Thursday, February 08, 2007, 2/08/2007 01:00:00 PM

Eighth Circuit Affirms Synergetics' $2 Million Trade Secrets Theft Verdict

By Todd
On February 5th, the United States Court of Appeals for the Eighth Circuit affirmed the $2 million misappropriation of trade secrets jury verdict in favor of Synergetics, a company specializing in the sale of precision instruments and disposable laser probes used during retinal surgical procedures. The verdict was rendered against Charles Richard Hurst, Jr. and Michael McGowan, two former high-level Synergetics sales employees who formed a competing company while still employed with Synergetics and who, as found by the jury, hired an outside Synergetics consultant to build a competing adapter/connector for the laser they would bring to market. The jury determined that Synergetics suffered actual damages of $1,759,165.00 and it levied punitive damages in the amount of $293,194.16 per defendant.

On appeal defendants argued, among other things, that they had no reason to know that drawings they commissioned for the adapter/connector were actually copied from Synergetics' own designs. They further contended that the information used was of the type that "grows stale relatively quickly" and thus shouldn't have been considered a trade secret two years after they left employment with Synergetics. The Eighth Circuit knocked both of these appellate claims down and noted, correctly, "determination of when trade secret information becomes stale cannot be made by reference to a bright line rule and necessarily requires fact specific consideration." The appeals court found that the jury HAD effectively engaged in the requisite fact specific consideration to support their verdict.

This is a major verdict against two departed employees and the affirmation of the verdict by the Eighth Circuit surely came as a major blow to the appellants. The appellate decision can be cited as Synergetics, Inc. v. Hurst, --F.3d--, 2007 WL 313585 (Feb. 5, 2007 8th Cir.).

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