Another Womble Trade Secrets Blog First - Trade Secrets Claim Made to Stop Political Rally!

The Washington Business Journal is reporting that a production company for large-scale entertainment and political rallies is asking a federal judge to halt a rally that a liberal political coalition is planning for this Saturday on the National Mall, alleging the group publicized the production company’s trade secrets while planning the event.

According to a complaint filed by National Events yesterday, the company sent rally planners a revised proposal on Sept. 19 for the total cost of the rally. The $1.1 million proposal included quotes and logistical plans for production equipment specifications, portable restrooms, first aid equipment and other costs.

Using the confidential proposal, the rally planners then contacted the third-party subcontractors listed in the proposal, seeking a better price than National Events quoted them, according to the complaint.

In a response, The Tides Center, a nonprofit doing business as One Nation Working Together, said a cost proposal that the company had submitted didn’t constitute a trade secret and there was never any contractual relationship. Furthermore, the planners argued, National Events hasn’t shown why staging the rally as planned would harm the company.

An injunction hearing is scheduled for Friday. We'll keep an eye on this one for you. Please - no jokes about liberals wanting a big production but not being willing to pay for it.

Trade Secret Litigation Filings Soar in the U.K.

Bloomberg is reporting that lawsuits filed in the United Kingdom to protect corporate secrets are becoming more and more common. They report that disputes over trade secrets at the High Court increased from 23 two years ago to 95 last year, while intellectual property cases overall rose 37 percent.

“Protecting IP becomes more, rather than less, important in a downturn,” said Karen Seward, a lawyer at Allen & Overy LLP in London, in an interview. “Employees are increasingly leveraging their value in the marketplace by trying to take valuable information with them when they go to new jobs.”

This report should not surprise our readers.

FBI: Data Thieves Want Green Technology

The FBI put out a press release on Friday that identifies "green technology" as a technology sector targeted by trade secret thieves. We thought you might appreciate reading their release.

Bratz Dolls Trade Secret Case Renders Ron Brawer a Professional Witness

We've covered the ins-and-outs of this Bratz Dolls trade secrets case and decided you might like to see the most recent motion filed in the case - one for a protective order to stop the SEVENTH deposition of a guy named Ron Brawer. Apparently Mr. Brawer used to work for Mattel and now he works for MGA and he's been deposed six times already for a total of 45 hours. But, alas, Mattel wants to depose him again. And MGA is protesting louder than Roberto Duran during a Sugar Ray Leonard fight.

We don't know whether Ron Brawer knows something more than he already testified to in his 45 hours of previous sworn testimony. We just know that we're glad our name is not Ron Brawer. And, sorry, that's not Ron Brawer in the picture to the left but we figured we'd feature a picture of a guy who looks like he's frazzled just for fun.

No Unjust Enrichment Won’t Let You Off the Hook for Reasonable Royalties under California Trade Secrets Act

What happens when you can’t – or don’t – prove actual damages or unjust enrichment in your trade secrets case?

E*Trade (annoying baby mascot pictured) just found out the answer in a recent case from the California Court of Appeal, Ajaxo Inc. v. E*Trade Financial Corp., H033631 (Aug. 30, 2010 6th Dist.).

The factual background is a bit complicated, so I’ll try to boil it down. Ajaxo and E*Trade entered into an NDA so that E*Trade could consider Ajaxo’s technology for wireless stock trading. E*Trade determined not to enter into an agreement, but instead went with another company, loosely affiliated with E*Trade. Ajaxo later found out that E*Trade and the other company developed their wireless offering with trade secrets from Ajaxo and Ajaxo brought suit under the California Uniform Trade Secret Act (CUTSA). Liability was established in the first trial.

In the second trial, Ajaxo could prove under CUTSA either its actual losses or the unjust enrichment of E*Trade. For various reasons, Ajaxo put all its eggs in the latter basket.

Wireless stock trading, though, turned out not to be lucrative for E*Trade. In fact, the jury determined, E*Trade lost over $2 million implementing it. (It made up only ½ of one percent of all trading.)

Ajaxo, having struck out on damages, argued that the court had to award a reasonable royalty to it under CUTSA. The California Act, unlike the uniform act as adopted in most states, provides for the reasonable royalty remedy solely in cases where the other two types of damages – plaintiff’s losses or defendant’s unjust enrichment – are not “provable.”

The question became, what does “provable” mean in this context. E*Trade successfully argued to the trial court that Ajaxo was not entitled to a royalty because the other types of damages were legally “provable,” they just had not been proved as a matter of fact.

The court of appeals reversed, holding that the failure to establish any damages still leaves a plaintiff with a royalty remedy to be awarded by the court. The court held that the legislature intended to track the common law remedy of allowing for reasonable royalties when a plaintiff could not prove any loss and defendant made no actual profits.

The appeals court also offered some guidance to the trial court on remand. The royalty should represent the hypothetically agreed value of what the defendant wrongfully obtained, i.e. “by means of a suppositious meeting between the parties, the court calculates what the parties would have agreed to as a fair licensing price at the time the misappropriation occurred.”

Quick lesson learned: not profiting from stealing trade secrets won’t let you off the hook.

Surveying Trade Secrets Allegedly Pilfered in Minnesota

Sometimes we blog a news story that doesn't have any national or international legal implications but we do it just to demonstrate that trade secret theft and allegations of the same are popping up in locations and businesses where you wouldn't expect it. With that, we bring you . . .

The Park Ridge (Minnesota) Enterprise is reporting that a well-known Park Rapids surveyor and developer faces felony theft charges in a case that alleges elements of competitive espionage.

Thomas Miller, 64, has been charged with downloading the database of Arro Surveying, his former employer, and taking it and a client list to Lindow Surveying and Mapping, where he is now employed.

Miller is a fixture at Hubbard County Board of Adjustment and Planning Commission meetings, where his projects and clients are frequently presented and represented. He is well respected by those boards and the County Board of Commissioners, with which he has done business on a regular basis. The information he allegedly stole is valued at $165,000.

Miller, through his attorney, has denied the allegations.

Australian Supermarket Trade Secrets and Defection Matter

We try our best at Womble Trade Secrets to insure our readers learn about the global implications of trade secret law and its development and refinement. Today we note that The Sydney Morning Herald is reporting about an interesting case that involves a former manager in the supermarket business and his designs on investing in a competitive business following his resignation. Metcash formerly employed Lou Jardim as its chief of operations. Jardim wants to become a material shareholder in SPAR Australia Limited, apparently a direct competitor. So Metcash has gone to court.

Metcash has already won an injunction in the matter. Mr Jardim is on ''gardening leave'' from Metcash until March, and he has not been at work since February 5. He is banned from speaking to IGA staff, excluded from the premises and has been locked out of the company's electronic communications, the NSW Supreme Court was told yesterday.

Mr Jardim wants to make a 51 per cent investment in SPAR.

He says he resigned on July 16. Metcash is arguing that Mr Jardim is still employed by the company, and he is still being paid - therefore he is obliged to act in the company's best interest and should not be allowed to work with a competitor.

The hearing continues today and we'll keep you posted.

Guilty Plea By Former Valspar Scientist Nabbed with Thumb Drive Containing Trade Secrets

We first posted about the arrest and indictment of David Yen Lee of Jersey City, New Jersey here: http://wombletradesecrets.blogspot.com/2009/03/chicago-area-valspar-employee-arrested.html.

Yesterday Mr. Lee pled guilty to the charges of economic espionage. You'll recall that when Mr. Lee resigned and turned in his phone and computer, Valspar found a hidden file containing unauthorized software programs including a data copying program. Data including Valspar trade secrets had been downloaded to the computer without authorization. Mr. Lee had booked a one-way airline ticket from Chicago to Shanghai scheduled to depart shortly after his resignation.

The U.S. Attorney is apparently recommending a sentence of approximately 5 years.

Economic Espionage Unicorn Returns - This Time in Indianapolis

We initially posted about this case here: http://wombletradesecrets.blogspot.com/2010/07/trade-secrets-unicorn-economic.html.

It's back. Bloomberg News is reporting that a former Dow AgroSciences LLC researcher was indicted by a federal grand jury for allegedly stealing trade secrets from the company and relaying them to China. We refer to these charges as the economic espionage unicorn because they are so rare - this indicatment is not just about the theft of trade secrets but with the additional and complicating aspect that the theft was for the benefit of a foreign government.

The indictment against Kexue Huang, also known as John, was announced in an e-mailed statement yesterday by Assistant U.S. Attorney General Lanny Breuer and U.S. Attorney Timothy Morrison of Indianapolis. Huang made his initial court appearance yesterday in Indianapolis, the prosecutors said.

“Economic espionage robs our businesses and investors of hard-earned, protected research and is particularly harmful when the theft of those ideas is meant to benefit a foreign government,” Breuer said in the statement.

Huang, 45, worked for the Indianapolis-based unit of Dow Chemical Co. from 2003 to 2008, researching organically-derived insecticides, work for which he had received Chinese government grant money, according to the U.S.

In December 2008, Huang published Dow AgroSciences trade secrets through China’s Hunan Normal University, disclosing information he had promised Dow he would keep confidential in a written agreement with the company, prosecutors said.

He also allegedly directed university scientists to do research on the Dow insecticides.

Huang faces 12 counts of theft and attempted theft of trade secrets to benefit a foreign government, each punishable by as many as 15 years of imprisonment, and five counts of foreign transportation of stolen property, for which he faces a maximum sentence of 10 years.

He is represented by Indianapolis federal public defender Michael Donahoe, according to Morrison’s spokeswoman, Mary Bippus. Donahoe didn’t immediately reply to a voice-mail message seeking comment.

The case is U.S. v. Huang, 10-CR-102, U.S. District Court, Southern Indiana (Indianapolis).