Monday, September 08, 2008, 9/08/2008 11:39:00 AM

Massachusetts Jury Says Former Employee and New Employer Did Not Steal STR Holdings' Trade Secrets for Solar Modules

By Todd
A solar supply company based in Connecticut that plans a $300 million initial public offering lost an intellectual property case in a Massachusetts court last week, raising new questions about its vulnerability to competitors that seek to use its technology.

A Superior Court jury in Northampton, Mass., rejected claims by STR Holdings that a former employee working for a rival misappropriated trade secrets in developing an encapsulant that shields solar modules from weather damage.

STR Holdings, which employs 1,700 Specialty Technology Resources Inc. employees at facilities in the United States and Spain, said the ruling “will not have a material impact on our business.”

But in its registration statement filed with the Securities and Exchange Commission July 31, the company had warned that a negative ruling in the case could expose it to greater competition, saying: “The outcome of this litigation is unknown and, if we are unsuccessful, competitors may be legally entitled to use certain proprietary technologies that have historically given us a competitive advantage in the marketplace.”

STR had filed suit against JPS Industries and former STR employee Jim Galica, claiming the South Carolina-based company misappropriated trade secrets in developing its own encapsulants, which were introduced in 2006, a year after Galica left STR to join JPS.

The jury ruled that a misappropriation of trade secrets had not occurred. The verdict not only opens the door for an immediate competitor, but also underscores STR’s lack of patent protection and heavy reliance on trade secrets, as cited in its SEC documents.

STR acknowledged in its registration statement any breaches in its trade secrets may “undermine our competitive position,” and further legal actions to defend them “may be protracted and expensive.”

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