temporarily barring Defendant from working for a
competitor also triggered the awarding of fees.

Am. Nat’l Prop. and Casualty Co. v. Campbell Ins., Inc., No. 3:08-cv-00604, 2011 WL 2550704 (M.D.
Tenn. June 27, 2011). One of Plaintiff insurance company’s employees allegedly transferred Plaintiff’s
proprietary information – specifically, information about specific policyholders, including their names,
contact information, coverage and rate information, and policy expiration dates -- to his wife, a former
employee of Plaintiff and now a competitor of Plaintiff, allowing the latter to garner business that was
formerly Plaintiff’s. Plaintiff sued both, as well as the wife’s insurance company, on breach of contract, a
consumer protection claim, trade secret misappropriation, intentional interference with business
relationships, unfair competition, and civil conspiracy. The court denied Defendants’ motion for
summary judgment on the trade secret claim. Plaintiff had submitted evidence that the information was
economically valuable because it allowed the competitor to effectively target Plaintiff’s customers,
providing the competitor with a roadmap regarding which policyholders to target and how to undercut
Plaintiff. Plaintiff had also submitted evidence that the information was not capable of being easily
reproduced; a competitor could ask each individual policyholder about the details of his policy, but the
competitor would have no way to identify in the first place the policyholders to target without the
confidential information. Finally, Plaintiff submitted evidence that it took measures to keep the
information confidential by maintaining it on a secure computer system at its home office, granting
access to employees only on a need-to-know basis, and inserting a provision into agent agreements
designating the information as trade secrets and requiring employees to return such information upon
termination of the agreements. The court disparaged the claim made in older cases that customer-
related information can never be a trade secret because it is often available from sources other than the
employer. The court also noted the relevance in this case of the fact that the insurance business has a
very broad spectrum of possible customers, making it difficult to identify a competitor’s customers
without the aid of that competitor’s confidential information – in other words, the insurance market is
not a “targeted” one. Defendants pointed out that Plaintiff routinely disclosed the allegedly confidential

information to banks and third-party administrators of insurance policies, but the court responded that
this did not matter as long as Plaintiff did not disclose the information to competitors or the general

7th Circuit

Seng-Tiong Ho v. Taflove, 648 F.3d 489 (7th Cir. 2011). Plaintiffs were a Northwestern University
professor and a graduate student who created certain mathematical formulas. Plaintiffs published part
of the formulas in the student's thesis. Defendant was plaintiff professor's former graduate assistant. He
and another professor republished some of the information previously published in the thesis. Plaintiffs
sued for copyright infringement, fraud, conversion, and misappropriation of trade secrets. The first issue
for the court was to determine whether the Copyright Act preempted plaintiffs' state law claims. The
court held that because conversion and fraud assert the same interests as those under the Copyright Act
– to control the publication of copyrighted work – those claims were preempted. However, the claim for
misappropriation was not preempted because a trade secret claim requires proving that information
was a secret and that a confidential relationship was breached. Those elements are not satisfied simply
by proving a work was copied without authorization, and therefore the Copyright Act does not preempt
a trade secrets claim.

The court then evaluated the merits of plaintiffs' trade secrets claim. Because the formulas had already
been published in plaintiff's thesis, the court held that the formals did not maintain the secrecy status
required for a meritorious claim. Plaintiffs argued that the formulas were nevertheless a trade secret
because most people would have properly cited to the plaintiffs when using the formulas. The court
rejected the argument and reasoned that an expectation of attribution is not part of a trade secrets
claim. Because the information was purposefully disclosed, the court held that the information could
not receive protection and summarily dismissed plaintiffs' trade secret claim.


1221122 Ontario Ltd. v. TCP Water Solutions, Inc., 2001 WL 2516531 (N.D. Ill. June 23, 2011). In an
underlying trade secret misappropriation case, plaintiff filed a motion to compel discovery responses.
Defendant argued that the court should not grant the motion because the responses involved divulging
confidential and trade secret information. The court granted the motion, noting that the very nature of
a trade secret misappropriation case will involve turning over sensitive information in discovery. The
court modified the protective order on the discovered information though and required an attorney's
eyes only provision so as to provide sufficient protection to the parties' trade secrets during the
discovery process.

Dynamic Fluid Control Ltd. v. Int'l Valve Mfg., LLC, 790 F. Supp. 2d 732 (N.D. Ill. 2011). Defendant filed
a motion to dismiss plaintiff's trade secret claim, alleging plaintiff failed to identify any specific trade
secrets that were misappropriated. The court denied the motion, holding that at the preliminary stage in
litigation, plaintiff only needed to establish the basic elements of trade secret misappropriation. After
finding that plaintiff pled sufficient facts, the court denied defendant's motion.

Fire 'Em Up, Inc. v. Technocarb Equip. (2004) Ltd., 799 F. Supp. 2d 846 (N.D. Ill. 2011). Defendant
brought a motion to dismiss plaintiff's misappropriation of trade secret claim. Defendant argued that
plaintiff failed to specify what it was alleging was a trade secret, and that plaintiff failed to establish it
took any reasonable measures to protect any information as a trade secret. The court rejected
defendant's first argument, reasoning that a complaint does not need to contain specific details of what

information a plaintiff is seeking to protect, but rather only needs to refer generally to the type of
information. The court agreed with defendant's second argument though and dismissed the claim. The
court reasoned that although plaintiff required its employees to sign a standard non-disclosure
agreement, the agreement alone was insufficient as evidence that plaintiff took reasonable measures to
protect the information as a trade secret.

Huawei Tech. Co. v. Motorola, Inc., 2011 WL 612722 (N.D. Ill. Fed. 10, 2011). Plaintiff manufactured
technologies for cellular communications. Plaintiff and defendant entered into an agreement where
plaintiff would create such products, sell them to defendant, and defendant would sell the products on
the market under defendant's name. Defendant and Nokia, another cellular company, began negotiating
a merger. Nokia was a direct competitor of plaintiff's though and plaintiff did not want its trade secrets
disclosed to Nokia. Plaintiff sought a preliminary injunction, claiming threatened misappropriation of
trade secrets. The court held that plaintiff established a high likelihood of success on the merits of the
claim, and therefore granted the injunction.

The court explained that a plaintiff could prove such a claim through the inevitable disclosure doctrine.
The doctrine protects confidential information when new employment will inevitably lead employees to
rely on trade secrets gained during their previous employment. The court must examine three things to
evaluate whether a threatened misappropriation is actionable under the inevitable disclosure doctrine:
(1) the level of competition between the owner of the trade secrets and the new employer, (2) whether
the employees' position with the new employer is comparable to the position with the former employer,
and (3) the actions the new employer has taken to prevent new employees from using or disclosing the
trade secrets.

After noting that plaintiff took reasonable steps to maintain the secrecy of its information, the court
held that plaintiff's technologies qualified as trade secrets under the Illinois Trade Secrets Act. The court
reasoned that Nokia's scheme to employ defendant's former personnel to assist customers who use
plaintiff's equipment would inevitably lead to the employees using the trade secrets. The court reasoned
that the employees should not be permitted to use such information that is unknown to other
competitors and only available to them because of past employment. As such, the court granted the

Mobile Mark, Inc. v. Pakosz, 2011 WL 3898032 (N.D. Ill. Sept. 6, 2011). While working for plaintiff,
defendant allegedly transferred plaintiff's proprietary data onto a hard drive and then gave the hard
drive to a competitor. Defendant brought a motion to dismiss plaintiff's claims for misappropriation of
trade secrets and conspiracy to breach the Trade Secret Agreement, a type of employment
nondisclosure agreement. Defendant argued that plaintiff did not sufficiently plead the claim because
plaintiff did not point to specific information that it was claiming was a trade secret. The court rejected
this argument, upholding precedent that dictates that full disclosure of the alleged trade secret is not
necessary to survive a motion to dismiss. Further, the court held that the complaint stated a claim for
misappropriation under the inevitable disclosure doctrine. The court found persuasive the facts that
defendant copied plaintiff's proprietary information, defendant's new employer was a direct competitor
with plaintiff, and defendant's new employer actively encouraged defendant to disclose the

A more pressing issue for the court was whether to dismiss plaintiff's claim that defendant conspired to
breach the Trade Secrets Agreement defendant signed upon commencing employment. The Illinois
Trade Secrets Act preempts all claims except those based on contract arising from misappropriated
secrets. Significantly, the court noted that there is a distinction between a tort claim that is based on

underlying breaches of contract, and a contract claim. Therefore, insofar as the conspiracy claim alleged
a breach of the Trade Secret Agreement, the court dismissed the claim. However, to the extent that the
conspiracy claim was based upon violations of Computer Fraud and Abuse Act and the Illinois Computer
Crime Prevention Law, the court denied the motion to dismiss.

Saban v. Caremark Rx, LLC, 780 F. Supp. 2d 700 (N.D. Ill. 2011). Plaintiff filed for a declaratory judgment
invalidating his non-compete agreement with defendant. Defendant counterclaimed and requested a
preliminary injunction, alleging breach of contract and violation of the Illinois Trade Secrets Act. The
court upheld the magistrate's denial of defendant's motion for a preliminary injunction and recited the
magistrate's opinion. The magistrate concluded that defendant was unlikely to succeed on the merits of
its misappropriation of trade secrets claim. At first, the magistrate held plaintiff was exposed to
information that qualified as a trade secret because the pharmaceutical pricing scheme was not
common knowledge, not ascertainable from public information, defendant derived significant economic
value from the information, and defendant took reasonable measures to safeguard the information. The
court then determined whether plaintiff misappropriated the trade secret. Under Illinois law, actual or
threatened misappropriation is enough to warrant an injunction. A threatened misappropriation may be
shown through inevitable disclosure; however, proving inevitable disclosure requires more than just an
employer's fear that the employee will use the trade secret. Instead, the employer must show that the
employee had an intent or high probability that the employee will use the secret. To determine whether
disclosure is inevitable, Illinois courts consider the level of competition between the former and new
employer, whether the employee's position with the new employer is comparable to his former
position, and the actions the new employer has taken to prevent the employee from using or disclosing
the former employer's trade secrets. Upon applying the aforementioned three criteria, the magistrate
found that any information plaintiff retained from defendant was general knowledge, no evidence
indicated that plaintiff currently had access to trade secrets, and plaintiff's new employer did not
substantially compete with defendant such that disclosure was inevitable.

Tradesman Int'l, Inc. v. Black, 2011 WL 5330589 (C.D. Ill. Nov. 7, 2011). Defendants formed a
competing company with plaintiff, their former employer. Defendants sent five personal emails from
their work computers and attached plaintiff's potential customer list. Plaintiff sued for a variety of
breach of contract claims and a misappropriation of trade secrets claim. Defendants argued that the
customer list was not a trade secret because plaintiff failed to take reasonable measures to keep the
information a secret. The court noted that plaintiff merely took the precautions of giving one specific
employee the authority to distribute the list and requiring that all employees sign a non-disclosure
agreement. Although precedent cases held that these precautions were not enough when executed
individually, other precedent held that the combination of the two sometimes amounted to a
reasonable measure.

The court assumed, without deciding, that the list was a trade secret because further analysis of the
claim rendered the issue moot. The court reasoned that even if the list was a trade secret, plaintiff failed
to establish that two of the defendants actually misappropriated the information. As such, the court
granted summary judgment in favor of those two defendants. In regards to the remaining defendants,
the count assumed they misappropriated the information but held that no recovery was warranted. The
court found that because plaintiff did not offer sufficient evidence of actual damages, its remedy was
limited to a reasonable royalty for the unauthorized use of its trade secrets. However, because
defendants deleted the list within weeks of misappropriating it, the court held there was no basis to
award a royalty. As such, the court granted defendants' motion for summary judgment on the
misappropriation claim.

Triumph Packaging Grp. v. Ward, 834 F. Supp. 2d 796 (N.D. Ill. 2011). Plaintiff filed suit against
defendant, plaintiff's former general manager, under a threatened misappropriation of trade secrets
theory because defendant began working for a company that produced similar goods. Plaintiff argued
that its pricing schedule and customer list, manufacturing process, and customer-specific manufacturing
process were trade secrets. The court held that plaintiff was likely to succeed on the merits of its claim
for the pricing schedule and customer list because that information was not commonly known in the
industry, only three employees within plaintiff-company knew the information, and plaintiff required all
customers to sign a non-disclosure agreement prohibiting the customers from disclosing prices to
others. The court held that plaintiff was not likely to succeed on its claim for the manufacturing process
because there was no evidence that the process was not commonly known or that plaintiff took
reasonable measures to keep the information a secret. With respect to the customer-specific
manufacturing process, the court held there was a reasonable likelihood that the process plaintiff used
to create certain customer-specific colors was a trade secret because plaintiff expended substantial time
and resources to create the colors, and plaintiff took reasonable steps to maintain the information's

The court then turned to resolve plaintiff's argument that it would succeed on its threatened
misappropriation claim because of the inevitable disclosure doctrine. The court noted that Illinois courts
are reluctant to apply the doctrine because applying it too broadly will lead to employees being unable
to work for any remotely competitive company. Based on the fact that only a fractional amount of
defendant's overall revenue was attributed to producing the same products as plaintiff, the court found
that the two companies were not direct competitors. Plaintiff argued that although it may not currently
be in direct competition with defendant's employer, there was a potential the companies may compete
in the future. The court held that although future competition may warrant issuing an injunction, the
facts indicated that any future competition was minimal, at best. Furthermore, the court reasoned that
defendant's positions at the two companies were not similar and the disjunction diminished any danger
that defendant may disclose confidential information. In light of the court's foregoing reasoning and
holdings, the court denied plaintiff's motion for a preliminary injunction.

Union Fid. Life Ins. Co. v. Wells Fargo Ins., Inc., 2011 WL 2173755 (N.D. Ill. June 1, 2011). Plaintiff and
defendant entered into several agreements whereby defendant gave its customer list to plaintiff.
Plaintiff then redacted the list and solicited those customers to purchase plaintiff's insurance. Defendant
acted as the bill manager for those insurance policies, and in exchange, defendant received a portion of
the premium before delivering the remainder to plaintiff. In the first three agreements, any customer
information was designated the property of defendant. The last agreement did not designate an owner.
The parties mutually ended the agreements, but defendant continued to act as bill manager for the
accounts plaintiff had with defendant's customers. Sometime later, defendant told plaintiff it was going
to use plaintiff's redacted customer list to persuade policyholders to cancel their policy with plaintiff and
purchase from a third party whom defendant began contracting with. Plaintiff filed a motion for a
preliminary injunction. Notably, plaintiff did not argue that defendant misappropriated plaintiff's efforts
to create the redacted list; rather, plaintiff argued that defendant could not use the customer list in the
manner it sought. Because the first three agreements granted defendant ownership of client
information, the court held that defendant did not misappropriate information, as it is impossible to
steal one's own information. The court interpreted the final agreement's restrictions as granting
ownership of client information to plaintiff. After analyzing the facts under the appropriate standard for
injunctive relief, the court granted plaintiff's motion with respect to the last agreement.

Vienna Beef, Ltd. v. Red Hot Chi., Inc., 833 F. Supp. 2d 870 (N.D. Ill. 2011). Plaintiff sought a preliminary
injunction enjoining defendant from advertising that it uses the same recipe for hot dogs as plaintiff, and

for actually using the trade secret recipe. The court quickly rejected plaintiff's arguments because
plaintiff relied solely on defendant's advertising material for the proposition that defendant used the
recipe. Because plaintiff did not establish that defendant actually used the recipe, plaintiff failed to show
that defendant misappropriated the recipe.


CoMentis, Inc. v. Purdue Research Found., 765 F. Supp. 2d 1092 (N.D. Ind. 2011). Co-defendant Ghosh
was employed as a professor at Purdue, and through the course of employment, Ghosh granted Purdue
any intellectual property rights Ghosh may acquire while conducting his research for the university.
While a professor, Ghosh began consulting with plaintiff and similarly granted to plaintiff any rights he
may acquire as a result of plaintiff's trade secrets. Because of Ghosh's dual positions, plaintiff and
Purdue entered into a licensing agreement whereby Purdue granted plaintiff an exclusive license to use
some of the patents Gosh created but Purdue owned.

Through Ghosh's consulting position, plaintiff gave Ghosh sensitive information about a particular drug
it was working on. Unbeknownst to plaintiff, Gosh had previously sought two independent patents for
the drug. Sometime after plaintiff disclosed the drug information to Ghosh, a Purdue international
patent application that related to plaintiff's drug became publically available. Plaintiff filed suit against
defendant alleging the drug information was plaintiff's trade secret and that Purdue misappropriated
the information.

Purdue argued that plaintiff waived any trade secret claim because plaintiff voluntarily disclosed the
information to Ghosh. Purdue further argued that plaintiff waived any misappropriation claim because
plaintiff admitted that Purdue was the rightful owner of any intellectual property that plaintiff gave to
Ghosh. The court rejected both arguments and held that because plaintiff only disclosed the information
after Ghosh signed a non-disclosure agreement, plaintiff successfully took reasonably steps to keep the
information secret. Further, the court held that Purdue was only entitled to creations developed by
Ghosh, not any information to which Ghosh was privy. The court reasoned that because Ghosh did not
develop the information, plaintiff's trade secrets were beyond the scope of the parties' agreements.

Dion v. Allwin Powersports Corp., 2011 WL 693628 (S.D. Ind. Feb. 17, 2011). Plaintiff appealed the
magistrate judge's ruling that plaintiff's likelihood of success on its claim for misappropriation of trade
secrets was very low. Defendant argued plaintiff failed to sufficiency identify the trade secret that
defendant allegedly misappropriated. The district court agreed with defendant and the magistrate
judge. The court noted the paradox that in order to prevail in a claim for trade secrets, the secret must
be revealed. Because plaintiff did not identify what the trade secret was or how defendant
misappropriated it, the court held that plaintiff's claim had little merit.


Jarosch v. Am. Family Mut. Ins. Co., 837 F. Supp. 2d 980 (E.D. Wis. 2011). Jarosh and the other plaintiffs
were former employees of American Family Insurance. Before leaving American Family, plaintiffs
solicited American Family's clients to become clients of plaintiffs' new insurance companies. Plaintiffs
sued defendant for failure to pay termination commissions due to them under their contractual
agreements. Defendant counterclaimed under misappropriation of trade secrets and breach of contract
theories, and sought a preliminary injunction. Plaintiffs' employment agreements with American Family
expressly stated that all client information belonged to American Family. As such, the court held that
plaintiffs were guilty of misappropriating American Family's trade secrets. However, the court denied
defendant's request for an injunction and damages. The court stated that an injunction is warranted

when it is necessary to eliminate the commercial advantage that a person misappropriating a trade
secret would otherwise derive from the violation. The court found that defendant failed to demonstrate
that plaintiffs were still using the client information, or that plaintiffs continued to derive an economic
advantage from their misappropriation – an event that occurred five years earlier. Furthermore, the
court denied awarding defendant damages because defendant had already received damages under its
breach of contract claim, and the facts giving rise to the misappropriation claim were the same as the
facts under the contract claim.

8th Circuit

AvidAir Helicopter Supply Inc. v. Rolls-Royce Corp., No-3444, 101 USPQ2d 1069, 663 F.3d 966 (8th Cir.
Dec. 13, 2011). In consolidated suits filed under the Uniform Trade Secrets Acts of Indiana and Missouri,
appellee, Rolls-Royce Corp., sought damages and injunctive relief for alleged trade secret
misappropriation involving helicopter engine repair and overhaul information contained in appellee’s
Distributor Overhaul Information Letters (“DOILs”) and their periodic revisions. As the DOILs and related
revisions were publicly released by appellee’s predecessor in interest, appellant, AvidAir Helicopter
Supply Inc., conversely sought a declaratory judgment that the documents were not worthy of
protection. Appellant further alleged that appellee had tortiously interfered with appellant’s business
interest and violated antitrust laws. Resolving multiple summary judgment motions, the district court
found that some of the information contained therein constituted trade secrets and in addition to
paying $350,000 in actual damages for misappropriation, appellant must return all documents obtained
without appellee’s authorization. Finding for appellee, appellant’s claims and request for declaratory
judgment were dismissed.

In affirming the district court’s decision in its entirety, the eighth circuit noted that trade secret
existence is a question of law for courts to decide and as Indiana and Missouri both adopted the
Uniform Trade Secrets Act (“USTA”), it was unnecessary to determine which states’ law would apply.
The eighth circuit then noted that under the USTA, compilations of non-secret and secret information
constitute trade secrets when the combination affords a competitive advantage and is not readily
obtainable. The court further agreed with the district court that the DOILs were revised because of
appellee’s independent research and testing, and by using documents previously labeled as trade
secrets, appellant benefited by avoiding the expenses associated with reverse engineering.
Furthermore, in labeling the DOILs and the accompanying revisions as proprietary and restricting their
distribution to parties bound by confidentiality agreements, appellee exercised reasonable steps to
maintain secrecy where the non-public information was of value to competitors separate and apart
from the information already in the public domain. Insofar as the documents are protected trade
secrets and the district court did not abuse its discretion in entering a narrowly tailored permanent
injunction, its entry was also affirmed.


Marcia K. Hajek v. Kuhmo Tire Co., Inc., No. 4:08CV3157, 2011 U.S. Dist. LEXIS 1039 (D. Neb., Jan. 5,
2011). Plaintiff, individually and as a personal representative of the Estate of Alan E. Hajek, sought
damages caused by the allegedly defective design and manufacture of defendant’s KL41 tire. By way of
a motion to compel and to the extent that “subsequent remedial measures” are discoverable, plaintiff
sought production of documents related to the manufacture and specifications of defendant’s KL78 tire,
the replacement tire for the KL41.

In denying the motion to compel, the district court reasoned that the defendant removed the tire at
issue from the market solely because of low sales and that the requested information was irrelevant to
the subject matter of the lawsuit since the most salient similarity between the two tires - tired tread
patterns - was not identified by plaintiffs’ expert as the reason for the underlying automobile accident.
As the tires are different from each other and feature individually different design specifications, the
district court found that plaintiffs had not met their burden for obtaining discovery of trade secret
information related to defendant’s replacement tire.


K-V Pharmaceutical Company v. J. Uriach & CIA, S.A., No. 10-3403, 684 F.3d 588, 2011 U.S. App. Lexis
15901 (8th Cir. 2011). In a lawsuit filed in the United States District Court for the Eastern District of
Missouri, plaintiff, a Delaware corporation with a principal place of business in St. Louis, Missouri, sued
defendant, a Spanish corporation with its principal place of business in Barcelona, Spain, for breach of
contract and misappropriation of trade secrets.

In 1993, the parties entered into a contract to develop, manufacture, and sell an antifungal cream with
an ingredient developed by the defendant as well as a drug-delivery system developed by plaintiff.
Under the original contract, the defendant was to also sell the antifungal cream throughout the world,
except for in the United States, Canada, and Mexico, where plaintiff retained selling rights. Plaintiff
terminated the contract in 2005 and shortly thereafter, accused the defendant of failing to return
certain trade secrets and confidential information.

Defendant moved to dismiss the complaint for lack of personal jurisdiction, forum non conveniens, and
failure to state a claim upon which relief can be granted. The district court granted defendant’s motion
to dismiss for lack of personal jurisdiction and denied the motion for failure to state a claim without
prejudice. The forum non conveniens issue was not considered.

In reversing the district court, the Eighth Circuit held that sufficiently purposeful contacts had been
established and even exceeded to establish personal jurisdiction over the defendant. In particular and
under the Eighth Circuit five factor personal jurisdiction test, the court noted that defendant’s corporate
officials had visited Missouri to renegotiate a contract with plaintiff, had paid money to plaintiff as
agreed in the contract, and had exchanged several letters, emails, and telephone calls with the
defendant over the course of 12 years. In addition, the terms of the contract dictated that the
defendant would have additional substantive interaction with Missouri. In addition, the court found
that Missouri would have an interest in providing a forum for the defendant and the fifth and final
factor, convenience for the parties, would be neutral at best.

South Dakota

Rapid City Journal, Associated Press and South Dakota News Paper Associations v. The Honorable
John J. Delaney, South Dakota Seventh Circuit Court Judge, 804 N.W.2d 388, 2011 S.D. Lexis 113 (S.D.
2011). Rapid City Journal, Associated Press and South Dakota News Paper Associations (the “Media”)
filed a writ of mandamus or prohibition against Circuit Court Judge John J. Delaney for his imposition of
a gag order and closing a trial as well as sealing court records related to a civil action involving opposing
Bear Country USA, Inc. shareholder groups. While on opposite sides of the dispute, the shareholder
factions jointly requested and obtained, in a modified order, the closure of all portions of the trial
related to financial affairs, proprietary data and trade secrets involving operating methods and other
related information.

Reversing in favor of the Media, the South Dakota Supreme Court held that the trial court’s findings
regarding the existence of a trade secret were conclusory, unclear and did not fully consider the First
Amendment’s right of access and presumption of openness. The Supreme Court further reasoned that
the trial court’s failure to conduct an in camera hearing, render specific trade secret findings or narrowly
tailor the closure or gag order to only cover trade secret evidence, amounted to an abuse of discretion.


Cooper Tire & Rubber Co., vs. Phillips County Circuit Court, No. 10-1074, 2011 Ark. 183, 2011 Ark. Lexis
162 (Ark. 2011). In underlying negligence case involving a one-car accident, the plaintiffs filed a
complaint against Cooper Tire & Rubber Co. (“petitioner”), alleging that the accident was caused by a
defectively manufactured tire. In response to a motion to compel filed by the plaintiffs, the circuit court
ordered petitioner to fully respond to all discovery requests and denied petitioner’s motions for
protective orders on the basis that petitioner failed to preserve its objections to the plaintiff’s discovery
requests. Petitioner had objected to a number of individual requests on the basis that they were
burdensome, excessive and required the disclosure of trade secrets. Seeking relief, petitioner requested
a writ of certiorari or some other alternate writ.

In granting petitioner’s writ of certiorari and reversing the circuit court, the Arkansas Supreme Court
found that the dissemination of petitioner’s trade secrets and other confidential information would
amount to an improper private property taking without due process or just compensation. And given
that petitioner had timely objected to the discovery requests and filed its first motion for a protective
order within thirty days from the date the objectionable requests were mailed, it was determined that
the circuit court acted erroneously in applying the rules of discovery.

9th Circuit

U.S. v Nosal, 676 F.3d 854 (9th Cir 2012). In U.S. v. Nosal, a Ninth Circuit en banc panel affirmed the
judgment of the district court that dismissed criminal counts against a former employee of a headhunter
firm accused of violating the CFAA by conspiring with employees of the former employer to log on to the
employer’s confidential database and send proprietary files to a competitor. The court acknowledged
that the Eleventh, Fifth, and Seventh Circuits permit employers to pursue CFAA claims against
employees who violate computer use policies or violate duties of loyalty to their employer. The court,
however, reversed its prior three-member panel ruling and reaffirmed the holding in Brekka that the
CFAA prohibits improper access of computer information whether it is “without authorization” or
“exceed[ing] authorized access,” but not misuse or misappropriation. The court concluded that because
Nosal’s alleged accomplices had permission to access the company database, they did not “exceed
authorized access” under the CFAA.

The court stated that the statute was meant to punish hacking, not the misappropriation of trade
secrets. To find otherwise, Chief Judge Alex Kozinski reasoned, would “criminalize any unauthorized use
of information obtained from a computer” and “make criminals of large groups of people who would
have little reason to suspect they are committing a federal crime.” In a powerful dissent, Judge Barry
Silverman criticized the majority’s “far-fetched hypotheticals” and “straw men” that “playing sudoku,
checking email, [and] fibbing on dating sites” would render employees criminals under the CFAA. Judge
Silverman stressed that the case “has everything to do with stealing an employer’s valuable information
to set up a competing business with the purloined data, siphoned away from the victim, knowing such
access and use were prohibited in the defendants’ employment contracts.”


Pathway Med. Technologies, Inc. v. Nelson, Case No. CV11-0857 PHX DGC, 2011 U.S. Dist. LEXIS
113075 (D. Ariz. Sept. 30, 2011). In Pathway Med. Technologies, Inc. v. Nelson, an Arizona federal
district court in a diversity jurisdiction case refused to enjoin violations of a non-compete clause that
contained a Washington State choice-of-law provision. For two years, Nelson was a sales representative
in Arizona for Pathway, a developer, manufacturer, and seller of medical devices for the treatment of
arterial disease. While employed, he signed a confidentiality agreement in which he promised that for
one year after his employment ceased, he would not “divert or take away,” or “attempt or assist”
anyone else in diverting or taking away, any Pathway customer. The agreement contained a Washington
State choice-of-law provision. Following his resignation from Pathway, he was hired by a direct
competitor and allegedly engaged in the prohibited conduct for the benefit of the competitor and the
detriment of Pathway. Pathway sued Nelson and the competitor, and moved for temporary and
preliminary injunctive relief. Judge Campbell denied both motions.

Arizona courts determine the enforceability of a choice of law provision in a non-compete clause by
applying Sections 177 and 188 of the Restatement (Second) of Conflicts of Laws. According to the court’s
reading of those sections, the parties’ choice will be honored only if they “could have agreed in their
contract to the same provisions that the chosen law would impose, and could have done so under the
law of the state with the most significant contacts with the transaction.” The contract was negotiated
and signed in Arizona, the state where Nelson lived and where he performed his duties both for
Pathway and for its competitor. Washington law differs from that of Arizona in two respects. First,
Arizona “requires that non-compete provisions be narrowly drafted and no greater than necessary to
protect the employer’s legitimate interests,” whereas Washington enforces agreements “even if they
are quite broad and last for long periods of time.” Second, in contrast to the law of Washington, Arizona
“courts may not rewrite non-compete agreements to make them reasonable.” The court found that
Arizona had a greater interest than Washington, and that Arizona’s “fundamental policy” (a) requires
courts in that state to be less tolerant than courts in Washington with regard to enforcing broad non-
compete clauses, and (b) prohibits Arizona jurists (unlike their Washington counterparts) from using a
“blue pencil” to make such clauses reasonable. The court held that application of Washington law in this
case would be contrary to the “fundamental policy” of Arizona law. The non-compete clause here had
no express geographical limitations. Further, it applied to all Pathway customers including those with
whom Nelson never had had contact. Finally, the phrases “divert or take away any customer,” and
“attempt or assist” such diversion or taking away, were deemed to be unduly vague.


PhoneDog v. Kravitz, No. C11-03474 MEJ, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. Nov. 8, 2011). In
PhoneDog v. Kravitz, a district court in the Northern District of California denied a motion to dismiss and
ruled that PhoneDog could proceed with its lawsuit against a former employee for his continued use of a
Twitter account that PhoneDog alleges it owns and contains trade secrets, namely the compilation of
subscribers and the password used to access the account. PhoneDog reviews mobile products and
services and provides users with the resources that they can use to research, compare prices, and shop
from mobile carriers. Kravitz worked for PhoneDog as a product reviewer and video blogger and was
given access to PhoneDog’s Twitter Account to send out information and promote PhoneDog’s services
on its behalf. PhoneDog sued Kravitz for, inter alia, trade secret misappropriation and conversion, for his
continued use of the Twitter account after his employment with PhoneDog ended.

Kravitz moved to dismiss on grounds that the Twitter Account could not be a trade secret because the
names of the Twitter Account followers are, and have always been “publically available for all to see at
all times.” The passwords, he argues, are not trade secrets because they don’t derive any independent
economic value as required under the Uniform Trade Secrets Act, since they don’t provide any
“substantial business advantage.” The court denied Kravitz’s motion to dismiss both the
misappropriation of trade secrets and the conversion claims because PhoneDog had described the
subject matter of the trade secret with “sufficient particularity” and satisfied its pleading burden by
alleging that it had demanded that Kravitz relinquish use of the password and Twitter Account, but that
he has refused to do so. Whether the Twitter Account followers constitute trade secrets – and whether
Kravitz’s conduct constitutes misappropriation – the court ruled that such determinations require
consideration of evidence outside the scope of the pleading and should, therefore, be raised at
summary judgment, rather than on a motion to dismiss.

Delphon Indus., LLC v. Int'l Test Solutions, Inc., No. C 11-01338 PSG, 2012 U.S. Dist. LEXIS 659 (N.D. Cal.
Jan. 4, 2012). In Delphon Indus., LLC v. Int'l Test Solutions, Inc., a district court in the Northern District of
California found that a plaintiff had not identified its trade secrets with considerable specificity as
required by California Code of Civil Procedure Section 2019.210. Plaintiff Delphon develops and
manufactures gel products used in safely transporting delicate technology devices within and between
laboratories. In response to an interrogatory from Defendant ITS seeking identification of the trade
secrets that allegedly were misappropriated, Delphon stated that it “customizes the composition of its
gel materials to its customers’ needs” and that the trade secrets are “[t]he ‘recipe’ for its different gel
materials - including the amount of each ingredient used, the process . . . [and] methods of combining
the ingredients, the use of solvents with gel materials, and the blending, mixing and dispersion of
additives into the gel material.”

ITS told Magistrate Judge Paul Grewal that Delphon had not identified its trade secrets with the
specificity required by Section 2019.210 of the California Code of Civil Procedure, and he
agreed. Magistrate Judge Grewal stated that “[w]hatever [the plaintiff] wishes to claim as trade secrets
that [the defendant] misappropriated, it must identify each particular composition, formula, technology
and manufacturing techniques, application and manufacture of [the applicable product] without further
delay.” Magistrate Judge Grewal reasoned that CCP section 2019.210 provides a “flexible standard”
which does not require “every minute detail” of the claimed trade secrets, but must be adequate “to
permit the defendant to learn the limits of the secret and develop defenses [and] to permit the court to
understand the secret and fashion discovery.” He held that Delphon had fallen short of this
standard. First, it had admitted that its depiction of the trade secret was imprecise; the court added that
“In fact, the description is so general that Delphon did not even bother to protect the description under
the terms of the Stipulated Protective Order.” Second, Delphon’s Director of Materials Technology
conceded at her deposition that the disclosures were “conceptual” and lacked specific details even
though Delphon has this information. Third, the court explained that Delphon had offered “no credible
expert testimony suggesting that those in the field would be able to review Delphon’s designations and
distinguish the alleged trade secrets from information in the field.”

The lessons learned from this case are that a trade secret misappropriation plaintiff should 1) insist on
the entry of a protective order; 2) state that the description of the confidential information is covered by
that order, and 3) avoid referring to the disclosed information as “general” or simply
“conceptual.” Finally, the plaintiff should consider seeking to retain a qualified expert witness to the
extent necessary to testify that the unique characteristics of the trade secrets have been described
sufficiently to differentiate the trade secrets from public information.

Wistron Corp. v Phillip M. Adams & Assocs., LLC, No. C-10-4458 EMC, 2011 U.S. Dist. Lexis 102237,
(N.D. Cal. Sept. 12, 2011). In Wistron Corp. v Phillip M. Adams & Assocs., LLC, a federal district court in
the Northern District of California dismissed a trade secrets claim that was based on “Utah law or some
other state” because the plaintiff failed to establish a plausible claim as pled under Utah law. Plaintiffs
Wistron and AOpen brought action against Adams, seeking a declaration that certain patents owned by
Adams are not valid and enforceable and that they do not infringe those patents. Adams filed
counterclaims for patent infringement and trade secret misappropriation. Adams asserted a trade
secrets claim based on Utah’s Uniform Trade Secret Act, rather than California law. Wistron and AOpen
moved to dismiss the Utah based trade secret claim on grounds that, inter alia, “there is no factual
nexus to Utah - e.g., Adams has no connection to Adams has no connection to Utah (thus no injury was
suffered there) and the alleged misappropriation took place in Asia.” Adams argued that if suit is
brought under the wrong state’s trade secret law, the court will apply the law of the correct state. The
court clarified the rule in that the court will apply the correct law only after the plaintiff has first brought
a plausible claim as it is pled. The court concluded that there was nothing to indicate Adams had a
plausible claim under Utah law. Thus, the court dismissed Adams’ trade secret claim with prejudice.

Mattel, Inc. v. MGA Entm't, Inc. & Consol.Consol. Actions, 782 F. Supp. 2d 911 (C.D. Cal. 2010). Mattel,
Inc. v. MGA Entm't, Inc. involved numerous claims of trademark misappropriation, trade dress
infringement, dilution, unfair competition, and related claims and counterclaims arising from disputes
between two toy makers regarding MGA’s Bratz doll line. Both parties filed motions for summary
judgment on various claims. The primary dispute concerned whether an employee who created concept
drawings and sculpt for a line of dolls while employed by one of the toy maker companies then was
instrumental in the other company, which subsequently hired him, using those concepts and drawings
to create a similar line of dolls that infringed property owned by the first company. Both parties
requested broad summary judgment rulings on the issue of whether Mattel’s alleged trade secrets
derived independent economic value from not being generally known. MGA also contended that
Mattel’s fashion doll concepts could not constitute trade secrets. The court ruled that concepts for
unreleased products can merit trade secret protection and can have value independent from the
products they eventually inspire. Thus, the court denied MGA’s motion for summary judgment in part
regarding these issues.

Jardin v DATAllegro, No. 10-CV-2552-IEG, 2011 U.S. Dist. Lexis 84507 (S.D. Cal. July 29, 2011) In Jardin
v. DATAllegro, the Honorable Magistrate Judge William Gallo, U.S.D.C. for the Southern District of
California “wholeheartedly” agreed that section 2019.210 (pre-discovery trade secret identification) did
not apply in federal district court. Yet, despite refusing to directly apply the statute, Judge Gallo’s pre-
discovery trade secret identification order mirrored the procedures and policies provided in section
2019.2010. The case involved a dispute over the inventorship of U.S. Patent Number 7,818,349 (“Ultra-
shared-nothing parallel database”). Plaintiff Jardin had previously filed a related suit two years earlier
against Defendant DATAllegro regarding the infringement of a different patent. Consequently, discovery
in the prior case allegedly provided Jardin with access to DATAllegro’s confidential information.
Additionally, a protective order entered in the previous case limited the use of the produced protected
information. DATAllegro brought this issue to Judge Gallo, concerned that Jardin would improperly use
confidential information from the prior case.

Judge Gallo found DATAllegro’s confidentiality concerns legitimate. Despite his explicit rejection of
section 2019.210, Judge Gallo ordered that no discovery would take place until Jardin identified the
allegedly misappropriated information. Jardin objected to Judge Gallo’s order. The Honorable Chief
Judge Irma Gonzales upheld Judge Gallo’s order, finding nothing erroneous in his refusal to apply section

2019.210. Judge Gonzales noted that the Ninth Circuit has not decided whether section 2019.210
applies in federal court and California district courts continue to reach conflicting conclusions. However,
she stated that Federal Rule of Civil Procedure 26 provides district courts with broad discretion to
control discovery. Thus, Judge Gallo could properly fashion his order after section 2019.210 without
necessarily applying section 2019.210.

FormFactor, Inc. v Micro-Probe, Inc., No. C 10-3095 PJH, 2012 U.S. Dist. LEXIS 79359 (N.D. Cal. June 7,
2012). FormFactor, Inc. v Micro-Probe, Inc. highlights the importance of companies taking proactive
measures to protect their trade secrets before litigation arises and specifically identifying trade secrets
that have allegedly been misappropriated. FormFactor, a company which designs, manufactures, sells
and supports high-performance advanced wafer probe card assemblies, alleged that its competitor
Micro-Probe, Inc., had been hiring FormFactor personnel for the express purpose of having them
disclose FormFactor confidential technical and marketing information. FormFactor filed suit alleging,
patent infringement, trade secret misappropriation, breach confidence, unfair competition, and civil
conspiracy. FormFactor also sued the former VP of its DRAM Business, Mr. Browne, who joined Micro-
Probe and was alleged to have misappropriated FormFactor trade secrets.

The parties filed cross-motions for summary judgment on the non-patent claims. In granting Micro-
Probe’s motion, the court highlighted several trade secret litigation fundamentals that, in its view, were
not satisfied by FormFactor. Specifically, the court held that FormFactor had not described its trade
secrets with sufficient particularity or shown that the information claimed to be trade secret in fact
qualified as trade secrets. The court highlighted FormFactor’s failure to provide any evidence of
reasonable secrecy efforts, including the lack of any written confidentiality agreements, allowing
employees to work from home and use personal email and external hard drives to conduct FormFactor
business, and not requesting Browne to return any FormFactor data when he left the company. The
court then held that the trade secret claim preempted FormFactor’s breach of confidence and unfair
competition claims because they were “based on the same nucleus of operative facts as the trade secret
misappropriation claim.” Although the court recognized that there is “some dispute” among the courts
as to whether CUTSA preempts claims for misappropriation of confidential information not rising to the
level of a trade secret, the court rejected application of that law here because “Form Factor's position
has consistently been that there is no distinction between the alleged trade secret information and the
alleged confidential information” at issue.

Amron Int’l Diving Supply, Inc. v Hydrolinx Diving Commun., Inc., No. 11-CV-1890-H (JMA), 2011 US
Dist Lexis 122420 (S.D. Cal. Oct. 21, 2011). In Amron Int’l Diving Supply, Inc. v Hydrolinx Diving
Commun., Inc., a district court for the Southern District of California refused to apply trade secret
preemption until it was first determined whether the allegedly misappropriated information constituted
a trade secret. Commercial diving equipment company Amron sued its former employee Saad Sadik and
his newly founded competing company Hydrolinx, after Amron discovered that Sadik had copied more
than 100,000 files from Amron’s computer systems. These files contained information about Amron’s
products, internal testing procedures and results, and information about vendors and customer
accounts. Amron brought claims against Sadik and Hyrdolinx for trade secret misappropriation, breach
of confidence, conversion, trespass to chattels, interference with prospective business advantage, unjust
enrichment, unfair competition, common law misappropriation, and computer data access and fraud.

Hydrolinx and Sadik moved to dismiss on grounds that Amron’s trade secret misappropriation claim
preempted the other claims. The court concluded that the targeted causes of action were not
preempted by UTSA, because they did not allege identical facts as those alleged to support Amron’s

trade secret misappropriation claim. The court additionally held that the preemption issue was
prematurely raised at the pleading stage. In this regard, the court noted that the status of the
information alleged to constitute a trade secret was just that – a matter of allegation. The court
therefore concluded that it was premature to address the preemption issue until a distinction could be
made between what information is determined to constitute a trade secret and Amron’s other
confidential or proprietary non-trade secret information.

SocialApps, LLC v Zynga, Inc., No. 4:11-CV-04910 YGR, 2012 US Dist Lexis 14124 (N.D. Cal. Feb. 6,
2012). In SocialApps, LLC v Zynga, Inc., a district court for the Northern District of California denied the
popular Facebook application “Farmville” operator’s (Zynga, Inc.) motion to dismiss several claims
brought by the inventor of “myFarm” (SocialApps, LLC, or SA)) for alleged theft of the source code, game
images, and “concepts and features” used in the myFarm app. SA alleged that it launched myFarm, the
first-ever virtual farming game, on Facebook in 2008. After Zynga approached SA in 2009 about
acquiring the intellectual property rights and other information about myFarm, the parties entered into
a written confidentiality agreement to protect SA’s assets while Zynga conducted its due diligence.
Within a month, however, Zynga allegedly used SA’s source code, game images, and other “concepts
and features” to launch FarmVille, all without buying the rights or obtaining SA’s consent.

SA sued Zynga for copyright infringement, trade secrets theft, breach of contract and implied contract,
breach of confidence, breach of implied covenant of good faith and fair dealing, and unjust enrichment.
Zynga moved to dismiss SA’s claims for breaches of implied contract, confidence, and implied, on
grounds that they were duplicative of SA’s express contract claim. The court denied Zynga’s motion to
dismiss on these claims and held that a plaintiff is entitled to plead different theories of recovery in the
alternative. Also of note is that the court granted Zynga’s motion to dismiss SA’s trade secret
misappropriation claim because certain portions of myFarm were publicly available on the Internet (i.e.
images and various features), but granted SA leave to amend to allege any additional specific parts of
myFarm it contends were trade secrets.

Richmond Techs., Inc. v Aumtech Bus. Solutions, No. 11-CV-02460-LHK, 2011 US Dist Lexis 71269 (N.D.
Cal. July 1, 2011). In Richmond Techs., Inc. v Aumtech Bus. Solutions, a district court for the Northern
District of California granted a temporary restraining order that partially enforced a non-competition
agreement. The plaintiff software provider entered into an agreement where the defendant company
would develop software for plaintiff and provide other services for plaintiff’s clients. The agreement also
contained non-confidentiality, non-competition, and customer non-solicitation provisions. A dispute
arose and plaintiff moved for a temporary restraining order alleging that defendant “hatched a plan”
with plaintiff’s former employees to take plaintiff’s clients in violation of their non-competition and non-
solicitation agreements. In determining plaintiff’s likelihood of success on the merits for granting the
TRO, the court recognized that some California courts have recognized a “trade secret exception” for
non-competes, while other California courts see trade secret misuse as an independent wrong. The
court applied the “trade secret exception” for its analysis and found that the non-competition provision
was likely to be found enforceable as necessary to protect trade secrets. Regarding the non-solicitation
provision, however, the court found this likely to be unenforceable under California law because it was
more broadly drafted than necessary to protect trade secrets. The court issued a narrowly tailored
temporary restraining order that permitted defendants to compete with plaintiff in a lawful manner, but
also protected the misuse of any trade secrets.

Brocade Communications Sys., Inc. v A10 Networks, Inc., No. 10-CV-03428-LHK, 2011 US Dist Lexis
30227 (N.D. Cal. Mar. 23, 2011). In Brocade Communications Sys., Inc. v A10 Networks, Inc., a district

court for the Northern District of California denied, in part, a motion to dismiss a claim based on the
breach of a customer non-solicitation provision, on grounds that the provision may be enforceable if
necessary to protect trade secrets. Plaintiff Brocade filed a complaint against Defendant A10 for, inter
alia, trade secret misappropriation, unfair competition, and breach of contract (i.e. the customer non-
solicitation provision). A10 moved to dismiss. This case is significant regarding the court’s ruling on the
breach of contract claim. A10 argued that the breach of contract claim should be dismissed because the
non-solicitation provision is unenforceable under California law (i.e. Bus & Prof. Code §16600; Edwards
v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008)). The court noted, however, that “[s]uch clauses may be
enforceable if they are ‘necessary to protect an employer’s trade secret.” (citations omitted). The court
found that based on all the allegations in the complaint, it was at least plausable that the trade secret
exception applies to this portion of its breach of contract claim, and, thus Brocade had stated a claim for
breach of this provision of the contract.

Pyro Spectaculars North, Inc. v. Souza, No. CIV S-12-0299 GGH, 2012 U.S. Dist. LEXIS 38630 (E.D. Cal.
Mar. 21, 2012). In Pyro Spectaculars North, Inc. v. Souza, Magistrate Judge Gregory G. Hollows of the
U.S.D.C. for the Eastern District of California (Sacramento Division) issued an order preliminarily
enjoining a former Account Executive for a pyrotechnics company from soliciting the customers of his
former employer to protect the employer’s alleged trade secrets. .Defendant argued that Plaintiff’s
customer lists were publicly available and did not constitute trade secret information. The court found
that, although several information components that comprised Plaintiff’s trade secrets were publicly
available, the software used by Plaintiff provided a “virtual encyclopedia” of specific Plaintiff customer,
operator, and vendor information allowing a competitor to solicit Plaintiff’s clients “more selectively and
more effectively without having to expend the effort to compile the data.” Appealing to common sense,
the court noted that if Plaintiff’s customer list was so readily available, “why was it necessary for
defendant to surreptitiously download, retain, and funnel… [Plaintiff’s] information to his new employer
in the first place.”

In analyzing the “public interest” considerations involved in potentially issuing a preliminary injunction,
the court weighed California’s strong public policies favoring on the one hand employee mobility, and on
the other hand, protection of trade secrets. The court decided to issue a time-limited injunction
intended to prevent misuse of Plaintiff’s trade secrets while allowing lawful competition. While
California courts do not recognize the so-called “inevitable disclosure” doctrine, the Pyro Spectaculars
court found that based on evidence of record, Defendant’s conduct was so unreliable and that his
probable misappropriation had “so tainted his base of knowledge” that defendant would not be able to
segregate his general knowledge and skills from Plaintiff’s legitimate trade secrets when competing with

Art of Living Found. v. Does, 2011 U.S. Dist. LEXIS 129836 (N.D. Cal. Nov. 9, 2011). In Art of Living
Found. v. Does, a district court in the Northern District of California protected the anonymity of a
blogger from discovery intended to reveal the blogger’s identity, by granting the blogger’s motion for
relief from a Magistrate’s prior denial of the blogger’s motion to quash. Plaintiff Art of Living is an
international organization dedicated to teaching the spiritual lessons of “His Holiness Ravi Shankar.”
Defendant was an alleged disgruntled former student of Plaintiff, who operated an internet blog under
the pseudonym “Skywalker” and criticized Plaintiff for being an alleged “manipulative and abusive cult.”
Plaintiff filed a complaint against Defendant for, inter alia, trade secret misappropriation and copyright
infringement after Skywalker allegedly published Plaintiff’s copyrighted teaching manual online.

Plaintiff sought leave to take expedited discovery for the purpose of identifying and serving process on
the pseudononymous Skywalker. Skywalker moved to quash Plaintiff’s subpoenas sent to Google and
Automattic, Inc. on grounds that allowing disclosure of Skywalker’s identity would violate the First
Amendment right to anonymous speech. The Magistrate denied Skywalker’s motion to quash. Skywalker
moved for relief from the denial. Judge Lucy Koh granted Skywalker’s motion for relief, and found that,
when balancing the harm to each party, Skywalker’s right to anonymous speech outweighed Plaintiff’s
need for discovery at that time.


T.J.T., Inc. v. Mori, 266 P.3d 476 (Idaho 2011). The Idaho Supreme Court in T.J.T., Inc. v. Mori found that
a two-year non-compete agreement executed in connection with the sale of a business was enforceable
under California law, despite the fact that the seller also became an employee of the purchasing
company as a result of the sale. The Idaho high court also remanded the case for consideration of
whether the non-compete agreement’s overbroad geographic restriction could be “blue-penciled” to
comply with California law. The case arose out of a 1997 non-compete agreement between plaintiff,
T.J.T., and defendant, Mori, executed in connection with the sale of Mori’s tire and axel recycling
business, Leg-It Tire Company, Inc., based in California. The agreement prohibited Mori from operating
anywhere within 1,000 miles of any facility owned or operated by T.J.T. or Leg-It for two years following
the termination of his employment with T.J.T. Although Mori became an employee of T.J.T. as part of
the deal, his employment was governed by a separate employment agreement. Within weeks of his
resignation, Mori began work with one of T.J.T.’s competitor.

T.J.T. filed a complaint seeking injunctive relief and a constructive trust based on several claims,
including breach of fiduciary duty and breach of contract. The district court denied T.J.T.’s request for
injunctive relief and ultimately granted Mori’s motion for summary judgment, finding that the
agreement was void under California law. The district court concluded that the agreement was tied to
Mori’s employment instead of the sale of his business, and that the durational and geographical scopes
of the agreement were too broad. The Idaho Supreme Court reversed and remanded the district court’s
opinion. First, the court held that the non-compete provision was indeed enforceable. The court
recognized that, as a general proposition, California has a strong public policy against non-compete
agreements. An exception to this prohibition, however, is in the case of the sale of the goodwill of a
business, citing California Business and Professions Code § 16601, the purpose of which “is to permit the
purchaser of a business to protect himself or itself against competition from the seller which
competition would have the effect of reducing the value of the property right that was acquired.” Even
though Mori’s non-compete agreement referred to Mori’s employment with T.J.T. to determine its
duration and enforceability, the court found that such an “incidental” link does not necessarily mean the
provision is unenforceable. Instead, the court reasoned that Mori’s employment only came about as
part of the larger transaction -- the sale of the business to a competitor -- and was therefore


Wrigg v. Junkermier, Clark, Campanella, Stevens, P.C., 2011 MT 290 (2011). In Wrigg v. Junkermier,
Clark, Campanella, Stevens, P.C., a case of first impression in the state, the Montana Supreme Court
ruled that a Montana employer ordinarily will not be permitted to enforce a non-compete provision in
an employment agreement where the employer was solely responsible for ending the employment
relationship. Wrigg, a CPA, started working for JCCS in Helena as a staff accountant in 1987 and was

promoted to shareholder in 2003. She signed a series of two-year employment agreements each of
which contained a provision which had the effect of imposing a monetary penalty if, during the 12
months after termination “for any reason,” she rendered certain professional services to a competitor of
JCCS. In May 2009, JCCS informed Wrigg that the agreement which would be expiring June 30, 2009
would not be renewed. After she left JCCS, she was hired by another accounting firm but for significantly
less compensation because, allegedly, of that firm’s concerns about the JCCS covenant. She filed a
declaratory judgment suit against JCCS, seeking to invalidate the non-compete. JCCS counterclaimed
based on the penalty clause and prevailed at trial, but the Montana Supreme Court reversed in all

The Court reasoned that because JCCS was responsible for Wrigg’s termination, it could not show that
its “legitimate business interest” would be furthered by enforcement of the non-compete. Therefore,
penalizing an accountant for pursuing her livelihood during the 12 months after her employment ended
apparently was considered to be an unwarranted punishment. The Court asserted that the applicable
legal principle where an employee is terminated without cause is that “courts should scrutinize highly a
covenant’s enforcement given the involuntary nature of the departure.” Intense scrutiny is required
because the employer could have prevented harmful competition “simply by maintaining the
employment relationship.” Further, “[a]n employer’s decision to end the employment relationship
reveals the employer’s belief that the employee is incapable of generating profits for the employer. It
would be disingenuous for an employer to claim that an employee was worthless to the business and
simultaneously claim that the employee constituted an existential competitive threat.” The Court said
that its ruling is supported by decisions from Iowa, New York, Pennsylvania, Tennessee, and the Seventh
Circuit Court of Appeals (interpreting Illinois law).


Finkel v. Cashman Prof'l, Inc., 270 P.3d 1259 (Nev. 2012). In Finkel v. Cashman Professional, Inc., et al.,
Case Nos. 54520, 55377, 2012 WL 669897 (Nev. March 1, 2012), the Supreme Court of Nevada
addressed the validity of non-solicitation, non-competition, and non-disclosure covenants and the
proper duration of a preliminary injunction prohibiting disclosure or use of trade secrets. Finkel is a
former executive with Cashman Professional, Inc. While employed by Cashman, Finkel was responsible
for expanding and streamlining Cashman’s Las Vegas-based wedding photography business. When
Finkel left Cashman in 2008, Cashman and Finkel entered into a consulting agreement providing that
Finkel would abide by restrictive covenants prohibiting Finkel from, among other things, engaging in a
business competitive with Cashman, soliciting Cashman’s employees, and disclosing Cashman’s
confidential information. In 2009, Finkel purchased a printing company which was the only printing
company in Las Vegas that could provide overnight printing of wedding photo books (“PrintCo”). Prior to
and after Finkel’s purchase of PrintCo, Cashman relied on PrintCo when overnight printing services were
required. Finkel enlisted several Cashman employees to help establish PrintCo, solicited several
Cashman customers to move their business to PrintCo, and in the process disclosed Cashman’s
confidential information and misappropriated its trade secrets. Cashman then obtained a preliminary
injunction (“PI”) against Finkel enforcing the Agreement’s restrictive covenants and concluding that
Finkel had misappropriated trade secrets in violation of Nevada’s Uniform Trade Secrets Act. Finkel
appealed the PI order and then exercised his right to terminate the Agreement. Finkel then moved to
dissolve the PI upon termination of the Agreement. The lower court denied Finkel’s motion to dissolve
and Finkel appealed.

The Nevada Supreme Court found that substantial evidence supported the district court’s conclusions
that Finkel likely competed with Cashman, solicited Cashman’s employees, disclosed Cashman’s
confidential information, and misappropriated Cashman’s trade secrets. The court rejected Finkel’s
argument that the information used by him were not Cashman trade secrets. Specifically, in rejecting
Finkel’s argument, the court noted Finkel’s admission that costs, discounts, future plans, business
processes, technical matters, and product designs are confidential trade secrets to hold that the
Cashman information used by Finkel likely constituted trade secrets and that Cashman had taken
reasonable measures to maintain the confidentiality of its information.

The Nevada Supreme Court held that the district court erred by refusing to dissolve the aspect of the
injunction enforcing the restrictive covenants. The court reasoned that, because the Agreement was no
longer in effect, the restrictive covenants were no longer enforceable. Ultimately, the court reasoned
that it was an abuse of discretion to restrict Finkel’s business activities based restrictive covenants
within a terminated agreement. Finally, the Supreme Court held that, under Nevada’s adoption of the
Uniform Trade Secrets Act, the district court had not made findings as to (1) whether the information
alleged by Cashman to be trade secret remained trade secret at the time of Finkel’s appeal; and (2) the
proper duration of the injunction. The court remanded this issue to the district court for
reconsideration. In Nevada, confidential information that does not rise to the level of a trade secret may
nonetheless be protected from disclosure by contract. Breach of such contracts may serve an
independent basis to obtain injunctive relief.

10th Circuit


Howard v. Nitro-Lift Technologies, Inc., No. 109,003, 2011 WL 5865068, 2011 OK 98 (Sup. Ct. Okla.
Nov. 22, 2011). In Nitro-Lift, Plaintiff sought to enforce a non-compete agreement against two former
employees that prohibited them from, for a period of two years: (1) owning, managing, operating,
joining, controlling, participating, being connected with (as an officer, director, employee, consultant,
etc.), loaning money to, or selling or leasing equipment to any business or person engaged in the
nitrogen generation business in the oil and gas industry in the United States; (2) canvassing, soliciting,
approaching, or enticing away any past or present Nitro-Lift customers or suppliers; and (3) engaging,
employing, soliciting, inducing or attempting to influence any Nitro-Lift officer or employee to terminate
their employment. The lower court upheld an arbitration clause and dismissed the complaint. On
appeal, the Oklahoma Supreme Court reversed the dismissal and held that, prior to determining
whether the arbitration clause governed the dispute, the Court must first determine whether the
contract itself is enforceable.

Ultimately, the Court held the on-competition provisions contained within the contract void pursuant to
Oklahoma public policy, as expressed by the legislature in 15 O.S.2001 § 219A, which requires that an
employee “shall be permitted to engage in the same business as that conducted by the former employer
or in a similar business as that conducted by the former employer as long as the former employee does
not directly solicit the sale of goods, services or combination of goods and services from the established
customers of the former employer.” The Court, however, went a step further and also struck the non-
solicitation provision, holding that (1) the language prevented employing, rather than soliciting,
employees, beyond the allowable exception of the statute; and (2) the restriction encompassed all
customers, rather than the statutorily allowed “established” customers. The Court declined to modify
the contract, holding that to do so would require supplying material terms.


Wolfe Electric, Inc. v. Duckworth, 293 Kan. 375, 266 P.3d 516 (Sup. Ct. Kan. Oct. 21, 2011). In
Duckworth, a dispute arose between Wolfe, a manufacturer of conveyor pizza ovens, and its former
president of Duckworth. Shortly after being made president, Duckworth joined a direct competitor,
Global Cooing System, LLC, and claimed to have reversed engineered a Wolfe oven in 3 months. Wolfe
sued both Duckworth and Global for, among other things, misappropriation of trade secrets. The jury
returned a verdict against the Defendants for, inter alia, misappropriation of Wolf Electric, Inc.’s trade
secrets in the amount of $50,000 each, as well as $140,000 in attorneys’ fees. On appeal, the
defendants challenged the award, claiming that the trial court erred in including the term “confidential
information” in the jury instruction for trade secret misappropriation.

The Kansas Supreme Court agreed, holding that the Kansas Uniform Trade Secrets Act provides a
remedy only concerning issues arising from trade secrets, and not mere confidential information.
Specifically, the Court gave guidance on the drafting of appropriate jury instructions, suggesting that
such instructions should include the elements of a trade secret, but should not attempt to define
confidential information in the context of providing jury instructions as it may causes juror confusion.
The Court reversed the award of damages, as well as attorneys’ fees, and remanded. Of further
interesting note, the Court also held that the Court erred in its instruction as to breach of fiduciary duty
and tortious interference claim, as the instruction included such damage caused by use of trade secrets,
rather than simply confidential information, wherein such claims would be preempted by the KUTSA.
The Court declined to answer whether the KUTSA would preempt these tort claims to the extent they
relied solely on non-trade secret proprietary information, instructing the lower court to allow briefing on
the issue.

Progressive Products, Inc. v. Swartz, 292 Kan. 947, 258 P3d 969, (Sup. Ct. Kan. Aug. 26, 2011). In
Swartz, the plaintiff charged three of its former employees and its competitor with misappropriating its
trade secrets, specifically: (1) a formula for a coating compound for elbow pipes; (2) a computer
program that facilitated price quotations; (3) a mixing process; and (4) price lists. The district court
granted a preliminary injunction against the defendants, finding that the formula, the price sheets and
the mixing process were trade secrets, but, upon bench trial, declined to enter a permanent injunction,
instead awarding a royalty for the use of Progressive’s trade secrets. On appeal, the Kansas Supreme
Court confirmed that the formula and the computer program were trade secrets, but declined to extend
trade secret status to the mixing process or customer lists. Notably, defendants argued that none of the
items should receive trade secret status as they were not properly “signaled” as trade secrets. The
Court declined to require such rigged identification, indicating that taking “some effort” to notify its
employees of the protected status was sufficient.

However, it was this requirement that the Court used to decline further extension of the trade secret
status to the mixing process and customer list, holding that the information was generally either
available in the public, or that Progressive failed to take proper measures to protect the confidentiality
of the information. Finally, the Court reviewed whether “exceptional circumstances” existed for
awarding a royalty. The Court noted that limited guidance exists as to what constitutes such
circumstances, but that the lack of actual loss, and the Defendants actual gain, may justify such an
award. However, the district court’s findings were incomplete, and the case was remanded for the
district court to “correlate legal conclusions to the facts found in the trial record consistent with the
opinion and relating to the basis for imposing the royalty injunction and other short-term injunctive

ICE Corp. v. Hamilton Sundstrand Corp., 432 F. App'x 732 (10th Cir. 2011) (unpublished). In ICE Corp.,
the defendant appealed a punitive damages award of nearly $10 million against defendant under the
Kansas Uniform Trade Secret Act on grounds that the award exceeded the $5 million cap imposed under
by Kansas’s general punitive damages statute. The Court of Appeals recognized an exception to the
punitive damages cap wherein the district court could exceed the $5 million cap upon finding that the
profitability of the defendant’s misconduct exceeds or is expected to the cap, and award up to one-and-
a-half times the profit. The Court of Appeals was unable to determine the amount of punitive damages
because the district court had not made any findings regarding profitability. The court remanded the
case for determination of a punitive damages award per its holding.

Farmers Bank & Trust, N.A. v. Witthuhn, 11-2011-JAR, 2011 WL 4857926 (D. Kan. Oct. 13, 2011). In
Farmers Bank & Trust, the Plaintiff alleged that the Defendants, who were former employees,
downloaded and deleted substantial amounts of data from Plaintiff’s computers, including confidential
customer and business information. The Plaintiff brought several claims against the Defendants,
including violations of the Computer Fraud and Abuse Act (“CFAA”). The Defendants moved for partial
summary judgment on the CFAA claims on grounds that the Plaintiff allegedly authorized their access to
the information they allegedly deleted.

The court acknowledged the circuit split regarding the definition of “authorization” under the CFAA. The
court sided with the approach – the Ninth Circuit’s LVRC Holdings LLC v. Brekka decision – that
determines authorization based on the employer’s decision to allow or terminate the employee’s
authorization. The court found that the Defendants were authorized to access Plaintiff’s confidential
and proprietary information, but found a genuine issue of material fact about whether the Defendants
exceeded said access to obtain or alter information they were not entitled to obtain or alter. The court
denied Defendant’s motion for partial summary judgment on three of the four alleged CFAA violations,
because those claims hinged on whether Defendants exceeded their authorized access, or caused
damage from the unauthorized deletion of information. The court granted the Defendant’s motion for
the alleged CFAA violation that only provided liability for acting without authorization and did not
provide liability for exceeding authorized access.


SBM Site Services, LLC v. Garrett, Case No. 10-cv-00385, 2012 WL 62819 (D. Colo. Feb. 27, 2012). In
Garrett, a former employee retained his computer subsequent to his employment with SBM, allegedly
engaging in unauthorized access as that term is used under the Computer Fraud and Abuse Act. The
court undertook analysis of the competing theories of “unauthorized” access, comparing the Seventh
Circuit’s stringent view that once an employee acquires adverse interests to his current employer with
the Ninth Circuit’s more lenient view that “authorization” depends solely on the actions of the
employer, and that an employee continues to have authorized access until his right is rescinded.
Ultimately, the district court concluded that, under either standard, the access was unauthorized as it
occurred several weeks after his employment was terminated. Of particular interest, however, was that
the court allowed a claim against the new employer, finding the possibility of an agency relationship
between the employer and employee in accessing SBM’s information. Of further note is that the Court
denied injunctive relief, and further dismissed a claim against the defendant under the theory of
inevitable disclosure, where the fear of use through nefarious means was not “actual” or “great” enough
to justify such relief.

L-3 Communications Corp. v. Jaxon Eng'g & Maint., Inc., No. 10-cv-02868-MSK-KMT, 2011 U.S. Dist.
LEXIS 117757 (D. Colo. Oct. 12, 2011). In L-3 Communications, Plaintiff moved to compel Defendants’
responses to Plaintiff’s trade secret-related discovery requests. The court reversed its conclusions in a
prior hearing that Plaintiffs had sufficiently disclosed its trade secrets to compel discovery. The court
noted that the case law does not provide a clear guidance as how detailed a plaintiffs trade secret
disclosures must be. However, what is clear is that general allegations and generic references to
products or information are insufficient to satisfy the reasonable particularity standard. The court found
that Plaintiffs had not identified their trade secrets with sufficient particularity because they made mere
general categorical references and general allegations that defendants misappropriated trade secret
customer lists, pricing templates and labor rates, and other information. The court stressed that at no
point in their Amended Complaint did Plaintiffs describe the actual equipment, methods, software or
other information they claims as trade secrets.

Finally, the court noted that Plaintiffs had not filed or served any disclosures of their trade secrets under
seal nor moved to seal their Amended Complaint or the motions hearings. The court also highlighted
the fact that all of Plaintiffs’ discussions of its trade secrets have occurred in the public portions of the
record. The court implied that Plaintiff’s conduct demonstrated the lack of reasonable particularity in its
trade secret disclosures. Accordingly, the court ordered Plaintiffs to file a list of trade secrets that they
claim has been misappropriated before Plaintiffs could compel discovery.

Christou v. Beatport, LLC, 10-CV-02912-RBJ-KMT, 2012 WL 872574 (D. Colo. Mar. 14, 2012).
Christou involved a dispute between two competing club owners in the “electric dance music” market.
Christou brought action against Beatport for, inter alia, Beatport’s alleged theft of trade secrets,
including login information for profiles on Myspace, MySpace “friends list,” and confidential lists of
personal cell phone number and email addresses for DJs, agents, and promoters, and customer lists.
Beatport moved to dismiss the trade secret theft claim on grounds that the MySpace profile and friends
list were publicly broadcast on the internet, and, thus could not constitute trade secrets. Christou
argued that the MySpace friends list was akin to a contact information database and Christou had
secured and safeguarded the profiles through login names and passwords given to restricted personnel.
The court denied defendants motion to dismiss and found that plaintiffs alleged sufficient facts to
maintain their trade secret claim. The court reasoned that while the contact names are readily available
to the public, the ancillary contact information connected to those names cannot be obtained from
public directors and are not readily ascertainable from outside sources.

Gognat v. Ellsworth, 259 P.3d 497 (Sup. Ct. Colo. June 6, 2011). In Gognant, a geologist brought a trade
secret misappropriation action against alleged joint venturers who the plaintiff alleged stole ideas
related to a plan to develop natural resources in Kentucky. The appellate court affirmed the trial court’s
order granting defendants’ motion for summary judgment on the grounds that plaintiff’s trade secret
claim was barred by the statute of limitations.

The Colorado Supreme Court affirmed the court of appeal decision, holding that the undisputed facts
demonstrated that all of the proprietary information alleged to have been misappropriated constituted
a single trade secret and the misappropriation of that trade secret was known to the plaintiff more than
three years prior to the filing of the complaint. The court stated that the statute of limitations expressly
included in Colorado’s Uniform Trade Secret Act (the “Act”) requires an action for misappropriation to
be brought within three years after it is, or by the exercise of reasonable diligence should have been,
discovered. The court noted that statute also specifies that for purposes of this limitations period, a
“continuing misappropriation” constitutes a single claim.

The Court then reasoned that while the nature of any particular piece of proprietary information,
especially “any scientific or technical information, design, process, procedure, formula, [or]
improvement,” under Colorado’s definition of a trade secret under its Act, may be heavily dependent on
scientific or historical facts, the determination whether minor variations in that design, process,
procedure, formula, or improvement, as used or disclosed by the defendant on separate occasions, are
sufficient to justify the classification of each as a different trade secret presents a question of law for the
court. The Court further reasoned that, where there is no genuine dispute of historical or scientific fact
concerning the nature of the proprietary information used by the defendant on different occasions and
there is no genuine dispute that the plaintiff was aware of an act of misappropriation by the defendant
more than three years before the complaint was filed, the question whether an action alleging
subsequent acts of misappropriation should be barred by the statute of limitations is therefore properly
postured for summary judgment.

The Court then reasoned that it could not, from the words of the Act, admit of a construction requiring,
by reason of the confidential relationship alone, the designation of all proprietary information disclosed
by the same plaintiff to the same defendant as one trade secret. The Court acknowledged that the
circumstances surrounding the acquisition or disclosure of proprietary information, like the nature,
timing, and reasons for the disclosure, permit reasonable inferences about the unity or relatedness of
the information disclosed. The Court stated that in the absence of any contention that the disclosure
was made, for instance, to someone in the business of buying and selling trade secrets of various kinds,
or that different parts of the secret information or process were discovered or developed at distinctly
different times, for distinctly different purposes, and using distinctly different experiments or analyses,
the fact that a body of secret information was disclosed to the same individual, at the same time,
normally provides a powerful reason for treating it as a single trade secret. The Court also remarked
that the disclosure of a body of proprietary information in exchange for an agreement to embark on a
joint commercial venture to profit from the development or application of that information offers
perhaps the strongest or most natural reason for treating all of the subject information as the same
trade secret for purposes of the statutory limitations period.

The Court further reasoned that the very breadth of the statutory definitions of both “misappropriation”
and “trade secret” makes it impractical, and on these facts unnecessary, to attempt an enumeration of
all possible factors, and the weight to be given each, relevant to determining whether multiple acts of
misappropriation involving the same parties constitute the continuing misappropriation of a single trade
secret or separate misappropriations of different trade secrets. The Court adopted a case by case
evaluation of the totality of the circumstances, with reference to the purposes of the statute, with the
caveat that both the specific provisions and overall structure of the Act militate against dividing into
multiple trade secrets a single body of proprietary information disclosed to the same person, at
substantially the same time, and in furtherance of the same commercial venture.

The Court affirmed the court of appeal decision, reasoning that there was no dispute that by early 2001
at the latest plaintiff was aware of acts by the defendants, which he characterizes as the
misappropriation of his trade secrets, and he waited to sue until December 2005. The Court rejected
plaintiff’s argument that the trade secrets he knew to be misappropriated as early as 2001 were
different from those whose misappropriation he did not discover until 2005, and therefore his action for
misappropriation of the latter secrets did not accrue at the time of his earlier discovery. The Court
found that all of the proprietary information allegedly misappropriated by the defendants amounted to
a single trade secret within the meaning of the Act as all of the information was shared with the same

person, in substantially the same time period, as part of the same joint commercial venture to develop
oil and natural gas reserves in Kentucky.


Ophir-Spiricon, LLC v. Mooney, No. 1:11-CV-00161, 2011 WL 5881766 (D. Utah Nov. 23, 2011). In
Ophir-Spiricon, the court granted in part and denied in part the Plaintiff’s Motion for a Temporary
Restraining Order against a former employee that joined a competitor. Plaintiff Ophir-Spirocin, LLC (“O-
S”) is in the relatively small but highly competitive laser measurement industry. Defendant Mooney
signed an Agreement under O-S’s employ concerning the nondisclosure of O-S trade secrets and
confidential information, non-solicitation of O-S’s customers, and noncompetition regarding competitive
employment that would “inherently require” Mooney to reveal any trade secrets or confidential
information. Mooney subsequently left for a competitor, Genentec. O-S moved to enjoin Mooney’s
new employment on grounds that Mooney’s position with Genentec would “inherently require” him to
reveal O-S’s trade secrets and confidential information.

The court held that O-S failed to meet its burden for a temporary restraining order prohibit Mooney’s
employment at Genentec because O-S failed to provide evidence that Mooney had breached the
Agreement. The court however enjoined Mooney to comply with the nondisclosure agreement and
enjoined him from soliciting O-S customers that were not previously customers of Gentec.

11th Circuit

News America Marketing In-Store, LLC v. Emmel, (slip copy), 2011 WL 2222040 (11th Cir. June 8,
2011). Emmel worked as an account director for News America and had access to a wide variety of
confidential and proprietary information, including trade secrets. Claiming he had concerns of illegal
activity, Emmel disclosed News America’s confidential information to various government offices
starting in 2006. Emmel was terminated effective November 30, 2006 for other reasons, as News
America had not learned about the disclosures. In December 2006, in connection with Emmel taking a
new job, News America asked Emmel to execute a post-employment non-disclosure and non-
disparagement agreement. Emmel signed the agreement on December 21, 2006 after having sent the
last package of confidential News America documents to a government staffer one day prior. News
America claimed that Emmel’s disclosures prior to the signing of the post-employment NDA constituted
a breach of that agreement. The district court agreed with News America, however, the appellate court
did not. Emmel argued on appeal that to find him to have breached the confidentiality covenant
through conduct that occurred before the contract was executed “disregards the basic rule that a
contract operates only prospectively from execution absent language of retroactive effect.” The
appellate court agreed with Emmel and his argument that “to capture his pre-contract conduct the
promises would have needed to be phrased in the present perfect tense—i.e., ‘Emmel agrees he has not
disparaged, denigrated or defamed the company’ and that he ‘has maintained in complete confidence’
News America's confidential information.”


AK Steel Corp. v. Earley, 2011 WL 3654491 (S.D. Ala. Aug. 19, 2011). Employer alleged claims of, among
other things, misappropriation of trade secrets against its former employees under Ohio law. The Court
granted summary judgment in favor of the former employees, finding that the employer failed to
provide evidence of the independent economic value the alleged trade secrets provided. The

conclusory allegations contained in the affidavits submitted by the employer were insufficient to show
the value to the employer of having the subject information as against competitors, the amount of
effort or money expended in obtaining and developing the information or the amount of time and
expense it would take for others to acquire and duplicate the information - three of the factors used in
determining whether information constitutes a trade secret under Ohio law.


Chen v. Cayman Arts, Inc., 2011 U.S. Dist. LEXIS 13931 (S.D. Fla. Feb. 11, 2011). Employee filed
numerous claims against his employer, including claims under the Lanham Act, the Fair Labor Standards
Act, and for violation of the relevant employment agreements. The employer filed a third-party
complaint, asserting that third-party defendants had encouraged and otherwise improperly influenced
the employee to violate his employment agreements and to misappropriate the employer’s trade
secrets. In ruling on the third-party defendant’s motion to dismiss the state law claims for lack of
jurisdiction, the Court held that the state law claims, including the claim for misappropriation of trade
secrets, involved the same facts, documents and witnesses as Plaintiff’s federal claims. Accordingly, the
Court exercised supplemental jurisdiction over such claims and denied the motion to dismiss.

White Wave Int’l Labs, Inc. v. Lohan, 2011 U.S. Dist. LEXIS 72781 (M.D. Fla. July 7, 2011). Plaintiff
entered into a confidentiality agreement with certain Defendants for the purpose of submitting
Plaintiff’s product samples for review and possible purchase. After the parties were unable to reach an
agreement as to price, Defendants released their own product that Plaintiff claimed contained the same
or nearly identical ingredients to Plaintiff’s product. Plaintiff filed suit, alleging that Defendants had
improperly used and misappropriate Plaintiff’s confidential information, samples, and trade secrets.
Defendant Lohan filed a Motion to Dismiss for lack of personal jurisdiction and for failure to state a
claim. The Court found it lacked personal jurisdiction under Florida’s long-arm statute and dismissed
Plaintiff’s claim against Defendant Lohan. In doing so, the Court recognized that Florida law is unclear as
to whether jurisdiction under Florida’s long-arm statute applies to defendants who commit a tort
outside of Florida that results in injury in Florida. Referring instead to cases from the 11th Circuit, the
Court held that Florida’s long-arm statute does not require the physical presence of a defendant. The
Court however held that the statute did not confer jurisdiction because the tortious act alleged
(misappropriation of trade secrets) occurred outside of Florida, was not directed at Florida residents,
corporations, or property, and did not arise from any communications that took place in Florida.

Godwin Pumps of America, Inc. v. Mackey Lee Ramer, 2011 U.S. Dist. LEXIS 73754 (M.D. Fla. July 8,
2011). Employer sued its former employee for, among other things, breach of an employment
agreement and misappropriation of trade secrets. The employer sought a preliminary injunction to
enjoin the former employee from violating the employment agreement and from disclosing the
employer’s confidential, proprietary and trade secret information. Applying New Jersey law to the
interpretation of former employee’s employment agreement, the Court found the agreement
unenforceable as written, modified its terms, and enjoined the former employee from further violation
of the modified agreement. In doing so, the Court held that the Employer had a legitimate business
interest in protecting the confidential, business information made available to the former employee
during his employment. With regard to the employer’s claim for misappropriation of trade secrets, the
Court denied the requested injunction, finding that the employer had failed to provide evidence that the
information possessed by the former employee constituted a trade secret under Florida law. Employer
only alleged that the former employee “connected various removable devices” to his laptop and “copied

onto them information belonging to” the employer. Employer did not provide any evidence as to the
information downloaded by the former employee to the removable devices.

Talk Fusion, Inc. v. Ulrich, 2011 U.S. Dist. LEXIS 74524 adopting Talk Fusion, Inc. v. Ulrich, 2011 U.S.
Dist. LEXIS 74549 (M.D. Fla. July 11, 2011). Employer sued its former employees, and sought to enjoin
them from, among other things, using the employer’s trade secrets. The magistrate judge granted the
requested injunction, which the District Court adopted. In doing so, the magistrate judge found that
while the Employer had not necessarily provided evidence of actual misappropriation of trade secrets,
the employer had demonstrated the actual or threatened misappropriation of trade secrets, which is
sufficient for an injunction under Florida law. The magistrate judge further found that the former
employees had not rebutted the presumption under Florida law that irreparable harm exists in cases
involving alleged misappropriation of trade secrets.

Mainline Information Sys., Inc. v. Fordham, 2011 WL 2938435 (N.D. Fla. July 21, 2011). Plaintiff sued
its competitor alleging that the competitor was soliciting the Plaintiff’s employees in an attempt to learn
the Plaintiff’s trade secrets. The Court denied the Plaintiff’s request for a temporary injunction. While
the Plaintiff submitted some minimal evidence in support of its motion through affidavits, the
Defendant provided testimony that refuted the scant evidence offered by Plaintiff. The Court found that
Plaintiff had failed to demonstrate a likelihood of success on its claims.

Estetique, Inc. USA v. Xpadmed LLC, 2011 WL 4102340 (S.D. Fla. Sep. 15, 2011). Employer requested a
preliminary injunction to enjoin its former employee from soliciting the employer’s clients and from
making use of and disclosing the employer’s confidential consumer information, which the employer
contended constituted a trade secret. The Court disagreed, finding that the employer had failed to
prove a likelihood of success on its trade secrets claim because the confidential consumer information
did not qualify as a trade secret. However, the Court granted the injunction in part because the
confidential consumer information did qualify as “confidential business information,” which is
protectable under Florida law.

International Hair & Beauty Systems, LLC v. Simply Organic, Inc., (Slip Copy) 2011 WL 5359264 (M.D.
Fla. Sept. 26, 2011). International Hair and Beauty (“IHB”) imports, markets, and formulates professional
hair care products. Simply Organic is a direct competitor of IHB. In August of 2010, IHB entered into an
Employee Non-Disclosure Agreement and a Proprietary Information Agreement & Invention Assignment
with its employee Defendant Pinto. In October 2010, IHB fired Defendant Pinto for alleged theft of
company property. IHB sought a TRO and preliminary injunction against Defendants Pinto and Simply
Organic to enforce a covenant not to compete and non-disclosure agreement and to prevent
dissemination of its trade secrets. Defendant Pinto admitted that after his termination, in 2011, a
former IHB employee sent him an IHB customer list. Defendant Pinto provided the list to Simply Organic
which in turn used the list for a mass e-mail marketing campaign. The Court found that IHB would likely
succeed on the merits of its breach of the non-solicitation and confidentiality provisions and its Florida
Uniform Trade Secrets Act claim, but not with regard to the non-compete claim. The Court held that the
customer list was a trade secret as testimony proved that it was a “product of great expense and effort
rather than a compilation of information available to the public.” The Court further reasoned that IHB’s
non-compete claim was likely to fail as it was ambiguous as to the geographic area and the line of
business restrictions.

Knights Armament Company v. Optical Systems Technology, Inc., No. 09-14480, — F.3d. —, 2011 US
App. LEXIS 18324 (11th Cir. Sept. 2, 2011). Optical Systems and Knights Armament partnered to sell

clip-on night vision devices. Optical Systems manufactured the devices, while Knights Armament
marketed and sold them. In 2003, a dispute arose as to the proper owner of the technology. As a
result, in 2007, Knights Armament filed a lawsuit against Optical Systems. In August of 2008, Optical
Systems filed a second amended counterclaim against Knights Armament alleging for the first time a
claim of misappropriation of trade secrets in violation of the Florida Uniform Trade Secrets Act
(“FUTSA”). Knights Armament filed a motion for summary judgment on the grounds that Optical
Systems’ misappropriation claim was barred by the statute of limitations as the FUTSA provides that
such an action must be brought within three years after the misappropriation has been discovered or by
the exercise of reasonable diligence should have been discovered. The district court granted Knights
Armament’s motion and the Eleventh Circuit affirmed. The Court stated “it is incredible, through
discovery, they damningly admit, on the record, that they knew of or suspected KAC’s alleged
misappropriation as early as March 2003. In so doing they lose on this issue.”


Robbins v. Supermarket Equipment Sales, LLC, -- S.E.2d --, 2012 WL 360506 (Ga. Feb. 6, 2012).
Employer sued its former employees for misappropriation of trade secrets and sought injunctive relief
prohibiting the use of the alleged trade secrets by the former employees’ new employer and requiring
the submission of the alleged trade secrets to the trial court for review. The employer sought this
injunctive relief under the Georgia Trade Secrets Act (the “GTSA”). While the trial court found that
information at issue did not qualify as a trade secret under the GTSA, the trial court exercised its power
to grant general equitable relief under Georgia law and granted the requested injunction. The Supreme
Court of Georgia reversed, finding that the trial court abused its discretion in granting the injunction
because such relief was preempted by the GTSA. Noting that the GTSA “supersedes all conflicting laws
providing restitution or civil remedies for misappropriation of trade secrets,” the Court held that the
only available relief under Georgia law for a claim of misappropriation of trade secrets is the relief
provided by the GTSA. Because the information at issue did not qualify as a trade secret, the employer
was not entitled to an injunction under the GTSA. Furthermore, because the trial court’s award of
general equitable relief was based on “the same conduct as the GTSA claim, i.e., the misappropriation”
of the alleged trade secrets, such relief was preempted by the GTSA.

Amedisys Holding, LLC, v. Interim Healthcare of Atlanta, Inc., Et al, Case No. 1:11-cv-1437-WSD, 2011
US DIST LEXIS 59260 (N.D. Ga. June 3, 2011). Amedisys asserted among other claims, a claim for
misappropriation of trade secrets against three former employees and a direct competitor, Interim
Healthcare. Amedisys sought a TRO and preliminary injunction against the defendants claiming that the
employees, two sales persons and an assistant, took Amedisys’ trade secret protected Referral Logs and
Workbook to their new employer, Interim Healthcare, in April, 2011. While the Court denied the TRO
based on statements made by the defendants in declarations, a far reaching preliminary injunction was
granted against one of the sales people (Defendant Mack) and the competitor, Interim Healthcare.
Besides finding that reasonable measures had been taken to keep the Referral Logs and Workbook
secret (they were marked confidential on each page, among other things), the Court noted that the logs
“are more than a list of names of healthcare providers and facilities. They are not simply a directory of
healthcare providers. They contain valuable, proprietary information uniquely known to Amedisys, and
which is not publicly available. This information, which Amedisys collects, evaluates, analyzes, and
arranges, enables Amedisys employees to make informed, fact-based decisions on where to focus their
business solicitation efforts. It is this information that transforms an ordinary list of doctors and
healthcare providers to a trade secret.” The Court further noted that “while the names of the doctors
and healthcare centers could be developed in the logs by other means, including through a cumbersome

and time-intensive deconstruction of medical directories, visitation to hospitals, internet searches, and
the like, these ‘public’ sources do not indicate which doctors or healthcare centers refer patients to in-
home care, for what ailments the patients suffer from, who provided the referrals, and do not allow one
to identify which patients are susceptible to poaching by a competing home healthcare provider.” In
summary, although the names were not a secret, the analysis that the plaintiff had done on the names
in compiling the Log made it economically valuable.

In support of the preliminary injunction motion, Plaintiff successfully demonstrated that Defendant
Mack had made numerous misstatements under oath to the Court regarding her possession of the
Referral Logs. Based upon the Court’s opinion that Mack had been untruthful regarding the Logs, it
ordered a far-reaching injunction, prohibiting the new employer, Interim, and Defendant Mack from
“contact[ing] on behalf of Interim, either directly or indirectly, any healthcare facilities, providers,
patients, or prospective patients referenced in the Referral Logs she emailed to her personal email
account on April 12, 2011, or any other Referral Logs or Referral Log information to which she now has
access ("the Reference Log Persons"). Indirect contact shall include, but is not limited to, assisting others
at Interim to identify, plan for, or make contact with any Reference Log Person." The defense argued
that this injunction was essentially a noncompete, but the Court noted that it did not prohibit her from
working for Interim in other capacities or calling on customers not listed in the logs.

Sutter Capital Management, LLC v. Wells Capital, Inc., — S.E.2d –, 2011 Ga. App. LEXIS 666, (Ga. App.
July 13, 2011). Wells Capital and Wells Partners (“Wells”) filed suit against Sutter Capital Management
alleging that Sutter misappropriated Wells’ trade secrets; a confidential list of Wells’ investors. A Sutter
investor obtained the Wells investor list and provided the information to Sutter, which in turn provided
the information to an entity which mailed mini-tender offers on Sutter’s behalf to Wells’ limited
partners. As a result, multiple Wells investors sold their partnership units to Sutter. The trial court
granted summary judgment in favor of Wells and awarded damages in the amount of $667,304.51. On
appeal, Sutter argued that this ruling should be reversed because the Wells lists do not constitute trade
secrets. The Court of Appeals agreed, finding that Wells failed to demonstrate that the list “derived
economic value, actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value from its disclosure or
use.” The Court of Appeals noted that Wells’ position statement that it sent to its limited partners,
while recommending that the partners reject Sutter’s tender offer, specifically stated that the decision
to transfer units would not have any direct financial impact on the general partners or their affiliates.
Further, Wells’ witnesses also admitted that the transfers to Sutter did not have any direct financial
impact on the general partners or their affiliates. The Court found that because the lists do not derive
economic value as a result of their secrecy, they do not constitute trade secrets.

Becham v. Synthes (U.S.A.), 2011 WL 4102816 (M.D. Ga. Sep. 14, 2011). Employee filed a declaratory
judgment action against his former employer seeking a declaration that the restrictive covenants in his
employment agreement were unenforceable because they violated Georgia’s public policy against
contracts in restraint of trade. Defendants counterclaimed asserting, among other things, claims for
misappropriation of trade secrets and unfair competition based on misappropriation of trade secrets.
The Court dismissed both claims. As to the trade secret claim, the Court held that such claim failed
because Defendants did not allege that Plaintiff disclosed a tangible customer list, the only type of
customer list protected under Georgia law, and because Defendants did not allege that Plaintiff
disclosed information that was not generally known to, and readily ascertainable by proper means by,
other person who can obtain economic value from its disclosure or use. As to the unfair competition
claim, the Court expressed skepticism that such a claim, when based on misappropriation of a trade

secret, exists under Georgia law because such claims are likely preempted by the Georgia Trade Secrets
Act. Assuming such a claim is possible, however, the Court found that Defendants had no such claim
because they could not show that Plaintiff occupied a confidential or fiduciary position with Defendants.

B&F System, Inc. v. LeBlanc, 2011 WL 4103576 (M.D. Ga. Sep. 14, 2011). Former business partners
sued each other regarding the dissolution of their business alleging, among other things,
misappropriation of trade secrets and conversion of trade secrets. Plaintiff alleged that Defendants
misappropriated Plaintiff’s customer list and associated customer information. The Court held that such
information did not constitute a trade secret because Plaintiff had failed to take reasonable efforts to
maintain its secrecy. For example, the Plaintiff did not password protect its customer list, made it freely
available to all of its employees, attached it to emails that were not sent through a secure server and
failed to mark any pages of the customer list as confidential. With regard to Plaintiff’s conversion claim,
the Court held that such claim was preempted by the Georgia Trade Secrets Act because it was based on
allegations of trade secret misappropriation.


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