Tech executive avoids trade secret claims

Fired by his employer, an executive at a high-tech marketing company sent “inflammatory text messages” threatening to “steal” its customers and “poach” its employees before he went to work for a competitor several weeks later.

The executive left with a personal external hard drive that contained files belonging to his former employer. A forensic expert hired by the old employer discovered its “deleted” files after that company sued the executive and his new employer.

In a climate in which the two companies competed for business and collaborated for certain global clients, the one that sued was hard-pressed to nail down exactly what the executive took and exactly how the plaintiff was harmed.

The case was “heavily litigated,” according to the trial court, but the employer could not link any particular information the employee had to any advantage his new employer gained.

An Alexandria federal judge granted summary judgment to the executive and his new company, leaving the executive facing only a claim for conversion and a sanction for a false statement about whether he had kept company information.

Litigation threat

When Integrated Direct Marketing LLC learned that Drew May, its former executive vice president for data integration, had been hired by Merkle Inc.’s “High Technology/B2B Vertical Markets Group, it went on alert.

It sent letters to May’s lawyer and to Merkle’s CEO stating it was “closely monitoring” the situation and would “aggressively pursue legal action” against May and Merkle if it learned of any breach of the confidentiality agreement May signed shortly after he was hired by IDM.

IDM’s counsel followed up with Merkle’s general counsel, saying IDM was concerned about May’s work with Dell, a client of both companies. The Merkle GC talked to May, who said he had backed up personal information from his IDM computer onto a personal external hard drive, and he was not sure, but he “did not think he had any IDM information on his personal hard drive.”

“As it turned out, May had in fact retained a large amount of IDM files on his personal external hard drive following his departure from IDM,” Judge Leonie M. Brinkema wrote in her Sept. 8 opinion in Integrated Direct Marketing LLC v. May (VLW 015-3-449).

IDM’s computer expert hired determined that May still possessed many IDM files long after he was fired from IDM and that he later attempted to delete those files from his external hard drive on four separate occasions, including twice after IDM filed its lawsuit.

IDM identified several aspects of Merkle’s work as allegedly benefiting from trade secrets misappropriated from IDM.

IDM claimed May disclosed IDM’s pricing information in connection with Merkle’s work on a proposal for Google work in Brazil, and that he set up a conference call to allow an IDM employee to share information with a Merkle employee about how to use a commercially available software package to identify similar records from multiple databases.

IDM also alleged disclosure of a trade secret related to work that both companies collaborated on for their mutual client, Dell, which involved customer data integration for blanking middle names to resolve issues with printing out contacts from a database for a marketing campaign.

IDM further claimed May disclosed the names of four IDM data vendors in connection with a Merkle proposal to Samsung, and shared information about IDM’s “New Business Trigger Program.”

Brinkema whittled away those claims in sequence, explaining why the information alleged in each instance was not shared, or not secret or not shown to be useful to Merkle or harmful to IDM.

Blanket claim

“Essentially, it is IDM’s position that May and Merkle should be liable for all of the IDM information retained on May’s hard drive regardless of the lack of evidence that any of that information was a trade secret and the lack of evidence that any information was passed on to Merkle or used by May, Merkle or third parties to their benefit,” Brinkema wrote.

“IDM has had many months of discovery in this matter and still cannot point to direct or circumstantial evidence that May or Merkle actually used and benefitted from particular confidential or trade secret information belonging to IDM,” Brinkema said.

She granted summary judgment to both defendants on the trade secret misappropriation claims, and to Merkle on all counts of the complaint.

Brinkema said IDM may try its conversion claim under Arkansas law against May, but could only seek nominal damages, as IDM failed to present evidence of any actual damages.

The court determined that May’s statement that he “did not keep any of IDM’s information” was false.

“May’s lack of candor regarding his retention of IDM files, coupled with his inflammatory text messages regarding stealing IDM’s clients and employees, poisoned the well for settlement purposes and caused unnecessary additional litigation, including necessitating IDM filing both its Spoliation Motion and Motion for Sanctions,” Brinkema said.

She awarded IDM its costs associated with hiring a computer forensic expert and its reasonable attorney’s fees and costs in pursuing the sanctions motion.

A jury trial is set for Nov. 16 in Alexandria federal court, according to court records.