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Two High Tech Heavyweights Involved in Trade Secret Theft Lawsuit

July 23, 2018

Posted in Intellectual Property

Was it a genuine attempt, with the best of intentions, of a joint venture to benefit both companies, or was it all just a game by one company to gain access to critical information and steal it? Two large, well known companies with complimentary technologies created a joint venture in the past. If the venture was legitimate the companies could’ve helped each other and themselves. But this marriage wasn’t meant to be and one company is accusing the other of theft.

Teradata Corporation, based in San Diego, which helps customers analyze their data, is suing SAP SE, a software company, for alleged trade secret theft and antitrust law violations. SAP offered to create a joint venture combining their services. Teradata claims the offer was done in bad faith meant only to access their trade secrets so it could be stolen to create a competing service. Teradata also accused SAP of trying to force their shared customers to switch to a new SAP product by withholding software updates from Teradata clients.

A trade secret is, under federal law, information (which could be a formula, pattern, compilation, program, device, method, technique, or process) that,

  • Has economic value (now or in the future) because it’s not generally known nor easily discovered by proper means by others who could obtain economic value from its disclosure or use, and,
  • Is protected by reasonable efforts to maintain its secrecy.

Teradata stores multiple copies of data sets on separate servers so they can be analyzed at the same time by many people. SAP has an interface which can organize that type of database. The two companies had a joint venture which started in 2008 that lasted until 2011. Teradata claims during this time SAP stole its trade secrets.

Teradata wants SAP to cease its alleged illegal behavior and pay it monetary damages for the harm they claim has been done. Teradata claims they’ve lost customer relationships and opportunities, profits and market share due to SAP alleged illegal acts. Plaintiff claims an SAP internal auditor found in 2012 the company stole proprietary and confidential information from it.

Often if two companies are exploring the possibility of, or are committed to, a joint venture the two share information, trade secrets and intellectual property they wouldn’t otherwise share in order to decide whether a joint venture would make sense and if so, come up with a way to protect each other’s trade secrets going forward.

Companies involved in discussing a joint venture should have a contract between themselves stating that any trade secrets shared are only to be used for discussing the trade venture, not for any other purpose and copies of any such trade secrets should be destroyed if the joint venture isn’t created.

To be successful with a trade secret theft claim a plaintiff needs to show,

  • The subject matter of the lawsuit qualifies for trade secret protection under the law,
  • Reasonable precautions were taken to prevent the subject matter’s disclosure, and,
  • The information was misappropriated or wrongfully taken.

Using another’s trade secret isn’t necessarily misappropriation. It would be illegal when it’s acquired through improper means or because of a breach of confidence. Depending on the circumstances theft of trade secrets not only could be the subject of a civil case but might also result in criminal charges.

You don’t have to be a corporate giant like the parties in this dispute to be subject to trade secret theft claims. Small companies can be victims of it and they can be wrongly accused of it too. If you have any questions about trade secrets, what to do to prevent their theft or what to do after they’re lost or stolen, contact our office so we can talk about it, I can answer your questions and we can discuss how we can help.