Zylon Corp. v Medtronic, Inc.
March 3, 2016
Appellate Division, First Department, New York Supreme Court
A New York state appellate division court affirmed the lower court’s ruling that rejected a motion to dismiss trade secrets misappropriation and unfair competition claims where such claims raised triable issues of fact about the alleged trade secrets.
Plaintiff Zylon Corp. is a company that focuses on developing new technologies relating to medical materials, medical devices, and catheters. Defendant Medtronic, Inc. is a medical device designer and manufacturer. In 2005, the parties entered into an Evaluation Agreement whereby Zylon Corp. would create a “zero-fold” balloon to be used in angioplasty catheters for Medtronic. As part of the Agreement, all information and processes developed through the course of the project were to be confidential and the property of Medtronic.
In 2008, Zylon brought suit against Medtronic, alleging that after disclosing the Zylon design and manufacturing process of creating the “zero-fold” balloon to Medtronic as a part of their confidential relationship, Medtronic misappropriated trade secrets and confidential information related to the process to create a balloon component for a different product, the Sprinter® Legend Semicompliant Rapid Exchange Balloon Catheter. Zylon argued that the information provided to Medtronic included Zylon trade secrets, outside of the Agreement’s confidential information.
The appellate division court affirmed the decision because Zylon raised triable issues of fact about the trade secret process for creating “zero-fold” balloons and whether a protectable trade secret existed. Medtronic failed to demonstrate that the information it used to create its own catheters was the same confidential information pursuant to the Agreement. As such, the court affirmed the lower court, rejecting Medtronic’s bid to dismiss Zylons claims.