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California jury awards millions for trade-secret theft

News and Notes Focused on the 3 Public Faces of IP Law

  • Brand Image Protection - Trademark Law
  • Visual Image Protection - Copyright Law
  • Personal Image Protection - Right of Publicity Law

The Image Protection Law blog has been created in order to share stories and information on the legal aspects of: 1) the marketplace reputation of a company or product captured in its trademark, 2) published or publicly-displayed artwork, photography, and any created visual design, and 3) use of a person's photograph or likeness for product promotion or other commercial purposes.

The "IP3" share at least one thing in common: Image is everything. In these posts let's look at what that means in the realm of intellectual property in the news, but let's also be prepared to explore if there's something more beyond "everything." Don't forget, the intellectual in "intellectual property" doesn't mean smart or brainy, although by nature true creators often are. The word is used to refer to any creation, i.e., a "product of the mind." While this blog will be regularly updated, you are encouraged to share your thoughts on these posts.

In recent posts, we have discussed the difficulty of protecting trade secrets in this age of rapidly advancing technology. It is easier than ever for an employee or contractor to digitally abscond with valuable commercial secrets

On August 10, a Superior Court jury in Santa Clara County awarded $66 million to Lumileds, a San Jose LED lighting company in a trade secret lawsuit. According to The Mercury News, the complaint alleges that Lumileds formerly employed Chinese citizen Gangyi Chen as a research engineer, who took trade secrets and gave them to his current employer, Elec-Tech International, known as ETI, a Chinese technology company. Chen is now reportedly an ETI vice president.

Defendants in the suit are ETI, Chen and ETI's CEO. 

ETI reportedly recruited Chen, and the parties entered into an employment contract while Chen was still working for Lumileds. The Mercury News cites the suit for the allegation that he took "thousands of files containing company secrets." 

Nature of Jury Award 

The $66 million award was the jury's estimate of how much it would have cost ETI to develop the technology itself, instead of through misappropriation of Lumileds' research, according to a Lumileds' press release on Business Wire. Since the figure represents neither damages in the form of lost sales of Lumileds nor profits illicitly gained by ETI, such an award is called "unjust enrichment." The press release also says that ETI was already paying Chen while he was still working for Lumileds. 

The Mercury News article says that the defendants deny the allegations of trade secret theft and will appeal. Their law firm is quoted as asserting that the technology at issue is "generally known and cannot be claimed to be propriety ..."    

The legal community will keep an eye on this appeal with interest.

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