August 07, 2008
By Jay G. Taylor
In Ideal Aerosmith Inc. v. Acutronic USA, Inc., 87 U.S.P.Q. 2d 1341, the United States District Court for the Western District of Pennsylvania found that a valid claim of trade secret misappropriation had been plead and denied a motion to dismiss where the defendant allegedly received the trade secrets through misdirected emails. The defendant allegedly read the emails and used the trade secret information to compete against plaintiff.
In this case, a third party, Carco Electronics, which was in the same business as the parties, went into bankruptcy and was required by the bankruptcy court to market and sell its assets free and clear of liens. Plaintiff Ideal entered into an asset purchase agreement with Carco and took possession of its operations and hired most of its employees to continue Carco's operations to preserve its assets pending approval of its purchase sale by the bankruptcy court. The former Carco employees continued to use their Carco email addresses in the continued operation of the Carco business. Subsequently, however, defendant Acutronic outbid Ideal for the assets in bankruptcy court and acquired Carco's assets. Ideal tendered the Carco facilities to Acutronic the next day and all of the former Carco employees vacated the Carco premises and moved to Ideal's offices.
Ideal immediately assigned the former Carco employees with new email addresses, however, some of those employees and third parties doing business with Ideal inadvertently continued to use the old Carco email addresses in transmitting emails regarding Ideal's business. Those misaddressed emails, some of which contained sensitive trade secret information, were received by Acutronic on the old Carco servers and redirected to Acutronic servers. Acutronic allegedly read the emails, disclosed the emails to numerous Acutronic employees and used the information in those emails to compete against Ideal. Acutronic did not disable the old Carco servers, did not inform the senders that the old email addresses were no longer in use, and did not forward the email to the intended recipient.
When discovered, Ideal sued Acutronic for trade secret misappropriation under the Pennsylvania Uniform Trade Secrets Act (PUTSA). Acutronic moved to dismiss the trade secret claim on the basis that it had not acquired the trade secrets though any misconduct on its part and therefore there was no misappropriation of those trade secrets. The court found that under the PUTSA, misconduct is not required. Rather, the court found that any use or disclosure of information that Acutronic knew or had reason to know was a trade secret without consent of the owner of the trade secret can be a violation of PUTSA.
Thus, the message from this case is recipient beware. Receipt of misdirected email of another that arguably contains confidential business information should be treated very carefully to avoid possible liability. Such emails should be forwarded to the correct recipient if that address is known, and the sender should be informed of error by reply email so that the error can be avoided in the future. Any use or disclosure of any possible confidential information contained in such a misdirected email should be avoided as it could subject mistaken recipient to liability for trade secret misappropriation.
Jay Taylor is a Partner with Ice Miller LLP focusing his efforts on patent, trademark, copyright, and trade secret litigation.
In Ideal Aerosmith Inc. v. Acutronic USA, Inc., 87 U.S.P.Q. 2d 1341, the United States District Court for the Western District of Pennsylvania found that a valid claim of trade secret misappropriation had been plead and denied a motion to dismiss where the defendant allegedly received the trade secrets through misdirected emails. The defendant allegedly read the emails and used the trade secret information to compete against plaintiff.
In this case, a third party, Carco Electronics, which was in the same business as the parties, went into bankruptcy and was required by the bankruptcy court to market and sell its assets free and clear of liens. Plaintiff Ideal entered into an asset purchase agreement with Carco and took possession of its operations and hired most of its employees to continue Carco's operations to preserve its assets pending approval of its purchase sale by the bankruptcy court. The former Carco employees continued to use their Carco email addresses in the continued operation of the Carco business. Subsequently, however, defendant Acutronic outbid Ideal for the assets in bankruptcy court and acquired Carco's assets. Ideal tendered the Carco facilities to Acutronic the next day and all of the former Carco employees vacated the Carco premises and moved to Ideal's offices.
Ideal immediately assigned the former Carco employees with new email addresses, however, some of those employees and third parties doing business with Ideal inadvertently continued to use the old Carco email addresses in transmitting emails regarding Ideal's business. Those misaddressed emails, some of which contained sensitive trade secret information, were received by Acutronic on the old Carco servers and redirected to Acutronic servers. Acutronic allegedly read the emails, disclosed the emails to numerous Acutronic employees and used the information in those emails to compete against Ideal. Acutronic did not disable the old Carco servers, did not inform the senders that the old email addresses were no longer in use, and did not forward the email to the intended recipient.
When discovered, Ideal sued Acutronic for trade secret misappropriation under the Pennsylvania Uniform Trade Secrets Act (PUTSA). Acutronic moved to dismiss the trade secret claim on the basis that it had not acquired the trade secrets though any misconduct on its part and therefore there was no misappropriation of those trade secrets. The court found that under the PUTSA, misconduct is not required. Rather, the court found that any use or disclosure of information that Acutronic knew or had reason to know was a trade secret without consent of the owner of the trade secret can be a violation of PUTSA.
Thus, the message from this case is recipient beware. Receipt of misdirected email of another that arguably contains confidential business information should be treated very carefully to avoid possible liability. Such emails should be forwarded to the correct recipient if that address is known, and the sender should be informed of error by reply email so that the error can be avoided in the future. Any use or disclosure of any possible confidential information contained in such a misdirected email should be avoided as it could subject mistaken recipient to liability for trade secret misappropriation.
Jay Taylor is a Partner with Ice Miller LLP focusing his efforts on patent, trademark, copyright, and trade secret litigation.
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