Reed Construction Data Sues McGraw-Hill Construction Dodge For Trade Secret Theft

BusinessWeek is reporting that Reed Construction Data, a construction information provider, has amended a federal lawsuit against McGraw-Hill Construction Dodge, raising new claims of unlawful misappropriation of trade secrets.

The original lawsuit, filed Oct. 8 in the U.S. District Court for the Southern District of New York, charged that Dodge used a series of fake companies since 2002 to pose as RCD customers and gain access to RCD's construction project information database.

Reed Construction Data is a subsidiary of Reed Elsevier. McGraw-Hill Construction Dodge is a unit of The McGraw-Hill Companies Inc.

The amended complaint alleges that Dodge downloaded hundreds of RCD project-related documents and viewed details for thousands of construction projects.

The lawsuit alleges Dodge made misleading claims that its products were superior to RCD's, preventing companies from making fair and objective comparisons of the companies' products.

Hundreds of companies made misinformed buying decisions, the lawsuit said.

The amended complaint alleges multiple counts of fraud, misappropriation of trade secrets, misappropriation of confidential information and unfair competition, among other allegations.

Spokeswoman Patricia Walsh for McGraw-Hill Construction Dodge said the company denies the allegations. "We believe their legal claims are without merit and we intend to defend against them vigorously," she said.

The suit seeks an unspecified amount in lost profits, punitive damages and a jury trial.

Trade Secrets of . . . Shoe Design: Crocs Gets Sued in Trade Secrets Case

OregonLive.com is reporting that Crocs is being sued Columbia Sportswear for allegedly misappropriating Columbia's trade secrets received from a former Columbia employee.

In a filing in Multnomah County Circuit Court, Washington County-based Columbia accused the Colorado-based company of misappropriating trade secrets, intentional contract interference and aiding and abetting breach of duty of loyalty. The suit seeks at least $310,000 in damages and asks a judge to halt sales of certain footwear and give up all profits.

Tia Mattson, a Crocs spokeswoman, declined comment because she had not seen the amended complaint. The accusations were added to a lawsuit Columbia filed in August accusing Brian O'Boyle of designing footwear for Crocs while working as a senior footwear designer at Columbia. O'Boyle said Tuesday he could not comment on the allegations while the lawsuit was pending.

Columbia alleges Crocs earned $10 million in revenue and $3 million in profit on four models that incorporate O'Boyle's designs, including Electro clog and Prepair collection of recovery footwear, said Peter Bragdon, general counsel and vice president for Columbia. Columbia alleges Crocs paid O'Boyle more than $120,000 for the work.

"We just can't allow a competitor to sneak in the back door to take advantage of the investment we made," Bragdon said. O'Boyle, who spent nearly seven years at Nike before joining Columbia in 2003, no longer works at Columbia. Records show he invented a side element of a shoe upper for which Nike holds a patent.

The Prodigal Son-In-Law: Trade Secrets Theft Damages Issue Submitted to Florida Jury in Weird Family Legal Battle

TCPalm.com is reporting that a decade-old legal battle launched by members of a once-close Palm City, Florida family torn apart by million-dollar financial disputes, arson and industrial espionage is back in court with a new jury seated Monday to pick up where a 2004 jury left off.

Five years ago, a Martin, Florida jury found that in 1998, Port St. Lucie plastics manufacturer Premiere Lab Supply stole a machine and its design — considered trade secrets — from Chemplex Industries, a rival Palm City business founded by Monte Solazzi that uses a thin plastic film to make medical and industrial sample cups and containers.

This jury will determine damages owed to Chemplex.

The machine thief, court records show, was Solazzi’s son-in-law, Anthony Norelli, who worked for Chemplex until Solazzi in 1998 terminated him and sales manager Donato Pompa.

According to court records, Norelli and Pompa established Premiere in part by using the production machine stolen from Chemplex, and soon after began luring away hundreds of thousands of dollars in business from Chemplex.

Norelli though, bent on destroying Chemplex, twice hired someone to torch the building at its former Stuart site. After the second fire in 2000, Chemplex relocated to Palm City.

Federal authorities arrested Norelli, who pleaded guilty to tax charges and arson for hiring an accomplice to burn Chemplex. He was sentenced to five years in prison, but last month a judge ordered him back to prison for three months for violating the terms of his supervised release.

Pompa, who in court on Monday said Norelli was no longer his partner in Premiere, was also convicted in federal court for a theft of trade secret from Chemplex. He was ordered to serve five months in prison, followed by three years of supervised release.

Court records filed in May show Pompa is hoping a judge will dismiss a $240,000 federal restitution order, the amount of money he was ordered to pay to Chemplex following his guilty plea.

In court Monday, Solazzi’s attorney, William Davis of Miami, grilled Pompa about the revenue generated at Premiere Lab between 1999 and 2007, the time frame for which the firm utilized the machine taken from Chemplex.

“Would you agree sir that between 1999 and Aug. 3, 2007, that on average Premiere was selling these thin film products for roughly 57 percent less in terms of price than Chemplex?” Davis asked.

“I don’t know what the calculations is as far as what their selling prices are,” Pompa said. “I don’t have those figures in front of me.”

The trial is expected to last through Friday.

Former Quicken Employee Indicted for Allegedly Stealing Trade Secrets

A Michigan man stole computer secrets from his former employer, Quicken Loans Inc., according to a grand jury indictment unsealed Thursday in Detroit.

Michael Hummel, 35, is charged with wire fraud and theft of trade secrets and faces up to 20 years in prison if convicted of the most serious charge, wire fraud.

Hummel worked at Quicken's Livonia, Michigan offices from February 2005 until November 2006 as a senior Web developer and software engineer, according to a news release issued by the U.S. Attorney's Office.

He stole developed secrets about how to make the company's Web sites operate quickly and effectively, the news release said.

Beginning in May 2006, while still working for Quicken, Hummel began consulting with another company and stole Quicken secrets to help the other company build its Web sites, the indictment alleges.

"Protecting the competitive edge technology of our companies through vigorous enforcement of our federal trade secret laws is a top priority of this office," said interim U.S. Attorney Terrence Berg.

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Former Home Depot Executive Gets Nailed By the Trade Secrets Hammer

The Atlanta Business Chronicle is reporting that former Home Depot executive Guillermo Martinez of Cumming, Ga., pleaded guilty Wednesday in federal district court to stealing trade secrets from the home improvement retailer.

Martinez was Home Depot’s senior manager of product engineering, responsible for helping company vendors prep to sell products to the company. In his position, he had access to Home Depot’s confidential information and other trade secrets, including pricing and profitability spread sheets and documents relating to product line reviews.

Starting in January 2008, Martinez was assigned to assist a potential local vendor that subsequently invited by Home Depot to participate in a product line review. A product line is where potential vendors make presentations for their products, packaging and marketing ideas. It also involves the submission of the potential vendors’ prices.

From around May 2008 and continuing until around July 2008, Martinez began supervising the local vendor’s presentation to Home Depot (NYSE: HD) as if he was a high-level employee of the vendor. In an effort to have the vendor gain an advantage over its competitors during the product line review, Martinez provided the vendor with Home Depot trade secrets. Specifically, he gave out confidential and proprietary pricing information, including the price the company was paying the vendor's competitors for the products that the vendor wanted to sell to the company.

Martinez provided a document titled “Wire Devices: RFP Summary,” which was marked at the bottom as “Proprietary & Confidential to The Home Depot,” and which contained a summary of the vendor's line review of competitor's price quotes. Martinez also provided a binder containing the line review presentation submitted to the company by a competitor of the vendor.

During this same time, Martinez was negotiating an employment agreement with the vendor.

Sentencing is set for Feb. 3, 2010.

Court Refuses to Give the Hook to The Nook - Preliminary Injunction Denied in E-Reader Trade Secrets Case

We first identified this Barnes & Noble "Nook" case here: http://wombletradesecrets.blogspot.com/2009/11/spring-design-says-to-barnes-nobles.html.

You'll recall that Spring Design has sued Barnes & Noble and the lawsuit asserts Barnes & Noble misappropriated Spring Design's trade secrets and violated the parties' non-disclosure agreement when it copied Spring Design's features into its recently announced Nook e-book.

Spring Design moved for a preliminary injunction and that motion was denied yesterday.

The Court preliminarily found that "Spring Design has not presented sufficient evidence to show that Spring Design is likely to succeed on the merits. Moreover, Spring Design’s motion was heard on the day that Barnes & Noble launched its nook™ product, at which time Spring Design did not have a commercial product available. Thus, the requested preliminary injunction halting the saleof Defendant’s product would alter the status quo, not preserve it."

You can read the full order here: http://stadium.weblogsinc.com/engadget/files/spring-design-order.pdf. This is not the end of the case, folks. This federal judge was just convinced that an injunction stopping Barnes & Noble from marketing and selling its reader wasn't warranted because the court couldn't decide whose evidence made them more or less likely to win later on at trial and and an injunction wouldn't protect Spring Design's interests anyway because its e-reader device wasn't on the market. In other words, the injunction would tend to penalize Barnes & Noble but not benefit Spring Design and protect its real commercial interests.

We'll keep a nightlight on to watch and read about this one as it progresses.

Starwood Hotels and Hilton Hotels Talk Settlement in High Profile Trade Secrets Case

We first reported about this case here: http://wombletradesecrets.blogspot.com/2009/04/starwood-hotels-v-hilton-hotels-trade.html.

Nielsen Business Media is reporting that the parties are talking settlement.

After Starwood filed the suit last spring, Hilton suspended development of its Denizen hotel brand and placed the two former Starwood Luxury Brands Group executives accused of stealing trade secrets on paid administrative leave.The suit appeared headed toward trial, as demanded by Starwood, but in a court filing this month, Charles Gilman, a lawyer for Cahill Gordon & Reindel, which represents Starwood, asked the judge to postpone a hearing set for Nov. 18 until the week of Dec. 14, noting that "the parties have been exploring the possibility of settlement."A Hilton spokesperson last week said the company has no further comment "beyond the document that was filed last week." Similarly, a Starwood spokesperson offered "no comment at this time."

We'll report back regarding any developments in this regard. We'd bet that the topics for settlement include some hands-off "covenant not to solicit or hire" employees provision and additional restrictions on Hilton's abilities to develop the Denizen hotel brand or hotel concepts that look and operate like the Denizen brand was supposed to. More when we learn it.