Recently Filed Cases

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August 12, 2011 | United States District Court for the Eastern District of Michigan, Southern Division
Energy drink maker alleges former manager, now subject of criminal probe, misappropriated trade secrets by divulging to direct competitor

Innovation Ventures, L.L.C., d/b/a Living Essentials (“Living Essentials”) filed a complaint in the United States District Court for the Eastern District of Michigan, Southern Division on August 12, 2011 asserting that Aspen Fitness Products, Inc. (“Aspen”), along with Derrick George (“George”) and his family of companies (“On Go”) misappropriated its trade secrets related to its popular “5 Hour Energy” beverage. The drink comes in a small bottle and is taken as a “shot” containing caffeine and B vitamins. George and On Go directly compete with Living Essentials with their own drink, On Go Energy Shot.

Kevin Zwierzchowski (a non-defendant), who worked at Living Essentials as controller and operations manager from March 2006 until September 2007, allegedly was in possession of the trade secrets in question. Living Essentials discovered that Mr. Zwierzchowski had retained information such as product formulae, pricing information, and supplier and vendor contact lists and shared that information with third parties including George and On Go.

Living Essentials maintains that Mr. Zwierzchowski had no authorization to possess or reveal these trade secrets, particularly as he was in a position “charged with the highest level of responsibility” and “having a duty of loyalty to Living Essentials.” Thus, Living Essentials asserts that the only way Living Essentials’ competitors could have gained this information is by wrongfully obtaining it from Zwierzchowski.

These allegations about Zwierzchowski, George, and On Go additionally are the subject of a current criminal investigation by the FBI.

Additional claims include both direct and contributory copyright infringement (of its caution label), trademark infringement (of its allegedly well-known “Running Man” logo), unfair competition and dilution under the Lanham Act, common law unfair competition, and common law unjust enrichment.

Living Essentials seeks injunctive relief as well as the greater of actual damages or statutory damages caused by the improper use of its proprietary information, copyrighted material and trademark, including attorneys’ fees.

July 15, 2011 | United States District Court for the Northern District of California
Tech company’s suit against former employee for misappropriation of trade secrets related to Twitter account survives motion to dismiss

PhoneDog is a company that delivers news about mobile phones, and provides information about them for consumers to use when comparison shopping. The company had employed Noah Kravitz to write online reviews of phone products using a variety of online mediums; one such medium was Twitter, where Kravtiz’s handle was “@PhoneDog_Noah.” However, after Kravitz left the company, he refused relinquish use of the Twitter account, and instead changed the handle to “@noahkravitz,” and installed a new password. Whether an exiting employee can take his Twitter followers with him, and the potential trade secret implications involved, is a case of first impression.

PhoneDog sued Kravitz in the United States District Court for the Northern District of California on July 15, 2011. The suit claimed misappropriation of trade secrets, interference with economic advantage, and conversion. On November 8, 2011, the court denied Kravitz’s motion to dismiss the trade secrets and conversion claims, noting that PhoneDog had described the elements of trade secrecy in sufficient detail. The case received publicity for potentially determining “ownership” of an employees Twitter account and followers. However, the alleged trade secrets at issue is actually the Twitter account password itself. Although PhoneDog’s conversion claim explicitly asserted ownership of the Twitter account, courts have interpreted the California Uniform Trade Secrets Act to preempt common law claims (such as conversion) if they are based on the same nucleus of facts as a concurrent trade secret misappropriation claim. Thus, the court can decide the case without analyzing the parties’ competing ownership claims. Moreover, even if the court finds in favor of PhoneDog, the specific remedy and calculation of damages could influence whether it would be cost-effective for parties to bring these types of claims moving forward.

The case exemplifies the complex challenges companies face when trying to protect their confidential information in the digital era, and more specifically, the dangers of not instituting explicit internal policies for employees and their social media accounts.

On or around December 19, 2012, the parties settled. Although the actual details of the settlement were confidential, it appears Kravitz has been permitted to retain ownership of the Twitter account.

June 26, 2011 | United States District Court for the Western District of Washington (Seattle)
Baden Sports, Inc. claims Wilson Sporting Goods Co. misappropriated secrets behind its ball inflation technology

Wilson Sporting Goods Co., one of the world's leading manufacturers of sports equipment, has been sued by a competitor, Baden Sports Inc., for patent infringement, unfair trade practices, and misappropriation of trade secrets. At issue in this case is Baden's inflation table, which is used to inflate and package inflatable balls. Baden claims that Wilson solicited confidential and proprietary information from a retired Baden employee regarding Baden’s inflation table and basketball products. According to Baden’s complaint, Wilson used the information to develop a “soft”-feel basketball that is manufactured with a cellular sponge layer. Baden claims that the product infringes its patent covering cushion-control technology.

On May 23, 2011, Wilson moved to dismiss the complaint for failure to state a claim. It argues that Baden failed to show a plausible trade secret since Baden’s method of ball inflation is common among manufacturers. Additionally, Wilson requests the court to bar Baden’s common law unfair competition claim, arguing that it is preempted by the Washington Uniform Trade Secrets Act. Wilson argues that the underlying facts of Baden’s unfair competition claim are the same as those giving rise to its trade secrets claim.

On July 26, 2011 the court granted Wilson's second claim in the earlier motion to dismiss, combating the allegations that defendant contacted a former employee and offered him consulting fees, causing subsequent disclosure of information about the operation and design of Baden’s inflation table. Importantly, the court dismissed Baden's claim of trade secret misappropriation in finding that Baden's inflation table did not constitute a valid trade secret under Washington Uniform Trade Secret law. The court further contended that the allegedly novel inflation table was not described with enough accuracy or detail so as to highlight any trade secret components or features. Thus, in failing to plead any details about inflation table that make it a trade secret, Baden did not meet the pleading requirements for the claim of trade secret misappropriation, dismissing Baden's third claim of unfair competition as well. Both claims were dismissed without prejudice, while the court gave leave for Wilson to eventually amend it's complaint on September 7, 2011.

With Baden's October 19th answer, the basketball inflation table litigation entered a discovery and deposition phase, with both parties trading opening briefs and filing declarations with the court. In late July, 2012 Baden Sports filed its motion for summary judgment on the pleadings and limited discovery, countered by Wilson's own motion for summary judgment days later. Wilson replied in late August 2012 to Baden's motion for summary judgment, and on September 6, 2012 a stipulation and order was entered for extension of ongoing mediation proceedings by the parties. This stipulation was granted and the mediation deadline was extended until October 4, 2012 to the parties to reach a potential mediated settlement.

May 26, 2011 | Santa Clara County, Superior Court of California
PayPal files suit against Google for misappropriation of trade secrets after Google woos over a former PayPal senior executive

Paypal, Inc. (“PayPal”) and eBay, Inc. (“eBay) sued Google, Inc. (“Google”) and Osama Bedier, a former PayPal senior executive, alleging that Bedier and Google misappropriated PayPal’s confidential marketing research, point-of-sale (“POS”) technology and services for retailers, and mobile payment strategies and procedures.

Before the suit, PayPal sought to serve as a payment option for mobile app purchases on Google’s Android market. Bedier was then the senior executive leading negotiations between PayPal and Google to set up the business relationship. However, during the final steps of the negotiations, Bedier interviewed for a position at Google without notice to PayPal. He terminated employment at PayPal and began work for Google’s Mobile Payments division on January 24, 2011. PayPal alleges that Bedier left the company with knowledge of its trade secrets for retail POS technology and services and mobile payment. Additionally, it claims that Bedier transferred and possessed upon departure PayPal’s and eBay’s confidential information on his personal computers.

April 7, 2011 | United States District Court for the Eastern District of New York (Brooklyn)
GEO Group sues former executive for misappropriating its trade secrets to secure a multi-million dollar contract from the U.S. Government

On April 7, 2011, GEO Group Inc. (GEO), a corrections services agency, sued a former executive, Jack A. Brown III, claiming Brown misappropriated its trade secrets to secure a multi-million dollar government contract from the U.S. Department of Justice's Bureau of Prisons. Brown was employed at GEO as Vice President of Community Corrections from October 2005 to March 2009. During this period, he allegedly was running another business on the side, Community First Services Inc. (CFS), without GEO's knowledge. GEO claims that it planned to submit a bid for the Bureau of Prisons project, but Brown accessed GEO’s confidential proposal materials and information in order to compose a lower bid for CFS. Brown then abruptly resigned from GEO and submitted the CFS bid. CFS was awarded the contract by the Department of Justice. GEO claims that its proposal materials and information were a trade secret.

February 14, 2011 | Central District of California (Western Division - Los Angeles)
Employer alleges concerted defections to competitor by former employees, sensitive information in hand

Ikon Office Solutions Inc. ("Ikon") filed a notice of settlement in this case on September 23rd, 2011, but details of the settlement are currently unknown.

Ikon sued two former employees, John Kolacinski and Robert Hornbeck, along with their current employer, Myriad Litigation Solutions LLC, for allegedly stealing client contacts and trade secrets. Ikon Legal Document Services, a division of Ikon Office Solutions, provides litigation support to law firms and in-house counsel. According to the complaint, Kolacinski and Hornbeck coordinated their November 2010 resignations from Ikon to go to work for Myriad, a direct competitor, and copied sensitive business information, such as pricing and contract details, onto flash drives before leaving the office. Ikon alleges that this was done in direct violation of nondisclosure agreements that the employees signed while under its employ.

Ikon filed a motion for Preliminary Injunction on February 17, 2011, but withdrew its Motion on March 28, 2011.

February 11, 2011 | Central District of California (Western Division - Los Angeles)
Start-up TechForward alleges Best Buy misappropriated trade secrets to copy successful buyback program

TechForward Inc., a California based start-up, has filed suit in U.S. District Court for the Central District of California, alleging that Best Buy illegally modeled its buyback program after the startup's own “Guaranteed Buyback Plan” and misappropriated TechForward’s trade secrets to do so. Under the buyback plan at issue, customers can trade in electronic devices that they purchased for store credit. According to the suit, Best Buy had tried to design its own buyback program but failed. After seeking a collaboration with TechForward, the two companies signed a confidentiality and nondisclosure agreement in February 2008. Although a Los Angeles-based pilot program was successful in April 2010, TechForward contends that Best Buy abruptly terminated the relationship in October 2010 and launched its own buyback program on January 10, 2011. According to the suit, successful implementation of an electronics buyback program requires data that TechForward considers highly confidential and proprietary.

In its answer to the amended complaint, defendant Best Buy denies the existence of any trade secrets under California law. Additional motions, including Defendant's motion for summary judgement, have been sealed pursuant to a protective order issued on October 6, 2011.

While ajury trial has been previously set for November 6, 2012, the parties recently petitioned for an accelerated settlement conference now scheduled for September 26, 2012.

December 29, 2010 | Southern District of New York
2FA's claims against Oracle for misappropriation of trade secrets is stayed pending partial summary judgment in a related action

In 2010, 2FA Technology sued Oracle Corporation and Oracle Systems Corporation, formerly Passlogix, a wholly-owned subsidiary of Oracle merged with Oracle Systems Corporation, for misappropriation of trade secrets and breach of contract. 2FA alleges that Passlogix's senior engineers misappropriated 2FA's source code and incorporated the code into Passlogix's products. 2FA alleges that Oracle continued to knowingly sell products containing misappropriated 2FA technology after it acquired Passlogix.

On January 31, 2011 the defendants filed a motion to stay the proceedings pending the outcome of a partial summary judgment motion filed by Passlogix in an earlier related action in the Southern District of New York, Oracle Systems Corporation v. 2FA Technology, LLC, docket number 08–cv–10986. There, the partial summary judgment motion seeks to dismiss each of 2FA’s counterclaims in the entirety, which could spell doom for the pending similar claims in this action. 2FA filed a memorandum in opposition to the motion to stay on March 17, 2011 but the motion was granted on April 6, 2011.

On July 25, 2011, the parties stipulated that the action be dismissed with prejudice, with each side bearing its own costs and expenses, including attorneys' fees, incurred in connection with the action. The related action was similarly dismissed.

December 20, 2010 | Northern District of Illinois
In Fire 'Em Up's suit for patent infringement and trade secrets misappropriation, both parties seek to dismiss the other's claims

Fire 'Em Up (FEU) brought a suit including claims of patent infringement and trade secret misappropriation against multiple defendants. The trade secret misappropriation claims pertain to misappropriation of customer lists, supplier lists, as well as materials necessary to create FEU's product, and software technology which is known to only one of FEU’s employees, software developer Jeffrey Bach.

FEU voluntarily dismissed claims against Intigreen Technologies, Inc. on February 24, 2011 and against David Shea, Peter Gordon, and Jeffrey Buecheler on March 16, 2011. The remaining defendants, Technocarb Equipment (2004) Ltd. and Aurora Electronics, Ltd. filed an answer on April 11, 2011 containing affirmative defenses and counterclaims, as well as a motion to dismiss FEU’s claims of trade secret misappropriation, conversion, fraud and accounting. FEU, in turn, filed on May 16, 2011 a motion to dismiss the defendants’ counterclaims for deficiencies.

December 15, 2010 | United States District Court for the District of Massachusetts (Boston)
Alleged misuse of software beyond the life of license agreement to discover software's unique processes

According to a copyright infringement complaint filed in the U.S. District Court for the Central District of California, Merriam-Webster continued to use Questrel's “Just-in-Time English” software after negotiations between the two companies for a new license agreement fell through. Questrel’s lawsuit also alleges breach of contract and misappropriation of trade secrets. According to the complaint, the trade secret is Questrel’s software and related methods, techniques, or processes, which were misappropriated when Merriam-Webster continued to use the software without Questrel’s consent.

Pursuant to a forum selection clause in the License Agreement between the parties, the suit was transferred to the United States District Court for the District of Massachusetts on March 24, 2011.

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