Intellectual Property Law

The Pacific Coast Business Times is reporting that two medical device makers who focus on aesthetic or cosmetic procedures (however, they are not competitors) are locked in a battle over some files that an employee of one company emailed to an employee of another company. The complaint, filed in Santa Barbara County Superior Court, alleges that Mark Kelly, a consultant for Mentor Corporation emailed files to Jamie Diggs, a Den-Mat Holdings employee, after Diggs had requested certain files. The article is here.

Mentor alleges that the emailed files contained Mentor’s trade secrets and that many were stamped “confidential” or “trade secret” at the top.

Key graph:

“Before Kelly sent the contested message, Mentor had installed a software program to monitor e-mail for potentially sensitive file attachments making their way outside the company, Mentor said in court filings.

“The program flagged as suspicious Kelly?s e-mail to Diggs. The message was then forwarded all the way up to the executive suite, Mentor said in court declarations.”

I haven’t spoken much about this type of software, but with the increasing amount of trade secrets litigation stemming from employee actions and misappropriation, it could make sense to add it as part of your trade secrets protection plan on at least two levels: (1) it is further evidence in court that you were actively seeking to protect your trade secrets and to keep them from becoming generally known to the public, or to a competitor; and (2) more practically, a company might be able to detect a trade secrets leak early on and prevent altogether the need for litigation (and its attendant costs) by taking decisive action early on.

There are some good companies that make such software. I will post later on some of them.

An interesting issue that I am sure will come up in this litigation is the degree of competitive advantage the documents provided to Den-Mat since the companies are not necessarily competitive with each other. The article states that the documents at issue contained “quality management policies, various accounting forms and policies, corporate procedures for expenditures and dispositions, human resources policies, corporate policies regarding inventory, computer system policies, and codes of conduct and ethics.” While much of this could be considered trade secret because it would allow a competitive advantage between competitors, it is not so clear when the companies are not competitors. It could raise interesting issues. We will follow this litigation as it develops.