A New London Connecticut Superior Court jury awarded an $839,423 verdict in November 2019, involving theft of trade secrets for a $70 million U.S. Navy underwater drone project. This case, LBI, Inc. v. Sparks, et al., KNL-cv12-6018984-S, is a classic example of the blatant theft of an employer’s confidential and proprietary information that is so easily traceable to electronic files – and the costly consequences for the defendant employer’s complicity in that trade secret misappropriation.
Plaintiff LBI, Inc., a small Groton-based research and design development company, was to design, build and test the Navy’s underwater drones, and LBI partnered with Defendant Charles River Analytics, Inc. to do the computer analytics. During the project, Defendant hired two of the Plaintiff’s employees who were subject to Plaintiff’s non-compete and non-disclosure agreements.
Plaintiff LBI proved that one of its former employees who was hired by the Defendant CRA had uploaded thousands of Plaintiff’s files to his personal Dropbox cloud-based file storage account while he worked for LBI. Soon after joining the Defendant CRA, he shared the uploaded materials with CRA, including accounting and engineering files, photographs and related designs and renderings used to fabricate and manufacture the unmanned vehicle buoys for the Navy underwater drone project.
The jury agreed with the Plaintiff LBI’s argument that the Defendant CRA began as a partner in the project, but became a competitor and committed tortious interference with the non-compete and confidentiality restrictive covenants between the Plaintiff LBI and its employees; and also, that the Defendant violated the Connecticut Unfair Trade Practices Act.
Confidential and proprietary trade secret information misappropriated by employees to their personal electronic devices and files is easily traced. Before and after hiring employees from a competitor, the hiring employer must scrutinize the source of what may be confidential and proprietary materials that the hired employee has misappropriated and is wrongfully misusing. Otherwise, the costly consequences for the malfeasant competitor-employer and former employee who steal those trade secrets are well justified.