Cases from 3rd Circuit

United States District Court for the Eastern District of Pennsylvania
Jury Awards Fig Jam Maker Millions in First DTSA Verdict

On February 24, 2017, a federal jury handed down the first verdict under the Defend Trade Secrets Act (DTSA). Dalmatia Import Group and Maia Magee (“Plaintiffs”) develop and sell various flavors of high quality fig jam. After their business relationship deteriorated, Plaintiffs sued their former distributors, Foodmatch, Inc. and Lancaster Fine Foods, Inc. (“Defendants”). In the suit, Plaintiffs alleged that Defendants’ competing fig jam impersonated Plaintiff’s product, more specifically, that Defendants stole the recipe for Plaintiff’s fig jam. Furthermore, Plaintiffs claimed that Defendants sold and distributed rejected jars of Plaintiff's fig spread, using Plaintiff’s trademark, without consent.

Plaintiffs brought claims for breach of contract, trademark infringement, counterfeiting, and misappropriation of trade secrets. After a four-week trial in the United States District Court for the Eastern District of Pennsylvania, the jury found Defendants liable for misappropriation of trade secrets, trademark infringement and counterfeiting. The jury awarded Plaintiffs $2.5 million in damages, which Plaintiffs’ attorneys estimate will double to roughly $5 million after the damages are trebled. Plaintiffs' attorneys also stated the court will issue an injunction enjoining Defendants from using Plaintiff’s trade secrets in the future.

The case is Dalmatia Import Group v. Foodmatch, Inc. et al., 16-cv-02767 (E.D. Pa. Feb. 24, 2017).

United States Court of Appeals for the Third Circuit
Florida's Litigation Privilege Bars Misappropriation Claims Under the FUTSA

On December 10, the 3rd Circuit upheld a district court decision dismissing Microbilt Corporation's claims for misappropriation of trade secrets under the Florida Uniform Trade Secrets Act ("FUTSA"). Microbilt claimed that Gunster violated the FUTSA when they attached copies of invoices from customers of a Microbilt subsidiary as an exhibit in a complaint alleging breach of contract, filed in the Middle District of Florida.

On appeal, the 3rd Circuit explained that it is "well-settled under Florida law that the absolute litigation privilege applies to statements in pleadings filed with the court." Thus the court reasoned, foreign state exceptions to the privilege, relied on by Microbilt, are irrelevant to the case at present. Further, since the privilege is settled law, the court need not submit it as a certified question to Florida Supreme Court.

Eastern District of Pennsylania
WebMD Alleges Former Vice President will Inevitably Disclose Trade Secrets Through Employment with Competitor

Plaintiff, WebMD Health Corp., sued Anthony T. Dale, a former employee, alleging by accepting employment with Health Grades, Inc., Dale breached his Restrictive Covenant Agreement, violated Delaware’s Uniform Trade Secrets Act, engaged in unfair competition, and converted WebMD’s trade secrets and confidential information. Plaintiff then moved for a preliminary injunction to enjoin Dale from employment with Health Grades for one year.

WebMD’s complaint alleged that in Dale’s ten years of employment, including three years as Group Vice President, he was exposed to, and involved in the development of, highly confidential information such as pricing policies, product development plans, business plans, sales strategies, and market positioning. Further, it stated that Health Grades was a direct competitor as defined by the terms of the restrictive covenants that Dale signed and that he could not perform the role he has planned at Health Grades without using WebMD’s confidential information, either consciously or inadvertently.

The District Court for the Eastern District of Pennsylvania, applying Delaware Law, granted WebMD’s motion for a preliminary injunction, finding that WebMD was likely to succeed on the merits. However, the court also found that that the definition for “competing businesses” in the restrictive covenants was overbroad and thus it “blue penciled” the definition to only restrict Dale’s involvement online advertising of health and wellness-related products, which constituted a marginal portion of Dale’s responsibilities at Health Grades.