Cases from United States District Court for the Central District of California

United States District Court for the Central District of California
Botox manufacturer successfully obtains injunction blocking competitor’s product release on allegations of trade secrets misappropriation

Allergan, Inc., makers of the famous anti-wrinkle medication Botox, successfully obtained an injunction against the release of its competitor Merz Pharmaceuticals, LLC’s rival product Xeomin, immediately ahead of its planned nationwide launch. Allergan claimed in the United States District Court for the Central District of California that seven former employees had stolen volumes of customer information before defecting to Merz. The information consisted of spreadsheets with customer details and contact information for over 24,000 Botox customers in the United States. Merz then used this information to create anticipation for its competing product among these customers.

The terms of the injunction prohibit Merz from: “retaining, disclosing, or using” the trade secrets; selling Xeomin or soliciting its purchase for 10 months in the “facial aesthetics” market; doing the same in the “therapeutics market” for specific customers; and selling “dermal filler” products for 10 months. Some exceptions are provided for customers that seek out Merz with no solicitation. Merz is also ordered to search for and destroy all Allergan trade secrets in its possession and then follow up with a report to the court. The remedy is noteworthy because of the judge’s willingness to completely block a product’s release, instead of disgorging profits, for example.

Update: Defendants requested a modification of the injunction order to also add an exception for “customers who are provided or purchase dermal filler products, or who are solicited to purchase dermal filler products, from a company other than” Merz. Judge Guilford issued an in camera order denying this amendment on April 12, 2012, noting that the defendants had not complied with his instructions to keep the order as-is and to “solve the problem” as applied to co-defendant Amber Prumer, a salesperson for Allergan who went to work Merz after sending sensitive sales information to her personal e-mail account. (Ostensibly the injunction, as is, would be too broad to apply properly to Prumer, but the reasoning is not clear from the judge’s order.)

The parties are conducting post-injunction discovery, and the court has scheduled the jury trial to commence on March 26, 2013.

United States District Court for the Central District of California
Allegations of misappropriation of TS countered by antitrust claims in C.D. Cal case

A United States District Court for the Central District of California trade secrets misappropriation case will become more complicated as it progresses, as Judge Wright recently allowed five of the defendants' antitrust-based counterclaims to survive motions to dismiss. The core allegations in the case, Yardi Systems, Inc. v. RealPage, Inc. et al., concern RealPage’s acquisition of a firm that formerly consulted for Yardi (DC Consulting, also named as a defendant). Yardi and RealPage are rivals in the real estate management software industry. Through the acquisition of the consulting firm, Yardi alleges that RealPage was able to gain information that allowed it to hack in to its servers. Yardi accuses RealPage of thereby accessing pricing data and customer lists with an eye towards courting Yardi customers to run Yardi’s software on RealPage’s cloud computing services. RealPage deflected these claims with an antitrust defense, founded upon “customer interference and intimidation” embodied in Yardi’s practice of forcing its software users to sign licensing agreements that disallow use of its software on RealPage’s cloud servers. The judge held in a Feb. 13, 2012 order that RealPage had sufficiently stated a counterclaim that Yardi was attempting to create a monopoly, allowing the antitrust argument to advance to the next stage of litigation. This decision serves as a reminder that antitrust claims are available as affirmative defenses and counterclaims to trade secrets misappropriation allegations.

United States District Court for the Central District of California
Doll Designer Alleges Hasbro Violated DTSA with “My Little Pony”

Plaintiff Elinor Shapiro (“Shapiro”) alleges that Defendant Hasbro, Inc. (“Hasbro”) misappropriated her trade secrets regarding new versions of the popular doll “My Little Pony.” Shapiro works as a doll creator and made a submission to Hasbro for a new line of pony dolls that are clear, filled with glitter, and light up. The submission included a presentation, marketing plan, and prototypes. Roughly 17 months later, Hasbro released a new line of “My Little Pony” dolls that are clear, light up and filled with different colored glitters. Shapiro argues that this was a misappropriation of information she presented, and has filed two lawsuits against Hasbro.

Shapiro’s first lawsuit, Shapiro v. Hasbro Inc. et al.,, No. 2:15-cv-02964, which is set to go to trial in September 2016, alleges multiple claims including copyright infringement, breach of contract, and multiple California trade secret law violations. Shapiro filed the second lawsuit, Shapiro v. Hasbro Inc. et al., No. 2:16-cv-05750, on August 2, 2016. The second suit drops the copyright infringement claims and focuses more on trade secrets, including a claim under the Defend Trade Secrets Act (DTSA), which took effect in May 2016.

The complaint for Shapiro’s latest lawsuit can be found here: http://tsi.brooklaw.edu/cases/shapiro-v-hasbro-inc-et-al/filings/shapiro-v-hasbro-inc-et-al