Trade secrets, such as customer lists, marketing plans and product formulas are what differentiates one company from another. They allow a company to be competitive and if they’re lost to another company, it can be a severe setback. A lawsuit involving two companies in the human breast milk products business are an example of the kind of legal fight that can take place over trade secrets, according to the Portland Business Journal.
Prolacta Bioscience Inc., located in City of Industry, is suing Medolac Laboratories founder Elena Medo in Orange County Superior Court because she allegedly violated California’s Uniform Trade Secrets Act and a nondisclosure agreement. Medo founded Prolacta in 1999, became its first CEO, raised $23 million in venture capital funding then left in 2009 and started Medolac, which is based in Lake Oswego, Oregon.
The lawsuit claims that Medo “had a falling out and a parting of the ways” with Prolacta and while there she had access to confidential data and trade secrets including customer lists. Medo responded to the lawsuit with a press release stating it was frivolous and an attempt to limit competition.
After leaving Prolacta Medo started a public benefit corporation, Medolac. Its stated goal is ending the shortage of human donor milk by using high volume professional food processing methods. Last year Medolac introduced Co-Op Donor Milk, the first commercially sterile human breast milk.
Theft of a trade secrets is considered “misappropriation” under California law, which means the acquisition of a trade secret by someone who knows, or has reason to know, the trade secret was acquired by improper means (such as by breaching a nondisclosure agreement). It can also include the disclosure or use of a trade secret without consent by someone who used improper means to acquire knowledge of the trade secret.
Remedies can include,
- A court order (injunction) to prevent the release of the trade secret or that a reasonable royalty be paid for use of those secrets,
- Financial compensation for the loss caused by the theft or the profits generated by the party stealing the trade secrets, and
- Punitive damages for up to twice the amount of any award.
If you want to protect your company against the release of trade secrets, your company has been the victim of such a disclosure or has been accused of improperly obtaining trade secrets, contact our office so we can talk about your business, the trade secrets at issue and the best ways to protect your company’s interests and legal rights.