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Southern District Holds That Misappropriation of Trade Secrets Claim Properly Pled Even Where Complaint Lacks Allegation of Use to Plaintiff’s Detriment

In Motion to Dismiss on November 17, 2010 at 7:47 am
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The Southern District of California denied a motion to dismiss a claim for misappropriation of trade secrets even where counter-claimant does not allege plaintiff’s use of the trade secret to counter-claimant’s detriment.  Young v. Fluorotronics, Inc., No. 10cv976-WQH-BGS, 2010 WL 4569996 (S.D. Cal. Nov. 3, 2010) (slip op.).

Background

Plaintiff John Young, M.D. filed a complaint against Fluorotronics, Inc. and others relating to his investment in Fluoro-Raman technology, which was purported to be a portable, non-destructive and rapid screening device able to detect problems with food and drugs before they are distributed and detect counterfeit drugs.  Id. *1.  Plainitff alleged that the Private Placement Memorandum and Balance Sheet falsely stated that Fluorotronics was the owner of the “iStar ICCD Intensified CCD Detector Head camera” (“Camera”) and “certain Laser Equipment” (“Laser”). Id. Young for himself and others invested in Fluorotronics, but contrary to the representations of defendants, Fluorotronics allegedly did not own the Camera, but borrowed it from Andor Technology.  Id. **1-2.  When Fluorotronics failed to pay Andor for the camera, Young purchased it from Andor. Id. *2.  Plaintiff brought claims for (1) fraud; (2) negligent misrepresentation; (3) intentional misrepresentation; (4) securities fraud in violation of the Securities and Exchange Act of 1934, Section 10(b) and Rule 10b-5; (5) sale of unregistered securities; (6) breach of fiduciary duty; (7) violation of Section 1507(a) of the California General Corporation Law; and (8) violation of Section 2201 of the California General Corporation Law. Read the rest of this entry »

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Defendant Pleads Guilty to Charge of Criminal Theft of Trade Secrets, 18 U.S.C. § 1832, and Faces, Inter Alia, up to 10 Years in Prison and Deportation

In Criminal Theft of Trade Secrets on November 16, 2010 at 9:33 am
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The U.S. Attorney’s office announced that a defendant entered a guilty plea to a charge of theft of trade secrets from Bristol-Myers Squibb, in violation of Title 18, United States Code 1832.  According the U.S. Attorney, the defendant Shalin Jhaveri holds a Ph.D. from Cornell University and was employed at the time of his arrest in February of 2010 as a Technical Operations Associate in Bristol-Myers’ management training program.  The U.S. accused defendant of stealing trade secrets during his employment with Bristol-Myers and devising a plan to convert them to his own use.  At the time of his arrest, Jhaveri was allegedly meeting in a Syracuse hotel room with an individual he believed was an investor willing to finance a business venture Jhaveri planned to start in his native India.  According to the U.S. Attorney, Jhaveri transferred Bristol-Myers trade secrets to this investor, an individual he knew was not employed by or associated with Bristol-Myers in any capacity.

Jhaveri admitted the following as part of his plea: (1) while employed by Bristol-Myers in its management training program at its Syracuse facility, he devised a plan to steal trade secrets of Bristol-Myers and convert them to his own use; (2) he did steal trade secrets from Bristol-Myers, and in doing so used methods to disguise his actions and evade detection by the Company; (3) he communicated, using a specially created email account and password he set up expressly for that purpose, with an individual he knew was not employed by or affiliated with Bristol-Myers, who he believed to be an investor willing to finance a business venture Jhaveri planned to start in his native India; (4) Jhaveri discussed with and transferred to that individual trade secrets he had stolen from Bristol-Myers; and (5) when asked by this investor whether the information he had taken from Bristol-Myers was everything he needed, responded that it was.

Jhaveri also consented to the entry of an order of removal/deportation from the United States by an Immigration Judge, to take place upon completion of any jail term imposed, and to not seek relief or take an appeal from such order.  Jhaveri faces up to 10 years in prison, a $250,000 fine, up to three years of supervised release, and deportation.

Attorneys

Stephen C. Green was the Assistant United States Attorney prosecuting the case.

Second District Vacates Arbitration Award for Failure to Resolve Misappropriation of Trade Secrets Counterclaim

In Arbitration on November 15, 2010 at 11:08 am
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The Second District Court of Appeal vacated an arbitration award for failure to resolve defendants’ counter-claim for misappropriation of trade secrets.  Rad v. Keehan, No. B222049, 2010 WL 4487142 (Cal. App. 2d Dist. Nov. 10, 2010).  Defendants Michael Keehan, Lucy Keehan, Lucy’s Silk Store, Inc. and Michael’s Imports, Inc. (collectively defendants) appealed from a judgment entered after the trial court denied their motion to vacate an arbitration award against them and instead confirmed the award.  Id. *1.  Defendants contended that the arbitrator failed to decide their counter-claim for misappropriation of trade secrets, and thus the trial court should have vacated the arbitration award for failure to resolve all issues submitted to arbitration. Id. The Second District Agreed. Id.

Background

Plaintiff Ira Rad, on behalf of his company Bita LLC, executed an agreement (Sales Agreement) with one of defendants’ corporations, Michael Imports, Inc., to sell and distribute silk products from defendants’ “Lucy’s Silk” label. Id. Bita paid defendants $60,000 as partial consideration for the exclusive right to sell the products in the eastern United States, but after execution of the Sales Agreement, defendants continued to sell the products directly to East Coast customers, undercutting Bita’s sales.  Id. Plaintiffs sued defendants, alleging, inter alia, causes of action for breach of contract, fraud, negligent misrepresentation, and rescission with respect to the Sales Agreement. Id. The parties ultimately stipulated to submit their disputes to binding arbitration and a stay of the litigation was entered. Id. Read the rest of this entry »

Defendant Counterclaiming for Trade Secrets Misappropriation Awarded $72,403 in Damages and $372,094 in Attorneys Fees

In Arbitration, Counterclaims, Judgments, Verdicts on November 3, 2010 at 6:34 am
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Plaintiffs in a wrongful termination suit were denied any award after an arbitration, but one plaintiff was ordered to pay $72,403 in compensatory damages to defendant on, inter alia, misappropriation of trade secret counterclaims. Holland v. Wachovia Securities LLC, 2009 WL 7035871, 44 Trials Digest 13th 12 (S.D. Cal. Award May 18, 2009).

Background

According to court records: Plaintiff William Holland filed his Statement of Claim alleging that defendants Wachovia Securities LLC and Eugene P. Ingargiola, who was the manager of the Wachovia office where William was employed, had damaged him when they wrongfully terminated his employment on November 18, 2004.  Id. Among other things, plaintiff claimed that defendants had terminated him on account of his age and in a desire to re-assign his accounts to younger account executives whose percentage share in the revenues generated by those accounts would be less than plaintiff’s share had been. Id.

Holland’s son and co-worker, Michael W. Holland, also filed his own Statement of Claim in a separate proceeding, alleging that defendants had damaged him when his employment with Wachovia terminated very shortly after his father’s.  Id.

Wachovia counterclaimed, alleging, inter alia, that William Holland and Michael W. Holland violated the Computer Fraud and Abuse Act and misappropriated trade secrets. Id. Read the rest of this entry »

Plaintiffs Awarded Over $1 Million After Bench Trial in a Trade Secrets Case

In Judgments, Verdicts on November 2, 2010 at 11:41 am
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After a bench trial in San Francisco Superior Court, plaintiffs in a trade secrets case recovered judgment on the merits against certain defendants in the amount of $921,469, plus pre-judgment interest in the amount of $301,664, and punitive damages of $275,000.  UltraEx Inc. vs. Express It Delivery Services Inc., Case No., CGC-05-447942, 2010 WL 4260535, 44 Trials Digest 13th 5 (Cal. Sup. Ct. Verdict Date: April 1, 2010).

According to court records, on April 29, 1998, plaintiff UltraEx Inc. merged with two other corporations, Express It Courier Services Inc. (“Old Express It”) and 800 Courier Inc.  Id. *1. Plaintiff was the surviving corporation in this merger, but prior to the merger, Old Express It and 800 Courier had each been actively conducting a package delivery business in California.  Id. Defendant Express It Delivery Services Inc. (“New Express It”) was a California corporation formed in November 2004. Id. Read the rest of this entry »