Thanks to the Indiana Civil & Business Lawyer website for posting the following kind words about the new kid on the block.
While very new, I think The Trade Secrets Blog should be worth watching. Anyone who thinks to post the Restatement of the Law (Third), Unfair Competition (first chapter, so far) interests me. While the blog has a California slant, I say his article 7 Steps to Take When You Are Sued should be required reading for all business clients.
According to Medical Product Outsourcing, Boston Scientific settled a lawsuit with ECRI Institute. See paragraph below:
With a Dec. 3 trial date fast approaching, Boston Scientific and the ECRI Institute have settled a potentially controversial lawsuit that could have spotlighted efforts by Boston Scientific and other medical device companies to keep the prices of their major products secret. No terms were disclosed. ECRI, a nonprofit consulting and market research firm based in Plymouth Meeting, Pa., collects data on medical device prices from more than 400 hospital clients and, in return, discloses to them the average and lowest-selling prices for each product. The hospitals use the information as a tool in negotiations with the companies. Boston Scientific had said that ECRI illegally disclosed its trade secrets. It also argued that ECRI interfered with its business relationships by inducing hospitals to violate sales contracts that require the hospitals not to disclose the prices they pay for Boston Scientific’s heart defibrillators and other devices. The lawsuit had drawn attention to arguments that the secrecy in device pricing has contributed to rising costs. Sen. Charles E. Grassley, Republican of Iowa, has introduced legislation that would require the device industry to disclose average prices on a quarterly basis starting in 2009. Jeffrey Lerner, the chief executive of ECRI, declined to comment on whether the settlement would require ECRI to change its price consulting service.
This is an interesting case for a few reasons:
(1) are the Boston Scientific prices truly protected by trade secrets law? Does publication to third parties (the hospitals) of the prices negate any trade secret protection Boston Scientific might have in the prices, even though it is alleged that, by contract, the hospitals were not allowed to divulge the price information? In other words, is a contractual term not to divulge the information a reasonable attempt to preserve the confidentiality of the information?
(2) did ECRI do anything wrong if it acquired the information from third parties who were obviously willing to give up the information (ECRI was under no obligation to keep the trade secrets of Boston Scientific confidential)?
(3) is ECRI liable for inducing breach of third party contracts held by Boston Scientific when the third parties have only divulged alleged trade secret information but have not breached the contract in any other way (by refusing to purchase the product, for instance)?
(4) does this type of secrecy hinder the marketplace from performing optimally? Are hospitals paying too much for these devices and are those costs being passed on to the consumer?
It’s too bad that this case was settled because these are compelling issues.
California-based MSC Software Corporation has sued Michigan-based Altair Engineering Inc. and seven former MSC employees in a U.S. District Court in Detroit over allegations that the seven employees (who were part of the Adams division of MSC and developed the Adams/Car software product) took trade secret information with them and used the information in the development of two software products launched by Altair this year, including Altair MotionView.
According to the article: “The suit alleges that Altair hired more than “20 percent of the MSC Software Adams Group,” developed a product using trade secrets and “undertook an aggressive program to induce Adams/Car customers to abandon Adams/Car and adopt Altair MotionView.”
C. Thomas Ludden, the attorney for the employees countered that it was all a coincidence and that the former MSC employees left MSC at varying times for varying reasons. “Our position is — and we’ve stated as much in the pleadings — that we deny any theft of trade secrets,” Ludden said. “We deny that we’ve done anything to break any laws or even violate a noncompete or confidentiality agreement. The clients moved for all the usual reasons you might change employers.”
This is an increasingly common trade secrets case where employees leave their employer and go to a competitor. The former employer then sues competitor alleging the misappropriation of trade secrets.
We’ll follow this closely as it develops…
The AP is reporting that a man in Portland, Oregon who lived in a tent by the airport, attempted to sell information from 2008 Nike catalogs to Nike’s competitors. According to the FBI he had taken the catalog from the printing and binding shop where he worked. He has been charged with theft of trade secrets. See the article here.
The FBI was tipped off when one of Nike’s competitors who received photocopies of unreleased Nike products sent the unsolicited information to Nike’s CEO Mark Parker because it contained a claim that the information was available to the highest bidder and had been sent to four other shoe companies competitive with Nike.
T o his credit, Richie Woodworth, President of Saucony, Inc., forwarded the information because, in his own words, “Although we’re very competitive and sometimes intensely competitive, I just didn’t think that was sort of the right way to do things.” It’s good to see the head of a major company still believes in fair play.
This case raises interesting legal issues and we will watch closely to see how they are resolved. First, was the information truly a trade secret since the catalog was meant for public viewing; and second, what is reasonable to protect your trade secrets when you send them off to third-parties like a printer–is it necessary to have the printer sign non-disclosure agreements?
In any event, this is not the typical situation with trade secret theft as most thefts of trade secrets are “inside jobs” done by employees who eventually leave to another competitive company. It is for this reason that a good trade secret protection strategy is an imperative part of any business plan that depends on the confidentiality of certain information to gain a competitive advantage.
This post represents the launch of The Trade Secrets Blog–a blog dedicated to following trade secrets litigation, trade secrets law and recent developments in the field of trade secrets.
As an attorney who focuses on trade secrets litigation in California, I thought that I could share some basic information about trade secrets law that would be helpful to others who are not as familiar with this important legal field (according to one survey, the Fortune 1000 and about 600 more small and medium sized businesses lost more than $50 billion from the theft of trade secrets in a one year period). Thus, the blog is intended as a resource for business owners to learn about trade secrets, their importance, and how to protect them. Feel free to look around and ask questions.
I will be posting occasionally on trade secrets cases currently in the news, practical information regarding trade secrets, and tips on how you can improve your trade secrets protection strategies within your own business. Take care.