Virginia Federal Jury Awards $26 Million in Trade-Secret Case
A Virginia Federal Jury in Alexandria recently awarded a mining tire design development company $26 million against two foreign companies for conspiracy to steal trade secrets and other related claims.
This case involves the alleged theft and misappropriation of tire designs. The plaintiff in this case, Tire Engineering and Distribution, LLC (“TED”), designs, develops and distributes highly specialized tires for underground mining vehicles. All of TED’s underground mining tires were designed and developed by the company’s founder and Chief Executive Officer, Jordan Fishman.
According to TED’s allegations, large tire companies, such as Goodyear and Michelin, abandoned the underground mining tire market and TED became the leader in this specialized area. TED took precautions to safeguard its one-of-a-kind designs and markings for its tires, its customer lists, pricing information, production schedules, and other proprietary and confidential trade secrets. Moreover, Fishman obtained copyrights for the tire designs, a trademark for one of the tire’s distinctive names, and had a patent pending for a special tire design.
TED’s trouble began when it employed a long-time acquaintance of Fishman, Sam Vance, as marketing manager to sell its underground mining tires. Vance was entrusted with access to all of TED’s trade secrets and other confidential business information that only Fishman and one other employee had access to. According to the plaintiff, Vance began working with TED’s China-based joint venture partner and tire manufacturer to cut plaintiff out of the business. The China-based company received manufacturing specifications for plaintiff’s tires and customer and pricing information, and stopped shipping tires for TED.
Moreover, Vance also met with principals of a Dubai-based international tire distributor in Richmond, Va and offered to provide plaintiff’s customer lists, pricing information and the blueprints for molds of the tires. Within a year, the Dubai company was distributing an almost full line of tires using the stolen designs and other proprietary information.
We’ve previously discussed the issue of employee theft of trade secrets on Virginia Business Law Update. As we noted, misappropriation of trade secrets cases are often brought not only against the former employee who took the trade secrets but also against the company who hired the employee and may have benefited from use of the trade secret – as was done in this case. The plaintiffs in this matter also separately pursued a case against Vance in Florida and prevailed. But, unfortunately for TED, this judgment was vacated on jurisdictional grounds since Vance never lived in Florida. Now, Vance is living in China, which makes collection of any monies from him appear unlikely.
What Is Intellectual Property?
.jpg)
No matter what product your business makes or service it provides, it is likely that your business is frequently using and creating a great deal of intellectual property. So, what is intellectual property? Intellectual property, sometimes referred to by its initials, IP, refers to creations of the human mind that are protected by one or both of state or federal law in a fashion similar to real property (land) or personal property (an automobile). Inventions, literary and artistic works, business secrets, and symbols, names, images, and designs used in commerce are all considered intellectual property. The four forms of intellectual property are patents, copyrights, trademarks and trade secrets.
- Patents provide the right to exclude others from making, using and selling or offering for sale an invention that has been patented.
- Copyrights protect an expression of an idea reduced to a tangible form. For example, a work of art, this blog on intellectual property, a statue or a photograph is protected by copyright.
- A trademark protects a product or service by its name in such a way as to avoid confusion in the marketplace of the source of the product or services.
- A trade secret refers to a secret that one might use in their trade or business but which would provide an unfair advantage to another if taken. An example is the process and formula for making a special soda beverage or a recipe for cookie dough.
These four components all make up what is known as intellectual property. The Constitution defines what may be protected by federal law, namely, patents, copyrights and trademarks. Trademarks may also be registered in a state and both trademarks and trade secrets are regulated by state law. One can only register a copyright or apply for a patent through the federal government and can only enforce their registered copyright or issued patent in federal court. Though it may seem abstract at times, it is important to note that intellectual property is just as valuable as tangible property and is regulated by the federal and governments in this manner.
Stay Connected with H. Scott Johnson Jr.
Stay Connected with Angela H. France