Intellectual Property Law

Taking of Correspondence and Bid Information Needed for Time Sensitive Construction Projects Allows Trade Secret Claims to Proceed to Trial

The One Sentence Summary: A project manager's taking of binders of correspondence and bids for time sensitive construction projects created questions of fact requiring a trial on trade secret, interference with prospective economic advantage and unfair competition claims by the former employer against the new employer.

California Sixth Appellate District Holdings:

• The plaintiff had presented sufficient evidence to avoid summary judgment. The binders of correspondence and bids were more than just client lists and could be trade secrets with independent economic value. Even though much of the information in the binders came from third party subcontractors who were willing to submit new bids to another company, the compilation of work present in these binders was a "completed puzzle" that had independent economic value.
• Defendant's argument that the projects that moved with the former project manager would have moved simply due to the relationship with the project manager could not be accepted on summary judgment. Material questions of fact existed as to whether the need for the projects to proceed without delay would have allowed the former employer construction company to keep the projects absent the taking of project information that allowed the new employer to commence the projects without delay.
• There were fact questions as to whether the information in the binders could be recreated through "reverse engineering." There was evidence that the actual "reverse engineering" through the collection of new subcontractor bids was a slow process that took longer than the time available to meet the customer needs for proceeding without delay.
• Trade secret misappropriation claims could proceed despite claims that the new company did not use the binders because wrongful acquisition of a trade secret even without use can be misappropriation.
• Interference with prospective economic advantage and unfair competition claims should be tried in light of evidence that the customers would not have switched if the project manager had not taken the information necessary to start the jobs without delay.

Full post as published by IP Law Observer on October 17, 2007 (boomark / email).