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TechForward Inc. v. Best Buy Co. Inc.
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.

2FA Technology, LLC v. Oracle Corporation
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.

Fire 'Em Up v. Technocarb Equipment (2004) Ltd.
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.

Questrel, Inc. et al v. Merriam-Webster, Inc.
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.

Dantec Dynamics, Inc. v. LaVision Inc.
December 1, 2010 | Eastern District of Michigan
Dantec alleges that a direct competitor received stolen information about existing and prospective customers from a former employee

Dantec alleges defendant and direct competitor LaVision received confidential information about existing and prospective customers from a former Dantec salesperson, Michael Kotas who began work for LaVision after he was terminated. Kotas allegedly accessed Dantec's computer systems in order to obtain the information about Dantec’s customers then subsequently deleted electronic information to cover his tracks. Dantec claims that LaVision used the information to solicit business from its customers.

A scheduling/settlement conference is set for April 20, 2011.

The Muecke Company, Inc. v. CVS Caremark Corporation
September 30, 2010 | Southern District of Texas
Accusation of abuse of confidential consumer info revealed by pharmacy benefit claims process

Six Texas pharmacies have brought suit against CVS Caremark for racketeering and misappropriation of trade secrets, accusing the company of requiring patients to buy maintenance medications at CVS retail pharmacies. The lawsuit, filed in September of 2010, claims that CVS does not maintain a “firewall” between its retail pharmacies and the pharmacy benefits management side of its business as required by the Federal Trade Commission. According to the complaint, each of the plaintiff pharmacies owns a trade secret in its patient lists, prescription files, and integrated patient information. The lawsuit claims that CVS misappropriated this confidential patient information, which was disclosed to CVS through the claims adjudication process.

Defendants moved to dismiss and compel arbitration on December 6, 2010. The deadline for plaintiffs to file their reply to defendants' motion to dismiss and compel arbitration was April 25, 2011.

Gene Codes Forensics, Inc. v. The City of New York
March 1, 2010 | Southern District of New York
New York Office of the Chief Medical Examiner moves for summary judgment in a suit filed by Gene Godes Forensics for improper sharing of trade secrets

Gene Codes Forensics, Inc. (GCF), a Michigan-based company, has accused the New York Office of the Chief Medical Examiner (OCME) of improperly sharing proprietary information about its software with the FBI. The software, named Mass-Fatality Identification System (M-FISys) was used to help identify victims of the September 11, 2001 (9/11) attacks. According to GCF, OCME employees were extracting information from M-FISys software in order to help the FBI develop its own software. In response, the city claims that 1) it obtained a "perpetual, royalty-free" license to use the M-FISys software for noncommercial purposes; 2) it helped developed the software; and 3) had some ownership rights. The court is currently deciding the defendant's motion for summary judgment.

Eastman Chemical Company v. AlphaPet Inc. et al
January 1, 2010 | United States District Court for the District of Delaware
Claims for trade secret misappropriation against a licensee survive motion to dismiss for failure to plead with specificity

Eastman refines further the pleading standard in trade secret cases. In general, there is no heightened pleading standard for trade secret cases after Twombly/Iqbal; a plaintiff is not required “to plead all of the relevant facts in detail.” However, a plaintiff can’t simply point to an area of technology or refer generally to information or business methods. The goal of the pleading standard is to provide notice to defendants of the substance of the claims against them. In the context of claims for trade secret misappropriation, this goal must be balanced with the need to maintain secrecy. Disclosure of the actual trade secret is not required.

Here, the alleged deficiencies in the pleadings were 1) a failure to identify the particular employees alleged to have stolen the trade secrets; 2) a failure to identify the trade secrets that were allegedly misappropriated; and 3) a failure to show use or disclosure of the alleged trade secrets. After a review of the facts set forth by the plaintiff, and case law from other states applying UTSA statutes, the Magistrate judge found that by identifying a group of employees, referring to the alleged trade secrets as information “relating to the manufacture of PET” and Eastman’s “IntegRex technology,” and alleging their use in start-up of a new plant, Eastman had properly disclosed sufficient information to meet the Rule 8 pleading requirements and state a claim.

Oracle Systems Corporation v. 2FA Technology, LLC
December 18, 2008 | Southern District of New York
Alleged exploitation of "technological resources" by Oracle competitor

Oracle Systems Corporation, formerly Passlogix (a wholly owned subsidiary of Oracle Corporation that has since dissolved), sued 2FA Technology, LLC. alleging that 2FA threatened illegitimate legal action, breached contractual obligations, exploited Passlogix’s resources, and sought to injure Passlogix's competitive position and reputation. Oracle Systems Corp. filed a motion for partial summary judgment, which is currently pending before the court.

This case is related to 2FA Technology, LLC v. Oracle Corp. (10-cv-9648), a later-filed case by the defendant in this action, currently stayed pending the disposition of the summary judgment motion here.

USA v. Jin
December 9, 2008 | U.S. District Court for the Northern District of Illinois.
Court Imposes Four-Year Prison Sentence on Ex-Motorola Employee Caught with Trade Secrets and a One-Way Ticket to China

In 2008, Jin was indicted on charges relating to the alleged theft of Motorola’s Trade Secrets. She was recently found guilty, and on August 29, 2012, sentenced to four-years imprisonment.

Jin began working as a software engineer at Motorola beginning in 1998. In February 2006, Jin took medical leave, during which time she accepted employment with Chinese competitor Sun Kaisens. After accepting employment, Jin allegedly returned to work to Motorola under false pretenses: She planned to take her former employer’s technical documents and other confidential, proprietary information on a one-way ticket to her new employer in China. However, Jin was searched at the airport and arrested before she could board her flight. Police recovered over 1,000 electronic and paper documents for her person.

Although U.S. District Judge Ruben Castillo acquitted Jin on espionage charges, she was found guilty of stealing Motorola’s Trade Secrets pursuant to the EEA. Jin’s lawyers argued in favor of a probationary sentence; however, prosecutors recommended a sentence of 70 to 96 months, arguing that Jin’s conduct justified a substantial sentence of imprisonment report. This was actually below the 121-151 month sentencing range set forth in the Pre-Sentence Investigative Report, as it accounted for Jin’s allegedly failing health. The four-year prison sentence -- although less than the government’s recommendation – nonetheless evidences courts’ increasing awareness of the importance of trade secrets to modern companies, and the devastating consequences of their theft.

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