Cases from United States District Court for the District of Delaware

United States District Court for the District of Delaware
Delaware Court Denies Tech Company's Motion for Preliminary Injunction

On December 22, 2015, Adtile Technologies, Inc. (“Plaintiff”) filed a complaint in the United States District Court for the District of Delaware against Intercept Interactive, Inc. d/b/a Undertone (“Defendant”). The complaint asserted multiple intellectual property claims, including that defendant misappropriated plaintiff’s trade secrets and confidential information.

Plaintiff develops technology and services for motion advertisements used predominantly on smartphones and tablets. Defendant is a marketing company. On August 18, 2014, the parties entered into a license agreement and non-disclosure agreement whereby Plaintiff would create motion advertisements and Defendant would sell them. Under the license agreement, Plaintiff would give Defendant access to software to create the advertisements and approve any advertisements Defendant wished to release using the software. The agreement also allowed Defendant to purchase, license, or develop similar, even competitive technology or services. Some of the software Plaintiffs used in their advertisements were publicly available on the internet.

From February to April 2015, Defendant accessed Plaintiff’s proprietary information about the motion advertisements, as per the agreement. However, Plaintiff did not, and still has not, provided Defendant with the licensed software for the advertisements. The parties terminated the license agreement on June 12, 2015. Plaintiff alleges that Defendant sought termination only after accessing Plaintiffs’ proprietary information regarding the technology. Defendant counters that it sought termination after Plaintiff refused to provide motion advertisements despite the license agreement.

According to Plaintiff, the day the parties terminated the license agreement, Defendant released a motion-activated advertisement for Discover. The advertisement included Plaintiff’s proprietary information, including layout, interface, and a "handphone" image that Plaintiff used. Plaintiff argues that Defendants created this advertisement and others using trade secrets that were outside the scope of the parties’ license agreement. As a result, Plaintiff filed this lawsuit, and also moved for a preliminary injunction to enjoin Defendant from releasing motion advertisements that include features using Plaintiff’s proprietary information.

On June 23, 2016, the Court denied Plaintiff’s motion for a preliminary injunction on the grounds that its claims, particularly misappropriation of trade secrets, are unlikely to succeed on the merits. The Court concluded that much of the information Plaintiff claimed was a “trade secret” is publicly accessible online after an advertisement is delivered to a web browser. As such, the Court could not determine which features of the advertisements were Plaintiff’s trade secrets, and found that the record lacked persuasive evidence that Defendant used any of Plaintiff’s trade secrets at all. Accordingly, the Court found Plaintiff unlikely to succeed on the merits and denied its motion for a preliminary injunction.

The Memorandum Order can be found here:

United States District Court for the District of Delaware
Solazyme Counter-Claims Trade Secret Misappropriation

Solazyme is alleging that Roquette Freres SA misappropriated its trade secrets regarding algae-based nutritional products.

The companies agreed to a research and development joint venture in November 2010 on microalgae-derived products. After the agreement fell apart, a subsequent arbitration between the parties held that Solazyme was entitled to all of the improvements made to the intellectual property it brought to the agreement.

Roquette sued in the federal court of Delaware in November 28, 2014 to vacate the arbitration order and for a declaration of joint ownership of the algae Intellectual Property rights. Solazyme answered on February 26, 2015 that Roquette agreed to the secrecy of Solazyme's IP under the agreement and violated the agreement by filing patent applications on the IP material.

The case is Roquette Freres SA v. Solazyme Inc., 14-cv-01442, U.S. District Court, District of Delaware (Wilmington).

United States District Court for the District of Delaware
Creator of semiconductor timing analysis tool alleges competitor misappropriated trade secrets by inducing customers to breach NDAs, then incorporating proprietary information into own product

Synopsys, Inc. voluntarily dismissed its complaint on October 11, 2011 as it acquired Extreme DA Corp.

Synopsys filed a complaint in the United States District Court for the District of Delaware on June 2, 2011 alleging trade secret misappropriation and interference with contractual obligations by its competitor, Extreme. Synopsys also asserted copyright and patent infringement allegations.

Synopsys and Extreme are both in the business of making timing analysis devices for the testing of semiconductors. Essentially, their products, “PrimeTime” and “GoldTime,” respectively, allow the computation of the expected speed of a digital circuit without the need to run a simulation.

According to Synopsys, prior to the development of PrimeTime, timing analysis was a time consuming effort and required a great amount of dedication from design teams. PrimeTime, using Synopsys’ proprietary information, significantly improved upon that task.

The complaint alleges that Extreme has taken the advances that Synopsys’ engineers have incorporated into PrimeTime and misappropriated them for use in their own GoldTime system. Synopsys notes that PrimeTime features “literally hundreds” of proprietary features that are not generally known and thereby grant a competitive edge. Additionally, these features are only disclosed to Synopsys customers when shielded by strict confidentiality obligations, and user manuals contain proprietary rights notices warning against unauthorized disclosure.

Synopsys alleges that Extreme gained unauthorized access to this proprietary information by purposefully breaching the PrimeTime end user license agreement (EULA) and by disrupting Synopsys’ contractual secrecy arrangements with its customers.

On its trade secrets claim, Synopsys has requested permanent injunctive relief preventing the further use of its trade secrets as well as any further actions intended to induce Synopsys customers to breach their non-disclosure agreements. In addition, it is requesting “compensatory, special, incidental and consequential damages according to proof” and attorneys' fees.

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.