Ownership Not Necessary to Launch Trade Secrets Claim into Litigation

• Author: Mark A. Flores
• Pages: 4-5

Published in Litigation News Volume 46, Number 1, Fall 2020. © 2 020 by the American Bar A ssociation. Repro duced with permissi on. All rights reser ved. This informati on or any portion the reof may not be copie d or disseminated in any form

or by any means or stored i n an electronic database o r retrieval syst em without the expr ess written co nsent of the American B ar Association.

By Mark A. Flores ,

Litigation News

Associate Editor

© Photo illustrat ion by Elmarie C. Jar a / Getty Images

n ex-employee’s attempt to

take condential rocket-

related infor mation from

his former employe r

blasted into litigation

that provides fur ther clarication on

the denition of a t rade secret and

whether a plainti ff must own the

information to ma ke a claim under a

state’s uniform trade se crets act. ABA

Section of Litig ation leaders say that

the decision serve s as an important

reminder for practit ioners to closely

analyze issue s of ownership and pos -

session when addressing the appli-

cation of state trade sec ret laws to

proprietary commerc ial information.

An Employee Lifts

Hydraulic Information

In Advanc ed Fluid Systems, Inc . v.

Huber, an employee of Advanced

Fluid Systems, In c. (AFS), allegedly

downloaded condential information

related to a hydraulic system f rom

the company’s server to use for hi s

own benet. A FS had developed the

information unde r a contract with

the Virgin ia Commercial Space Flight

Authority (VCSFA), which operate d a

NASA rocket launch faci lity. Pursuant

to the contract, A FS ceded legal own-

ership of the condent ial information

to VCSFA. But AFS sta mped the infor-

mation as condenti al and proprietary,

and stored it on its own computers,

which the employee had acces s to.

A new entity calle d Orbital ac-

quired control of the laun ch system

from VCSFA. Orbital bid out work for

the system. The employee a llegedly

fed some of AFS’s proprieta ry infor-

mation to one of AFS’s competitors to

help it secure work from Orbital. T he

employee also formed his ow n com-

pany and alleged ly used AFS’s propri-

etary in formation to secure h is own

contract with Orbita l for work on the

launch system.

AFS led a lawsu it under the

Pennsylvania Uni form Trade Secrets

Act (PUT SA) and other state laws

against its forme r employee and the

competitors that bene ted from the

use of AFS’s trade secre ts. In the U.S .

District Cou rt for the Middle District

of Pennsylvania, th e defendants ar-

gued that AF S could not state a claim

under PUTSA b ecause AFS had relin-

quished ownership of the p roprietary

Ownership

Not

Necessary

to Launch

Trade Secrets

Claim into

Litigation