Tuesday, March 16, 2010

Traverse Internet Law Federal Court Report: January 2010 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: 1/28/2010

Big businesses enter into confidentiality and non-disclosure agreements all the time and comfort can be taken in the fact that these businesses have deep pockets, a brand to protect, and hopefully an understanding of business ethics. More often than not, doing business on the web means that you are not dealing with big businesses, the risk of loss of trade secrets is far greater, the “deep” pockets far shallower, the brands that could be tarnished by his conduct almost non-existent, and a code of ethics a mere figment of the imagination. Don’t take big business policies and practices relating to the protection of intellectual property and trade secrets and try to implement those in the Internet arena when small businesses are involved. When you are doing deals with other companies, recognize that there is often a minimal amount of leverage available to assure compliance with promises made.

The Plaintiff is engaged in the business of renting Harley Davidson motorcycles and providing guided and self-guided tours to tourists worldwide. The Defendants are former employees/managers for the Plaintiff. They are alleged to have left the employment of the Plaintiff and launched a competing business despite the existence of a confidentiality and non-disclosure agreement.

The lawsuit alleges misappropriation of trade secrets and aiding and abetting the misappropriation of trade secrets, unfair competition, breach of contract, breach of duty and loyalty, breach of the covenant of good faith and fair dealing, intentional interference with and conspiracy to interfere with prospective economic advantage, negligent interference with prospective economic advantage, violation of Computer Fraud and Abuse Act, violation of the California Penal code 502, and unjust enrichment/imposition of constructive trust. Plaintiff requests declaratory relief against all Defendants and an accounting of profits, as well as general, special, and punitive damages and attorneys’ fees and costs. Traverse Internet Law Cross-Reference Number 1393.

FILED: 1/04/2010

Non-disclosure agreements are vastly overrated in their importance, at least in the Internet industry. If you are going to disclose trade secrets to a third party and rely upon a non-disclosure agreement to protect those secrets first consider what they party who is signing the agreement has to lose if there is a breach. Once trade secrets are disclosed into the public arena the fact that you might have a valid legal claim against someone who signed a non-disclosure agreement isn’t much consolation. If you are going to hand over your trade secrets, make sure you are dealing with a party who is highly motivated to comply with the contract, no matter how your prospective business relationship pans out.

This is a class action lawsuit and the Plaintiffs are various franchisees providing business coaching to entities wishing to purchase franchises. The Defendants are alleged to have breached a non-disclosure agreement and misappropriated trade secrets by launching a competing website.

The lawsuit alleges breach of non-disclosure agreement, breach of confidentiality agreement, and breach of duty of loyalty. The claim for relief includes a request for an award of actual and compensatory damages in an amount well in excess of $150,000, an accounting of revenues and profits, damages sufficient to deprive Defendants business of any benefit of enrichment from their wrongful conduct, damages in the amount paid to Dombach during his engagement with Plaintiffs which is in excess of $251,000, preliminary and permanent injunctive relief, punitive damages, reasonable attorneys’ fees and costs. Traverse Internet Law Cross-Reference Number 1394.

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