Wednesday, May 19, 2010

Traverse Internet Law Federal Court Report: April 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: 4/28/2010

The Plaintiff in this case alleges that its executive was responsible for backing up critical confidential and proprietary information and was the sole party responsible for maintaining such intellectual property. Although the dispute came to a head after the Defendants’ alleged termination for cause, the problem actually arose far earlier when an employee was apparently given the sole and exclusive responsibility, seemingly without oversight and controls, to act as the sole responsible party for maintaining what is alleged to be very significant intellectual property of the corporation. Every business should have a program in place to ensure that all information, and particularly valuable intellectual property, is backed-up and the integrity of the back-up process and data must be confirmed by a separate employee. Think of your intellectual property as your bank account - allowing the same party to write checks and reconcile bank accounts is a dangerous practice.
Direct Line Corporation, the Plaintiff, is a corporation that provides high density storage filing systems and maintains extensive websites for its dealers. The Defendant was allegedly hired as a marketing representative and project manager and became Executive Vice President with principle responsibilities for marketing and intellectual technology. Carrington was allegedly terminated for cause in January, 2010. Plaintiff alleges that Carrington is refusing to return electronic files containing extensive trade secrets of the Plaintiff absent the payment of additional compensation.

Causes of action listed in the complaint include trademark infringement, unfair competition, theft and misappropriation of trade secrets, breach of fiduciary duty, breach of duty of loyalty, breach of duty of trust, breach of duty against self-dealing, tortious interference with a business relationship, conversion, and unjust enrichment. Plaintiff requests that the Court issue extensive injunctive relief along with an accounting and disgorgement of profits, the return of all passwords, electronic files and other confidential information belonging to the Plaintiff, forensic examination of relevant hardware, pre-judgment and post-judgment interest, and exemplary and exceptional damages that the Court deems appropriate. Traverse Internet Law Cross-Reference Number 1417.

FILED: 4/26/2010

This case obviously involves both trade secret misappropriation issues and copyright infringement. It’s unfortunately common for web developers to “borrow” content from websites, and most often this just results in the service of a Digital Millennium Copyright Act takedown notice or a cease and desist demand letter that results in the content being removed from the web. However, when there is more than simple copying, and there are competitive aspects to the infringement, it is much more likely that a businesses’ first notice might come by service of a federal lawsuit. It’s a good time to check the contract with your web developers and make sure that when you order customized creative works you aren’t getting cut and paste copies of websites already existing on the web.

Any Test Franchising, Inc. owns and sells the franchise rights to an array of laboratory tests distributed through retail locations. Lab Test Depot, LLC, the Defendant in this case, has allegedly copied much of the content from the Plaintiff’s website. The principals of the Defendant allegedly attended a “discovery day” put on by the Plaintiff and signed an extensive non-disclosure agreement but the Defendant did not enter into a franchise agreement with the Plaintiff.

Defendant is accused of misappropriation of trade secrets and confidential and proprietary business information, federal trademark infringement, federal unfair competition, federal trademark dilution, federal copyright infringement, trademark infringement under Florida common law, and unfair competition under Florida common law. The Prayer for Relief includes requests for temporary, interlocutory, and permanent injunctive relief, general and compensatory damages, actual damages, incidental, special, consequential, and exemplary damages, damages for the unjust enrichment caused by Defendant’s misappropriation and infringement, attorneys’ fees and costs, and such other relief the Court deems just and proper. Traverse Internet Law Cross-Reference Number 1418.