U.S. Investment Banking Firm BlackRock Sues U.K. Competitor, Shroders PLC, With Employee Raiding and Theft of Confidential Information Claims

The financial services industry continues to be rocked by the continuing threats of key employee departures.

Portfolio Media is reporting that BlackRock Inc. has slapped U.K. investment bank Schroders PLC with a lawsuit, striking back at its asset-management rival for luring away the former head of its German business and potentially revealing confidential company information.

BlackRock filed suit Friday in the U.S. District Court for the Southern District of New York against Schroders, a move triggered by the latter’s hiring of Achim Kussner, BlackRock’s one-time operations manager. “The e-mails show Mr. Kussner and defendants Schroder acted in concert to solicit and entice a team of key employees to resign from BlackRock Germany and join defendant Schroders,” the suit said.

The dispute dates back to early March when Kussner, who fronted BlackRock's institutional and retail businesses in Germany and Austria, announced that he was leaving the asset-management firm. Though he tendered his resignation, he remained on "garden leave" from the company through June 30, according to the lawsuit. Under garden leave, an employee continues to receive a salary, but is asked to refrain from working during this time period in order to thwart employees from leaving to go work for competitors, according to court papers.

But Kussner’s resignation kicked off an exodus from the company, with five other employees also choosing to leave BlackRock, court papers reveal. BlackRock believes that Kussner and Schroders hatched a plot to steal key members of the firm’s management team, a violation of Kussner’s fiduciary duty, according to BlackRock."Defendant Schroders has knowingly and intentionally acted to deplete BlackRock's human resources at BlackRock Germany, and to obtain and use for defendant's own advantages BlackRock's confidential information about its operations, compensation and employees," the lawsuit said.

BlackRock maintains that Kussner began trying to recruit its employees and convince them to leave the company as early as December 2006, according to the suit. The asset management company is seeking an injunction that forbids Schroders' employment of Kussner and from interfering with his contractual obligations with BlackRock in addition to damages.

BlackRock expressed fear that Kussner will choose not to honor his obligations under BlackRock's confidentiality and employment policy, which he signed off on after becoming a managing director in September. "Instead, he has specifically contended to BlackRock that his restrictive covenants were not binding upon him, effectively repudiating his agreements and clearly demonstrating that he intends to solicit further employees away from BlackRock and BlackRock Germany and to utilize and disclose BlackRock confidential information to Defendant Schroders," the suit said.

Schroders, for its part, has denied the claims and maintains that the company has done nothing wrong."We do not believe that there is any basis for this claim against Schroders filed in the U.S. courts," a spokesman said, Dow Jones reported.The case is Blackrock Inc. v. Schroders PLC, case number 1:07-cv-03183, in the U.S. Bankruptcy Court for the Southern District of New York.
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An interesting sub-text to this lawsuit is the transfer of a great deal of investment banking business from Wall Street to London. As labor resources follow the money, we predict we'll see more and more employee defections from Wall Street to U.K.-based firms. The literature on this evolution in the investment banking capital of the world is substantial - you can find an interesting report on this here: http://www.american.com/archive/2007/february-0207/a-non-random-walk-down-wall-street.

Georgia Appeals Court Finds Customer Lists to be Trade Secrets (Registration Req’d)

From the Georgia Court of Appeals, a decision in Hilb, Rogal and Hamilton Co. of Atlanta, Inc. v. Holley, 2007 WL 914240 (Ga. App. Mar. 28, 2007), in which the court upheld denial of a motion for summary judgment with respect to plaintiff’s trade secrets claim against its former employee.

The defendant, Holley, left the plaintiff, an insurance company, for a competitor. On the way out, Holley took an electronic organizer which had been given to him for Christmas which contained his clients’ contact information.

After his resignation, Holley mailed an announcement of his new employment affiliation to former customers using publicly available lists. Approximately 20 to 25% of the clients that Holley serviced while working for the defendant ultimately followed him to his new employer. The record also showed that he also used the electronic organizer to retrieve phone numbers.

The trial court denied summary judgment and the Court of Appeals agreed:

The record shows that Holley signed a confidentiality agreement in which he promised to keep customer lists confidential, that he took the electronic organizer containing contact information for actual customers with him when he resigned from [defendant], and that he used the organizer to look up phone numbers after his resignation. Tangible customer lists are the property of the employer and may warrant protection as trade secrets. The evidence is sufficient to create a genuine issue of material fact as to whether Holley misappropriated trade secrets.

UK's VBi Triscan Systems Hit Hard By Industrial Espionage

The Lancashire Telegraph is reporting that thousands of pounds worth of trade secrets have been stolen in suspected "industrial espionage" raids on a high-tech company.

Bosses at VBi Triscan Systems, Harwood Street, Blackburn, have now put up a "substantial" reward for information about the crimes.

Thieves targeted the fuel management company's main operational servers and stole a number of laptop computers containing company information.

VBi Triscan Systems employs 80 people and is market leader in the provision of hardware and software for fuel management solutions such as pay-at-the-pump petrol payment terminals.

Company bosses are concerned that customers may be approached by unauthorised individuals or companies offering support on VBi owned software and products.

Marketing manager Barry McLeod said: "The laptops were worth thousands but in terms of intellectual property the potential damage to the business is a hell of a lot more. We have got back-up procedures across our IT department which means there is no threat whatsoever to the business.

"But the theft involved hard drives from some of our servers which had the potential to create some major issues for the business and its customers; however, it would be difficult for the thieves or recipients of the material to gain any useful advantage or information from them. It's like taking a few pieces of a jigsaw.

"We are not ruling out industrial espionage. We are a niche company and don't have many competitors."

The incidents happened between Tuesday, March 27 and Saturday, March 31.

Managing director, Simon Hollingsworth, added: "As a market leader in the provision of fuel management and retail solutions software we are a prime target for this kind of activity due to the value of the products that it has in the market place and in those currently under development.

"The company is taking this matter very seriously indeed and all staff including former employees are in the process of assisting the criminal investigation team with their inquiries."
A police spokesman said: "Police were called to the business on two separate occasions. We are currently investigating the incidents where the matter of industrial espionage will be looked into as part of the investigation."

Anyone with information about the incident is asked to contact Blackburn Police on 01252 51212 or Crimestoppers on 0800 555 111.
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Since it's Friday, we thought you'd like to learn something interesting about Blackburn. Blackburn is a town in Lancashire, England. It is the main part of the Blackburn with Darwen borough, which has a population of 140,200. It was a key centre for the textile industry during the Industrial Revolution and is popularly known as the home of Blackburn Rovers Football Club. Blackburn is situated to the north of the West Pennine Moors.
Blackburn is known to fans of The Beatles as the town featured in the song "A Day in the Life". An article in the Daily Mail about a plan to fill potholes in the town caught John Lennon's eye as he was writing the song, giving birth to the lyric: "I read the news today. Oh, boy. 4,000 holes in Blackburn Lancashire". This lends itself to the title of the unofficial fanzine of Blackburn Rovers, which is called "4,000 Holes".

VOIP Services Obtains TRO Against Fired Executive in Trade Secrets Case

Law.com is reporting that a telecommunications company has won an emergency injunction in Miami-Dade Circuit Court against a fired executive it accuses of stealing trade secrets and using his office and staff to help a rival firm that secretly employed him.

VOIP Services filed a lawsuit requesting injunctive relief and damages for use of trade secrets and tortious interference against Christian Ibarra, its former manager of business development in Mexico and competitor TeleVoIP Cards of Miami. The lawsuit filed March 28 also alleges breach of fiduciary duty against Ibarra.

Judge Victoria Sigler issued the injunction April 4. The injunction ordered Ibarra and TeleVoIP to stop using Miami-based VOIP's trade secrets and equipment, and to stop "doing business with, soliciting or interfering with VOIP's advantageous or contractual relationships."
Sigler issued the injunction even though the case is before Judge Gil Freeman in Miami-Dade's new complex business litigation court. Freeman was out of town.

Ibarra "actually was running the competing business out of his office, using [VOIP's] routing system and their own employees," said Melanie Damian of Damian & Valori in Miami, who is representing VOIP. "It's just an incredible breach of fiduciary duty."

Court records indicate that Ibarra has no counsel of record in the suit, and he could not be located for comment. A phone number could not be located for TeleVoIP and calls to its registered agent were not returned before deadline Monday.

Damian said that process servers were trying to locate Ibarra in Mexico to notify him of the suit. "Carlos Ibarra is now in Mexico, basically avoiding service," Damian said. "We expect to be able to serve him soon."

According to the complaint, VOIP is a Florida corporation supplying clients with voice-over-Internet telecommunication services. Ibarra worked in VOIP's offices in Mexico City for three years as manager of business development. In 2003, Ibarra left VOIP to work for another company.
In 2005, Miami-Dade businessman John Reyes, a friend of Ibarra's, established TeleVoIP, a direct competitor of VOIP.

In May 2006, Ibarra left TeleVoIP and returned to work for VOIP in Mexico City. According to the VOIP's complaint, he went back to VOIP under false pretenses, and was planning, along with Reyes, "to steal VOIP's customers and technology."

While in VOIP's employ, according to the complaint, Ibarra told Reyes about VOIP's pricing and rates, cloned VOIP's computers and stole its proprietary software. Ibarra also paid VOIP employees to work secretly for TeleVoIP, the complaint states.

VOIP executives discovered the alleged fraud March 5, almost a year after Ibarra returned to work for the company. Ibarra and a number of other VOIP employees in the Mexico City office were fired on March 6, Damian said.

Damian said VOIP executives didn't notice that their executive and his staff were performing work for a competing company because Ibarra "was such a high-level, trusted employee."
VOIP has filed legal action against Ibarra in Mexico as well.

Motorola Ordered to Pay $22.9 Million in Attorney's Fee Sanction in Trade Secrets Mistrial

Daily Report is reporting that Motorola Inc. has been ordered to pay $22.9 million in attorneys fees and costs to lawyers for a now-defunct technology company, months after a trade secrets lawsuit ended in a hung jury.

Circuit Judge Leroy Moe ruled that the law firm headed by famed attorney Willie Gary was due money based on Motorola's alleged poor conduct during the trial against SPS Technologies Corp.

But the award was much less than the $200 million in fees, costs and restitution sought by Gary's firm, and the judge did not even address the issue of restitution or sanctions in his ruling.

"Certainly, it was a huge rejection of Mr. Gary's case," said Motorola attorney Faith Gay, who said Motorola would appeal the award. "Our feeling is there isn't a basis in law or fact for the award of sanctions."

Gary said after the trial that the judge's ruling sent a message to Motorola that "you can't cheat and get away with it."

"The $22.9 million for fees and costs, obviously we felt that should be a bit more," Gary said.

Fired Wal-Mart Security Operative Denies He Stole Trade Secrets or Provided Them to the Wall Street Journal

Portfolio Media is reporting that fired Wal-Mart Stores Inc. security operative Bruce Gabbard denied that he had provided company secrets to the press in court papers filed on Monday. Gabbard, who was fired by Wal-Mart last month, filed a brief two-paragraph notice in Arkansas circuit court claiming that he had not revealed company secrets in a Wall Street Journal interview published two weeks ago. It is possible he may provide more information at a later date.

The suit suggested that Gabbard might still have Wal-Mart documents, and asked the court to order him to surrender a list of “all home and work computers, personal digital assistants, hard drives, thumb drives and all other electronic and digital media and hardcopy information.” It also asked the court to order Gabbard to provide Wal-Mart lawyers with “the names of all persons to whom he has transmitted, since January 15, 2007, any Wal-Mart information.”

On Friday, Judge John R. Scott granted Wal-Mart’s request to take custody and make electronic copies of all computers, hard drives and other storage devices Gabbard had used. The judge had previously granted Wal-Mart’s request to stop Gabbard from talking to any more reporters, court papers said. The company filed a lawsuit and request for a temporary restraining order against Gabbard in the Arkansas Circuit Court in Benton County on April 6.

On April 9, the suit and Judge John R. Scott’s order granting the gag request became part of public file. Wal-Mart fired Gabbard in March after he intercepted workers’ pager messages containing sensitive information and taped a call between employees and a New York Times reporter. Gabbard, who had been with the company for 19 years and was part of a security team called the Threat Research and Analysis Group, told the Wall Street Journal that the project to intercept pager messages was authorized. He admitted that he didn’t get authorization to record calls between employees and the reporter, but said his actions were a result of pressure from the head of Wal-Mart’s office of global security, Kenneth Senser.

Last week, Gabbard talked to reporters from the Wall Street Journal, outlining the Threat Research and Analysis Group’s activities—including sending an undercover operative to spy on protest groups and hacking into the Web sites of activist investors. According to Wal-Mart, Gabbard violated trade secrets law by revealing “confidential information about Wal-Mart security systems and operations” and “highly confidential information about Wal-Mart’s strategic planning.” Gabbard told the Journal that Wal-Mart considered its activist shareholders potential threats and was engaged in a super-secret “Project Red” that aimed to bolster its sagging share price.Gabbard was part of the security team for Project Red and was responsible for encrypting data and reports and creating passwords.

About Project Red, Wal-Mart said, “Our senior management, our board and their advisors regularly conduct thorough, strategic reviews of all aspects of our business.”“That’s just good governance. We look at a full range of alternatives, many of which are considered and rejected, and we will not comment specifically on any of them,” the company added.

Trade Secrets and Stone

From the San Diego Business Journal, another big money verdict in a trade secrets case. The story concerns a San Marcos, California company, Eldorado Stone LLC, that manufactures artificial stone veneer which won a $21 million verdict in a trade secrets case in San Diego against Renaissance Stone Inc., a company founded by a former Eldorado employee in 2004.

The jury sided with Eldorado following a two-and-a-half-week trial finding that Renaissance “misappropriated Eldorado’s trade secrets, infringed on Eldorado Stone trademarks, infringed on Eldorado Stone’s copyrights, and interfered in the economic relationships between Eldorado and its customers,” according to Eldorado.

Genzyme and Cytochroma Settle Vitamin D Deficiency Trade Secrets Case

Portfolio Media is reporting that two biotechnology companies that specialize in treatments for Vitamin D deficiency have agreed to settle a trade secrets dispute that was initiated after three employees left one firm for the other. Genzyme Corp. and Cytochroma Inc. on Monday announced they had reached an amicable settlement over the lawsuit brought by Genzyme. The terms of the accord, and many details of the complaint, are under seal.

"Cytochroma has remained on track for meeting its financing and clinical development milestones despite the intercurrent lawsuit," said Alan Lewis, chairman of the Cytochroma board. "The recent settlement with Genzyme adds further momentum to Cytochroma for achieving its corporate objectives."A spokesman for Genzyme declined to comment on the case, citing the terms of the settlement.

The dispute between the two companies started when three employees at Bone Care International left to start Preventive Therapeutics LLC. Soon after they moved, Genzyme acquired Bone Care, and Cytochroma took over Preventive, according to Eric Messner, vice president of commercial operations at Cytochroma, who was one of the three employees. Genzyme filed its lawsuit in August 2006, claiming that Messner, Charles Bishop and Keith Crawford had stolen trade secrets regarding its production of treatments for Vitamin D deficiency-related illnesses. According to the settlement, the case has been dismissed.

Genzyme and Biogen Idec Inc. settled another IP lawsuit in August 2005 with Columbia University, over patents that had raised over $600 million in royalties for the university. The companies did not disclose the financial details of that settlement. The agreement would let them continue to sell their drugs to treat multiple sclerosis and Gaucher disease based on a technology developed at Columbia in the 1970s. Until its patents expired in 2000, Columbia University had collected hundreds of millions of dollars in royalties from biotech companies stemming from a genetic engineering technique vital to drug making created by professor Richard Axel, who the 2004 Nobel Prize in medicine. Axel and two colleagues created a way to splice bits of DNA into living cells to create human proteins, a basic technique used to produce many of today's best-selling biotechnology products such as Genzyme's Cerezyme for Gaucher disease and Biogen Idec's multiple-sclerosis drug Avonex.

Regulatory filings with the Securities and Exchange Commission show Biogen Idec paid the school $35 million, and Genzyme paid $25 million in royalties for use of the patent. Genzyme is represented in its case against Cytochroma by Foley & Lardner LLP. Cytochroma is represented by Quarles & Brady LLP. The case is Genzyme Corp. v. Cytochroma Inc. et al., case number 06-C-0428, in the U.S. District Court for the Western District of Wisconsin.

Son of Former Knight Ridder CEO Accused of Stealing Newspaper's Trade Secrets

The San Jose Mercury News is reporting that the son of the former chief executive of Knight Ridder was accused in a lawsuit Thursday of staging a secret, months-long plan to defect as publisher of the St. Paul Pioneer Press to its rival newspaper with company secrets.

The suit, filed in Minnesota state court by the Pioneer Press and its owner, MediaNews, adds a nasty new chapter to the saga of the forced sale and dissolution of the Knight Ridder newspaper group last year.

Par Ridder, 38, abruptly resigned as publisher of the Pioneer Press on March 2 to take the same job with the Minneapolis Star Tribune, kicking off a major battle when his former employer said it learned he left with a laptop filled with confidential information. He was subsequently joined at the Star Tribune by two top Pioneer Press executives.

The suit - which alleges fraud, breach of contract, conspiracy and trade secrets violations - seeks the return of confidential Pioneer Press information and asks that Ridder and its two other former executives be barred from working at the Star Tribune for at least a year.

The lawsuit accuses Ridder of starting to plan his defection within weeks of MediaNews' August 2006 acquisition of the Pioneer Press. Denver-based MediaNews also acquired the Mercury News at the same time. Both newspapers were sold to MediaNews by McClatchy following McClatchy's purchase of the 32-newspaper Knight Ridder group, whose sale was forced by unhappy stockholders.

Ridder is the son of Tony Ridder, former CEO of Knight Ridder and longtime publisher of the Mercury News. In 2004, Par Ridder became publisher of the Pioneer Press, which his great-grandfather acquired in 1927.

In a prepared statement, Star Tribune Chairman Chris Harte said the company would address the allegations in its legal response. "Par Ridder has been discussing these matters in good faith with the Pioneer Press," he said, declining further comment.

Ridder could not be reached for comment.

According to the lawsuit, the departing Ridder "stole" a file of non-competition agreements, including his own, from the Pioneer Press. And, as he "secretly negotiated" with the Star Tribune and Avista Capital Group, Ridder "was accessing the Pioneer Press' confidential and proprietary information," including budget and salary data, advertising customer lists and other competitive files the suit states.

Par Ridder first disclosed he was leaving on Friday, March 2, in a conversation with MediaNews Chief Executive Dean Singleton. On the following Monday, he began work at the Star Tribune. One of his "very first acts," the suit alleges, was to copy all the confidential information from the hard drive of his Pioneer Press laptop to a Star Tribune computer.

When his former paper sent an employee over to collect his laptop and a backup hard drive, Ridder said the backup drive was lost and the employee was "kept waiting for 45 minutes" while a Star Tribune worker completed copying data from the laptop, the suit states.

Among the evidence cited by the lawsuit that Ridder's departure was long-planned were notes for an apparent acceptance speech for the Star Tribune job, found on Ridder's laptop and allegedly written last September: "It's a real honor to be trusted with MNI's X paper," the document said. (MNI is McClatchy's stock ticker symbol.) "My family has been trying to chase you guys out of St. Paul since 1927, so I recognize this will take some time getting used to."
Ridder used very similar words in a March 6 address to the Tribune staff, according to published reports.

In a "working e-mail" that was part of the same document, Ridder allegedly explained the reasons behind his decision to become publisher "at the X newspaper."
In it, Ridder takes a veiled swipe at MediaNews: "While I've enjoyed getting to know Dean Singleton, and have the highest respect for the successful company he has built, I don't feel that MN is a good fit for me," the document says, referring to MediaNews. "I wasn't looking to leave the Pioneer Press but rather I needed to leave MN."

While there were no disagreements with Singleton, the document states, there was "just a sense, after getting to know his leadership team, that we weren't right for each other."
Singleton could not be reached for comment.

Avista purchased the Star Tribune from McClatchy, whose board members include Par Ridder's father, Tony. Avista took over March 5, the same day Par Ridder joined the newspaper.

In addition to Ridder, the suit names as defendants former Pioneer Press executives Kevin Desmond and Jennifer Parrat, who were hired by the Star Tribune; the Star Tribune and its new owner; and two Star Tribune executives.

Wal-Mart Obtains Trade Secrets Based TRO After Hours

Daily Report is reporting that Arkansas legal rules intended to protect trade secrets from imminent disclosure were the basis for a rare late-night court order obtained by Wal-Mart Stores Inc. to stop a former employee from talking about the company's affairs, an expert in civil law said Tuesday.

Wal-Mart lawyers went to Benton County Circuit Court Judge John R. Scott's home around 8 p.m. Friday seeking a temporary emergency order against former security employee Bruce Gabbard without Gabbard or his lawyer present.

The judge granted the temporary restraining order and filed the ruling and complaint in court Monday in Wal-Mart's home county. Rules in Arkansas and most states allow judges to accept emergency filings at all hours, according to civil procedure expert Scott Dodson of the University of Arkansas Law School.

Dodson said that for the judge to make a ruling without the presence of both parties, Wal-Mart would have had to show that the immediate order was necessary to protect trade secrets.
''I'm confident the judge would not have signed such an order without some showing by Wal-Mart that it was necessary to preserve the confidentiality of Wal-Mart's trade secrets over the weekend,'' said Dodson, an assistant law professor at the university in Fayetteville.

''Confidential information and the possibility of immediate disclosure of certain trade secrets or things that could be harmful of a business nature do generally provide adequate justification for such extreme measures,'' Dodson said.

The judge said Monday that it was rare to get a trade secrets case after hours and that the company argued that it was an emergency. He said he could not by law comment on the specifics and referred instead to the court filings.

Federal Jury in California Awards Eldorado Stone $17 Million in Trade Secrets Case

Eldorado Stone has issued a press release that the jury in the Eldorado Stone, LLC vs. Renaissance Stone Inc. awarded more than $17 million to Eldorado Stone. After a two and a half week trial in United States Federal Court, the jury agreed with Eldorado that Renaissance Stone Inc., former Eldorado employee Alfonso Alvarez, Renaissance President Joseph Smith and Robert Hager had misappropriated Eldorado’s trade secrets, infringed on Eldorado Stone trademarks, infringed on Eldorado Stone’s copyrights, and interfered in the economic relationships between Eldorado and its customers. The jury also awarded $3.85 million in punitive damages and attorney’s fees to Eldorado.

“This is a bittersweet victory for Eldorado Stone,” says Mike Lewis, President of Eldorado Stone. “The time and effort to prosecute this case has been a huge distraction. However, the clear decision by the jury underscores the value of our trade secrets and proprietary information. This intellectual property has taken years and even decades to develop and is worthy of protection.”

Lewis continued, “The men and women at Eldorado Stone have worked tirelessly over the years to help Eldorado become the leading, innovative stone manufacturer in this industry. We have never hesitated to, nor will we ever hesitate, to aggressively protect the intellectual property that represents the hard work of many individuals that have become the underpinnings of our business.”

Eldorado Stone is the designer and manufacturer of stone veneers used in construction. Their website can be found here: http://www.eldoradostone.com/flashsite/main.html

Plaintiff's Counsel in Motorola Trade Secrets Case Seeks $11,000 Per Hour Attorney's Fee Sanction

Daily Business Review is reporting that Stuart, Fla., litigator Willie Gary has upped the stakes in his post-trial sanctions case against electronics giant Motorola. He's asking for as much as $93 million in attorney fees for the plaintiffs lawyer team in a trade secret case that ended with a deadlocked jury.

Gary, 59, who represents the now-defunct SPS Technologies of Fort Lauderdale, Fla., also is asking Broward Circuit Judge Leroy Moe to levy a $100 million sanction against Schaumburg, Ill.-based Motorola for violating a court order sequestering witnesses and allegedly hampering the plaintiff's chances in a new trial.

Moe had granted a motion made by Motorola on Oct. 9 to sequester witnesses. He also removed witnesses from the courtroom. But the judge later said in a January hearing that he "almost threw up" when two witnesses for Motorola testified they had read the testimony from the plaintiff's experts before taking the stand.

The eight-week, $10 billion trial over trade secrets ended in a mistrial in November when jurors deadlocked on whether Motorola stole SPS's idea for a vehicle-tracking technology.
"What they did was taint the whole process," Gary said in an interview Tuesday. "They were going to win at any cost."

But Motorola blasted the plaintiffs lawyers' fee request. "This is outrageous," said Paul Alfieri, a Motorola spokesman, in an e-mailed statement about the fee request by Gary and his firm.
Faith Gay, a New York City attorney representing Motorola, said Gary's request for attorney fees is unreasonable because it goes back long before the allegedly tainted testimony occurred. She said Gary's fee request, if granted, could be record setting.

"They couldn't win at trial, so they come back for a second bite of the apple," said Gay, who's with Quinn Emanuel. "The violations didn't make them lose this case. They lost this case because they didn't have the appropriate evidence."

A hearing on the fee request and sanctions is expected to last the rest of this week. Minor motions were scheduled for Tuesday afternoon with testimony from witnesses to start this morning.

Both sides are gearing up for a dramatic hearing this week. Motorola has lined up former Florida Supreme Court Justice Major B. Harding to testify on the issue of reasonable attorney fees. SPS has scheduled veteran Fort Lauderdale litigators David Bogenschutz and Bruce Rogow to testify.
In January, Gary estimated the plaintiffs attorneys' fees at $11 million. But that was before his firm, Gary Williams Parenti Finney Lewis McManus Watson & Sperando, went back and reconstructed the case and found more than 19,000 billable hours during a five-year time period, for a base cost of $31 million, he said.

But Gary is seeking far more than that.

Citing the so-called lodestar calculation, in which a judge can determine the product of reasonable hours and reasonable rate, SPS attorneys argue that Moe can triple the billable hours in this complicated case and award lawyers $93.1 million. In addition, SPS lawyers are asking for $3.1 million in costs.

Gary said the lodestar precedent protects plaintiffs from deep-pocket defendants who otherwise could run out the clock in cases like this one.

Gary proposed an hourly fee for himself of $11,000 for 2,200 hours of work. That is 11 times more than any other lawyer on the case is seeking. Manuel Socias, Gary's co-lead counsel, is asking for an hourly fee of $1,000 for 2,920 hours. Paul Finizio of Finizio & Finizio in Fort Lauderdale billed at $750 an hour for 1,743 hours.

Lester Brickman, a law professor at Yeshiva University in New York, said it is unlikely that Gary will win such a high fee award even if Moe sides with the plaintiff on the sanctions issue.
"It is highly unlikely that any court would consider an $11,000 [hourly] fee," Brickman said. "I would guess that a reasonable hourly rate to be awarded by the court in this case would be in the range of $300 to $600 an hour."

The fee request could be moot, however, if Moe doesn't agree with the $100 million sanction requested by SBS. The plaintiff alleges that Motorola's violation of Moe's witness sequestration order led to tainted testimony that severely injured its case for re-trial.
Moe himself has said he was convinced that Motorola's violation of his order affected the jury outcome.

In the underlying suit, SBS contended that Motorola stole its technology to develop a roadside assistance system with a satellite global-positioning system after the companies broke off negotiations for a joint venture in 2000. Juan Canto and Roberto La Rocca, the two principals of SPS, testified that they developed the technology.

Moe granted a motion by Motorola on Oct. 9 to sequester witnesses. Moe reiterated his ruling during trial by saying defense experts could not remain in the courtroom while one of SPS's experts testified. He also denied SPS' request to have one its experts remain in the courtroom during Motorola testimony.

But then, during testimony, Motorola's damages expert, Daniel McGavock, and trial witness Douglass Locke admitted to reading expert testimony before taking the stand. Locke admitted to reading the transcripts a day after Moe had admonished the company for providing the testimony to McGavock.

The judge has prohibited both men from testifying at any new trial in the case.

"Motorola's multiple violations of the sequestration rule and this court orders were intentional deliberate, blunt, willful and contumacious," Moe wrote in a Jan. 12 order setting the date for this week's hearing.

Motorola's position is that even though mistakes were made, they were not deliberate and that no harm was done to the plaintiff's case. "It's one thing to run a red light," Gay said. "It's another thing to run a red light and hit someone."

Wal-Mart Gag Order on Former Security Officer

We've reported in the past on the tough corporate stance taken by Wal-Mart concerning trade secrets and other corporate security issues. Now comes the story, reported here in the Baltimore Sun, of former Wal-Mart security operative, Bruce Gabbard, fired last month for intercepting messages between Wal-Mart employees and newspaper reporters. An Arkansas state court judge has issued an order to keep him from talking the press.

Last week, Gabbard talked to reporters from the Wall Street Journal, outlining the his internal group's activities which included sending an undercover operative to spy on protest groups and hacking into the Web sites of activist investors.

Orders forbidding discussions with the press are generally disfavored by courts as unconstitutional prior restraints on speech in violation of the First Amendment. We'll see if this one holds up.

No Auto Trade Secrets – Vermont Emissions Trial to be Conducted in Public

From the Burlington Free Press, more on the Vermont automobile emissions case in which the auto industry sought to close the courtroom because of trade secrets concerns. We had earlier reported on the case here and here. The case concerns Vermont's efforts to control automotive emissions.

Federal court judge William Sessions stated:

"I want to rule only on what the public hears. You don't take subject matter like this and decide on it outside of the public's view."

The Burlington Free Press had challenged the attempt to close the courtroom.

Link To Oracle v. SAP Trade Secrets Theft Complaint Here

We thought it might be interesting for some of you to actually read Oracle's complaint filed in federal court in San Francisco alleging some pretty serious tomfoolery over at SAP. It's a fascinating read - under the federal rules SAP has 20 days to respond after being served with the complaint. We'll report SAP's response here.