Nondisclosure Agreement

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, Inc, No. 05 C 4088, Slip Op. (N.D. Ill. Aug. 15, 2008) (Moran, Sen. J.).*
Judge Moran granted declaratory judgment plaintiff Rosenthal Collins Group’s (“RCG”) motion for leave to use an expert witness that declaratory judgment defendant Trading Technologies (“TT”) previously met with. TT met the first prong of the test for expert disqualification. TT had established a confidential relationship with the expert, as proven by the non-disclosure (“NDA”) agreement entered into by TT and the expert.
But the NDA was not enough to meet the second prong of the test, that confidential information requiring disqualification was exchanged. The expert stated that he had two meetings with TT approximately four years before the issuance of this opinion. One meeting was held before the NDA was executed and one after. TT alleged that there were additional meetings, but only had supporting evidence of two meetings. TT also alleged that it discussed litigation strategy, prior art and a relevant court decision with the expert. But based upon an in camera review of TT’s evidence, the Court held that there was not sufficient evidence of an exchange of confidential information. The emails TT provided were one or two lines each and contained no confidential or work product information. And TT did not provide attorney notes or other evidence of confidential or work product information. The Court did acknowledge that one email discussion of a court opinion could have been work product, but the expert’s response was so brief and vague that the Court did not consider it advice.
Finally, TT did not offer evidence that it retained the expert or paid him any fees. TT did argue that it compensated the expert by having TT’s president speak to a trading group the expert owned. But there was no evidence that the speaking engagement was intended to be or was accepted as payment for the expert’s work.
* Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.

Continue Reading Trading Technologies: Party can Use Expert Previously Contacted by Opposing Party

Amari Co. v. Burgess, No. 07 C 1425, ___ F.Supp.2d ___, 2008 WL 656072 (N.D. Ill. May 7, 2008) (Ashman, Mag. J.).
Judge Ashman denied plaintiff Amari Co.’s motion for a protective order to prevent defendants’ alleged intimidation of Amari’s non-party witnesses in this Racketeering Influenced and Corrupt Organization Act (“RICO”). Amari argued, among other things,* that defendants were intimidating ex-employees of former defendant International Profits Associates (“IPA”), which was run by defendants, by threatening to enforce confidentiality agreements signed by all IPA employees.
The Court held that it could not grant Amari its requested relief for two reasons. First, to be effective the injunction would have had to enjoin non-party IPA from suing its ex-employees to enforce the agreements. The Court could not enjoin IPA without proof it was working in concert with defendants or that IPA was defendants’ alter ego. And before enjoining IPA, IPA would have to be given notice of the motion and an opportunity to respond.
Second, Amari sought a blanket injunction from enforcing the agreements against IPA’s ex-employees, but did not allege that the agreement was unenforceable. While confidentiality agreements cannot be used to hide a company’s potential impropriety, they can be used to protect proprietary information. Without identification of specific ex-employees allegedly threatened with a suit, the Court could not determine whether IPA might have been using the confidentiality agreement for enforceable or unenforceable ends. And if Amari identified a specific individual, it could subpoena them, removing the need for an injunction.
*Amari alleged other forms of intimidation, but they are not related to IP and are, therefore, not discussed in this post.

Continue Reading Threat to Enforce Confidentiality Provision Not Intimidation

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, Slip Op (N.D. Ill. May 27, 2007) (Coar, J.).
Judge Coar denied defendant Sears, Roebuck & Co.’s (“Sears”) Fed. R. Civ. P. 50(b) motion for judgment as a matter of law and Fed. R. Civ. P. 59(a) motion for a new trial or a remittitur. And the Court granted plaintiff RRK Holding Co.’s (“RRK”) motion for pre-judgment and post-judgment interest. A jury previously returned a verdict finding Sears liable for breach of a nondisclosure agreement and misappropriation of RRK’s trade secret related to its spiral saw – click here for much more on this case in the Blog’s archives. The jury awarded RRK approximately $21M, including $11.6M in actual damages, $1.6M for unjust enrichment and $8M in punitive damages.
First, Sears argued that RRK offered insufficient evidence showing that Sears’ alleged misappropriation caused RRK’s damages. But the Court held that there was sufficient evidence to support the jury’s verdict. The fact that Sears’s price for its spiral saw was lower than RRK’s explained why customers purchased Sears’s saws over RRK’s, but the trade secret causation was shown by the fact that Sears sold the combination tool instead of selling the components separately.
Second, Sears argued that RRK’s damages should be limited to the traditional “head start” period (an estimate of the time it would take for defendant to develop the trade secret on its own). But the Court held that Illinois law limits injunctive relief to a head start period, but not monetary relief.
Third, the Court held that RRK’s damages expert was sufficiently credible and held that Sears had sufficient opportunity to challenge the expert’s methodologies during cross examination.
Fourth, Sears argued that the jury’s award was in error because it awarded damages based on the entire sales price of the spiral saws, instead of apportioning just that portion of the sales price related to RRK’s trade secrets. But the Court held that a rational jury could have determined that the reason the spiral saw was a success was because of the trade secret and that, therefore, apportionment was not required.
Fifth, Sears argued that RRK’s lost profits damages should have been cut-off when third party competitor Dremel entered the market with a competing spiral saw. But the Court held that it was unclear whether Dremel’s tool was similar enough to RRK’s trade secret to be a substitute for it.
The Court also held that the jury’s award was not excessive. But the Court did find that the jury erred in by using the wrong figure from RRK’s expert for actual lost profits. RRK also conceded that the jury used the wrong number. The Court, therefore, reduced the jury’s actual damages award from $11.6M (the incorrect figure) to $11.2M (the correct figure).
Finally, the Court awarded RRK both pre-judgment and post-judgment interest. Pre-judgment interest, which is awarded on equitable grounds, was appropriate because of the intentional nature of trade secret misappropriation. Additionally, the Court held that pre-judgment interest was appropriate even though RRK was also awarded punitive damages. The Court did, however, suggest that had the punitive damages award been multiples of the actual damages, pre-judgment interest might not have been appropriate. Sears did not challenge RRK’s motion for post-judgment interest.
The Court added $3.7M in pre-judgment interest to the $21M award and assessed post-judgment interest of $1,931.50 per day until the award was paid.

Continue Reading RRK v. Sears: Judge Adds Interest to Jury Award

As promised last week, the jury instructions are now available — click here for a copy. Additionally, although the verdict form is not available electronically, the Court’s minute order (click here for a copy) gave some additional detail. The jury found for plaintiff RRK on each of eleven counts and awarded damages as follows:
Damages Award RRK’s Actual Losses $11,664,105
Sears’s Unjust Enrichment $1,688,136
Punitive Damages $8,011,344
Total Damages $21,363,585
For more on this case, click here for the Blog’s archives.

Continue Reading RRK v. Sears: Jury Instructions

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, 2007 WL 495254 (N.D. Ill. Feb. 14, 2007) (Coar, J.).
The Chicago Sun-Times is reporting that a jury returned a $21.5M verdict, including $8M in punitive damages, Monday for plaintiff RRK Holding Co. (“RRK”) in its Illinois Trade Secret Act (“ITSA”) suit against defendant Sears, Roebuck & Co. (“Sears”). RRK alleged that, pursuant to a nondisclosure agreement, it disclosed to Sears its plans for a next generation “combination tool” which consisted of a rotary saw, also called a spiral saw, which could be converted into a plunge router. But after negotiations broke down over price, Sears allegedly took RRK’s plans and used them to make Sears’s Craftsman “All-in-One” tool. Sears has said it will appeal the verdict. The Court’s docket has not been updated yet with a verdict form or jury instructions, but I will post them when they become available, likely next week.
For more on this case, click here for the Blog’s archives.

Continue Reading Jury Returns $21.5M Trade Secret Verdict

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, 2007 WL 495254 (N.D. Ill. Feb. 14, 2007) (Coar, J.).

Judge Coar denied defendant summary judgment on plaintiff’s trade secret and breach of contract (nondisclosure agreement) claims. The Court also granted defendant summary judgment on plaintiff’s unjust enrichment claim holding that because it was based upon the trade secret misappropriation allegations it was preempted by the Illinois Trade Secret Act (“ITSA”). Plaintiff alleged that, pursuant to a nondisclosure agreement, it disclosed to defendant its plans for its “combination tool” which consisted of a rotary saw, also called a spiral saw, which could be converted into a plunge router. But after negotiations broke down over price, defendant allegedly disclosed the idea to its Canadian subsidiary, which then allegedly disclosed the idea to another party, Choon Nang Electrical Appliance Manufacturing Ltd. (“Choon Nang”), that obtained a British design patent on the combination tool and produced it for defendant. 


Continue Reading Conflicting Testimony Creates Questions of Fact in Trade Secrets Case

Huthwaite, Inc. v. Randstad General Partner (US), L.L.C., No. 06 C 1548, 2006 WL 3065470 (N.D. Ill. Oct. 24, 2006) (Lefkow, J.).

Plaintiff, a corporate sales training services provider, contacted defendant, an employment services provider, to discuss improving defendant’s sales training offerings.  Plaintiff told defendant that it knew defendant’s current training materials incorporated techniques from plaintiff’s copyrighted books — "SPIN Selling" and "Major Account Sales Strategy" — but assured defendant that it would not file a copyright infringement suit.  As discussions between the parties progressed, plaintiff asked to review defendant’s training materials and promised defendant that it would not bring a copyright suit if the materials contained plaintiff’s copyrighted information.   Defendant ultimately gave plaintiff its training materials, but only after signing a nondisclosure agreement requiring that the documents not be used for, among other things, filing a copyright infringement suit.  Two days after receiving defendant’s documents, plaintiff filed a copyright infringement suit.  In response, defendant filed fraud and breach of contract counterclaims alleging that plaintiff was engaged in a broad scheme to leverage its copyrights be gaining the trust of potential infringers through marketing discussions and that the suit breached the nondisclosure agreement between the parties.


Continue Reading Breaking A Promise Not To Sue Is Not Fraud, But It May Be A Breach Of Contract