Insight Technology, Inc. ("Insight") runs an internet-based freight load matching service it started in 1996 which allows independent truckers or small trucking companies to search online for available hauling jobs. Insight formerly employed Darren Brewer as its president.
In 1998, Insight expanded its business to include freight factoring - in other words, paying truckers immediately on hauling invoices and then collecting payment from the payors and assuming for itself the risk of nonpayment or slow payment. Truckers liked this because Insight paid them up front and they were willing to pay a fee for this right to immediate payment without the headaches of collection lag time.
Patrick Hull started a competitive company with Insight called GetLoaded.com, LLC in 1999. Brewer, Insight's president, met Hull, GetLoaded's "managing member, in 1999. Brewer was trying to get Hull to accept an ad for the freight factoring business Insight was running on GetLoaded.com's website. Brewer and Hull didn't come to an agreement on the ad but they DID start talking about a new internet factoring business that they might own and run together. At the time they started their discussions, Brewer was a 20% shareholder in Insight AND had created a website, drafted forms, designed procedures for evaluating creditworthiness or shippers, and even helped make design modifications to Insight's software to improve the performance of its factoring business.
Ultimately, without Insight's knowledge, Brewer and Hull created a company called FreightCheck in late 2001 - all while Brewer was still serving as Insight's president. At the time FreightCheck was created, freight factoring represented 98% of Insight's revenue. FreightCheck also kicked off its business with Insight's customized software program Brewer had developed while at Insight and even had "satisfied customer" testmonials that were identical to those for Insight's freight factoring business. Brewer even filed for copyright protection of of the customized software program he had worked on for Insight and then licensed that software afterward to his existing employer, Insight, and Freightcheck, too.
You know where this is going.
After Brewer suggested to Insight's largest shareholder and founder that he should sell Insight to Hull and GetLoaded, Insight's largest shareholder and founder received word of Brewer's involvement with FreightCheck and that company's relationship to GetLoaded. That made him unhappy and Insight sued - and sued everybody mentioned above. One of the claims Insight brought, of course, was that the customized software program was its trade secret. The trial court didn't like that claim and granted summary judgment to the defendants on it. The Court of Appeals of Georgia, however, reversed that decision saying there was evidence that a jury could find that the customized software program WAS an Insight trade secret and that Hull, GetLoaded, and FreightCheck had acquired the trade secret through improper means. That claim, therefore, is going to a jury.
This decision is chock full of fun stuff and the story-line reads like a Scott Turow novel. The case can be cited as Insight Technology, Inc. v. Freightcheck, LLC, et al.
, 2006 WL 1679391 (June 20, 2006, Ga. App.).