K&L Gates Prevails in Electronics Trade Secret Action Following Jury Trial

4 September 2019
Los Angeles - Lawyers from the Los Angeles office of global law firm K&L Gates LLP recently obtained a judgment in favor of clients Schneider Electric USA, Inc., Veris Industries, LLC, and Pacific Transformer, who were named as defendants in a trade secret action that proceeded through jury verdict.

The case was filed in September 2016 by plaintiff Vitec Electronics Corporation, who alleged that it owned a trade secret in certain drawings for current sense transformers, electronics parts that Vitec built for use in Schneider’s and Veris’ power management systems. Vitec claimed that Schneider and Veris improperly disclosed to Pacific Transformer – a competitor of Vitec – the alleged trade secret drawings in an effort to move the supply of those transformers from Vitec to Pacific Transformer. After the pleadings were at issue, Vitec pursued two sets of claims: its trade secret misappropriation claim and two claims for breach of contract.

In January 2019, the defendants obtained summary adjudication against Vitec on the contract claims, leaving only the trade secret misappropriation claim for trial. At trial, the plaintiff obtained a jury verdict for approximately $216,000 on the basis that the drawings of the current sense transformers constituted a trade secret, and that the defendants’ conduct justified damages based on the notion that they obtained a “head start” by using the drawings to shift the supply from Vitec to Pacific Transformer.

After trial, however, the defendants successfully moved for judgment notwithstanding the verdict, with the court agreeing with the defendants that the drawings at issue did not possess independent economic value pursuant to the trade secret statute and therefore did not constitute a trade secret. The court found compelling the defendants’ reliance at trial on deposition testimony from Vitec’s engineer, who admitted that the alleged trade secret drawings would not materially affect the time it takes to reverse-engineer the current sense transformers depicted in the drawings. The court also found compelling the defendants’ use of expert testimony to explain the lack of value in the drawings. Based on the evidence, and no contrary substantial evidence, the misappropriation claim failed, and judgment was entered for the defendants.

The defendants were represented by Los Angeles partner and lead trial counsel Seth Gold, who was assisted by Los Angeles partner Kevin Asfour and associates Saman Rejali and Jonathan Kintzele.

Gold commented: “The result we secured for our clients was gratifying in several respects, but among those two stand above the rest. First, of course, the judgment completely vindicates our clients. Second, while our path through the judicial system was somewhat protracted, ultimately the system worked.”
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