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Northern District of California Holds That CUTSA Supersedes Common Law Claims Where Plaintiff Alleges a Confidentiality Agreement But Failed to Allege Defendant Was Bound by It

In Preemption on February 14, 2012 at 3:52 pm
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District Judge Jeffrey S. White of the Northern District of California held that the California Uniform Trade Secret Act (“CUTSA”) superseded common law claims for misappropriation, conversion, unjust enrichment, and trespass to chattels.  Heller v. Cepia, L.L.C., No. C1101146JSW, 2012 WL 13572 (N.D. Cal. Jan. 4 2012) (slip op.).  Plaintiff alleged the existence of confidentiality agreements but not that defendants were bound by them.  Id.

Background

Plaintiff Heller was the sole proprietor of Floating Lightbulb Toys. Id. *1. He accused Cepia, A-Tech, The Bean and Ying Leung International Limited (“Ying Leung”) of misappropriating his trade secrets regarding his toy hamster project.  Id.  Cepia moved to dismiss Plaintiff’s claims for failure to state a claim and for sanctions under FRCP 11. Id. Plaintiff filed a counter-motion for sanctions against Cepia. Id. The Bean and A-Tech moved to dismiss based on lack of personal jurisdiction. Id.

Discussion

Cepia argued that Plaintiff’s common law claims were superseded by CUTSA. Id. Citing Silvaco Data Systems v. Intel Corp., 184 Cal.App.4th 210 (April 29, 2010), the court noted that “common law claims premised on the wrongful taking of information that does not qualify as a trade secret are also superseded, unless the plaintiff identifies some law which confers property rights protecting the information.”   Heller, 2012 WL 13572, at *1.

While Plaintiff argued that his confidential information that was not a trade secret is still property because he entered into agreements providing that any non-secret confidential and proprietary business information would remain his property. Id. The court disagreed, dismissing the common law claims: 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 »

After Nine Years of Litigation, Jasmine Networks v. Marvell Semiconductor Finally Proceeds to Trial

In Trial on October 5, 2010 at 9:38 am
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After over nine years of litigation, the trade secrets misappropriation case in Jasmine Networks, Inc. v. Marvell Semiconductor, Inc. is underway.   As reported by Kate Moser of The Recorder, Jasmine, represented by San Francisco’s McGrane Greenfield, contends that Marvell abused a nondisclosure agreement to rip off valuable intellectual property and claims that it lost business worth $80 million to $100 million.  Marvell’s attorneys have argued that Jasmine’s alleged trade secrets are based on stolen technology that Jasmine tried to pass off to Marvell as its own: “The truth is that Jasmine was a failed start-up founded at the tail end of the technology boom of the late 1990s,” Bauer wrote in Marvell’s trial brief. “In its short life, it never completed a product, did not obtain a single patent, and earned not a penny of revenue.”

The case was filed on September 12, 2001, and has featured two appeals to the Sixth District Court of Appeal.  Last June, the trial judge dismissed the case for lack of standing by Jasmine, but the Sixth District reversed, and the California Supreme Court denied Marvell’s petition for review and stay.

Jasmine’s key evidence is an infamous voice mail accidentally left by Marvell’s former general counsel, where he called a Jasmine in-house lawyer and apparently meant to hang up, but allegedly continued to talk with two colleagues on speakerphone about stealing trade secrets from Jasmine.  The voicemail was finally played for a jury on Friday.  A transcript prepared by Jasmine quotes Marvell’s former general counsel as saying: Read the rest of this entry »

Northern District Notes That Trade Secret Law Allows Recovery of Saved Development Costs

In Damages, Remedies, Unjust enrichment on September 9, 2010 at 7:37 am
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In a non-trade secrets intellectual property case, The Northern District of California noted, in dictum, that “trade secret law allows recovery of saved development costs.”  Oracle Corp. v. SAP AG, No. C 07-1658 PJH, — F.Supp.2d —-, 2010 WL 3258603, *14 (N.D. Cal. Aug. 17, 2010). Read the rest of this entry »

Breaking News: Apple Sues Its Own Global Supply Manager for Misappropriation of Trade Secrets

In Breaking News, Criminal Theft of Trade Secrets, Fun with Trade Secrets, Trade Secrets News on August 16, 2010 at 8:45 pm
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Apple Inc. filed suit on Friday against one of its Global Supply Managers alleging that he had “abused his position, violated Apple policies, and broken the law by stealing Apple’s proprietary, trade secret and other confidential information and converting it to his own benefit.”   Complaint ¶ 1.  The case is Apple Inc. v. Devine, et al., CV10-03563 PVT (N.D. Cal. Aug. 13, 2010).  Defendants are Paul S. Devine and CPK Engineering, Inc.  Apple alleges that it paid Devine over $614,000 in salary and $51,076 in bonus compensation and issued him 4,500 Apple stock options and 900 shares of Apple restricted stock.

Shannon Henson at Law360 reports that Apple served Devine on the day he appeared in court on charges of wire fraud, conspiracy, money laundering and engaging in monetary transactions with criminally derived property.

Apple claims that it investigated Devine since April 2010, and during the course of that investigation, discovered an “Entourage database and cache of e-mail from Devine’s personal Hotmail and Gmail e-mail accounts stored on Devine’s Apple-supplied laptop hard drive.”  Id. ¶ 16.  “These e-mails also confirmed that Devine had demanded and received over a million dollars in illicit payments, kickbacks, bribes, and other things of value (which Devine sometimes refers to in e-mail correspondence as ‘samples’) from numerous suppliers, and had concealed his scheme from Apply over the course of several years.”

Apple alleges 12 separate causes of action (the complaint was carefully pled, but several of the causes of action are likely susceptible to dismissal on a 12(b)(6) motion).

UPDATE: Kaedar Electronics Acknowledges Paying Brokerage Commission

UPDATE: Kaedar Electronics Suspends Employee

Judge and Attorneys

The case has been assigned to Magistrate Judge Patricia V. Trumbull of the Northern District of California.

Attorneys for plaintiff Apple Inc. are George A. Riley, Sharon M. Bunzel, Aaron M. Rofkahr, and Jean B. Niehaus of O’Melveny & Myers in San Francisco.

The criminal case is U.S. v. Devine, case number 10-cr-00603, in the U.S. District Court for the Northern District of California.

The civil suit is Apple Inc. v. Devine et al., case number 10-cv-03563, in the same court.

By CHARLES H. JUNG

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Protecting Trade Secrets in China is Top Priority for Group of In House Intellectual Property Attorneys

In Conferences, Criminal Theft of Trade Secrets, International on August 11, 2010 at 9:03 pm
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Protecting trade secrets when doing business in developing countries has long been a concern of intellectual property attorneys.  Protecting American trade secrets in China was identified as a top priority amount a group of in-house intellectual property attorneys at a the American Bar Association‘s annual conference which was held at the Moscone Center in San Francisco this morning.

Amy Miller of Legal Pad reported on some perspectives shared at the conference:

Gary Loeb, vice president of intellectual property at Genenetech, Inc., said that during litigation he fights aggressively to keep his company’s secret information confidential. “It’s a battle we take very seriously,” he said. “It’s something that makes our cases very expensive.”

Scott Piering, senior IP lawyer at Cargill, Incorporated, said . . . . [that] Cargill has had less success keeping their trade secrets secret when doing business in China. Dealing with corporate espionage is just the price of doing business there, he said. So his company doesn’t take its best trade secrets to China, but Cargill has taken some calculated risks in the country, and said it’s expected that trade secrets will be stolen. “It keeps me up at night constantly,” he said.

Robert Lindefjeld, general counsel and chief IP counsel for Nantero, Inc., said he hasn’t figured out how to deal with corporate spying in China either. His strategy is to just maintain a strong patent portfolio in China. “I used to file every single patent overseas,” he said. “Now I only file key patents because it’s so expensive.”

You can read the article here.

By CHARLES H. JUNG

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Morrison & Foerster Wins $9.36 Million in Compensatory Damages and $1.525 Million in Punitive Damages in Trade Secrets Trial

In Verdicts on August 6, 2010 at 8:23 am
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A San Francisco Superior Court jury granted $1.525 million in punitive damages Friday to Technology Information Group, adding to the $9.36 million in compensatory damages it awarded to the company a day earlier in a trade secrets dispute with its former employees and a competitor. As reported in law360.com, the “jury found San Francisco-based FusionStorm, three of its executive officers and three former TIG employees who were hired by FusionStorm liable for breach of fiduciary duty, breach of loyalty, misappropriation of trade secrets and other causes of action . . . .”

The complaint alleged that the improper conduct began while the former employees still worked at TIG’s Tampa, Fla., offices. The former employees were accused of trying to lure away other of TIG’s employees and customers to FusionStorm, which was then setting up in the area. TIG filed its lawsuit in 2007 and won a temporary restraining order that enjoined FusionStorm from soliciting additional TIG employees and from conducting business with certain customers, MoFo said.

The jury verdict comes after a five-week trial.  FusionStorm was represented by Orrick Herrington & Sutcliffe LLP.  TIG was represented by Morrison & Foerster LLP.  The docket may be viewed here.

By CHARLES H. JUNG

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BASF to Host Trade Secret Theft MCLE

In Seminars and MCLE on August 2, 2010 at 4:56 pm
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The Bar Association of San Francisco has scheduled a CLE Event – Combating Trade Secret Theft and Computer Crimes: Strategies for Civil Enforcement, Criminal Prosecution and Avoiding Claims – on Tuesday, September 21.  It will run from noon to 1:15 p.m. at the BASF Conference Center, 301 Battery Street in San Francisco.

By CHARLES H. JUNG

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