Wednesday, September 30, 2009

Traverse Internet Law Federal Court Report: August 2009 Trade Secret Violation Lawsuits

The facts are unproven allegations of the Plaintiff and all commentary is based upon the allegations, the truthfulness and accuracy of which are likely in dispute.

FILED: 8/26/2009

We are seeing more and more distributors deciding that they can take out the “middleman” and sell directly to the consumer. This is the “disintermediation” model that drove the success of the web in the late 1990’s. However, if you have a contract that prohibits such competition, or you have acquired trade secret information that you use to launch a competing website, or you owe a potential fiduciary duty of good faith and fair dealing to an existing business relationship, launching a competing product or service is inviting litigation and can get you in hot water.

Plaintiff is a company that sells scissors and shears. Two of the Defendants were distributors of the Plaintiff and a third is a company with whom Defendants began distributing products allegedly in violation of a distributor agreement with Diamond Rose Shears. Diamond Rose alleges that the Defendants have utilized its proprietary business information, including its training manual and advertising methods, to solicit the existing and potential customers of Diamond Rose for the purpose of diverting those customers to a newly formed business, Hattori Hanzo Shears, LLC, which is in direct competition with the Plaintiff. This type of information is typically considered to be trade secrets.

The lawsuit includes counts for federal copyright infringement, unfair competition, breach of contract, and unjust enrichment. Plaintiff requests the entry of preliminary and permanent injunction against Defendants, an accounting of profits, actual damages including additional profits of Defendants, reasonable attorneys’ fees and costs, and other just and proper relief. Traverse Internet Law Cross-Reference Number 1352.