Can You Sue for Stolen Data That’s Not a Trade Secret? Court Ruling Clarifies

In today’s fiercely competitive business environment, safeguarding trade secrets and confidential information has never been more crucial. A recent legal clash between Brand Services, an industrial scaffolding company, and Irex Corporation, a competitor, illustrates the challenges of protecting intellectual property in the digital age. This blog post examines the dispute, the key legal arguments presented, and the court’s ruling on the Louisiana Uniform Trade Secrets Act (LUTSA) and common law conversion claims.

The Alleged Misappropriation

Brand Services accused its former employee, James Stanich, of stealing trade secrets when he joined Irex. Stanich allegedly transferred sensitive files from his work computer, including information about Brand Services’ proprietary software used for invoicing and job tracking. Brand Services claimed that Irex leveraged this stolen information to develop similar software, giving them an unfair competitive advantage.

The Legal Battle Begins:

Brand Services filed a lawsuit against Irex, asserting claims under LUTSA and for common law conversion. The case was further complicated by discovery disputes, with Brand Services alleging that Irex failed to produce requested documents, even after the discovery deadline.

Court Rulings and Appeal:

• Summary Judgment for Irex: The district court initially granted summary judgment in favor of Irex on Brand Services’ LUTSA claim, stating that Brand Services failed to provide sufficient evidence of damages. The court also ruled that LUTSA preempted Brand Services’ conversion claim.

• Brand Services’ Appeal: Brand Services appealed, arguing that the district court erred in its rulings and that it should have considered their pending discovery motion before granting summary judgment.

• Court of Appeals’ Decision: The Court of Appeals partially reversed the district court’s decision. It held that Brand Services had presented enough evidence of damages to survive summary judgment on its LUTSA claim. It also clarified that while LUTSA preempts common law conversion claims related to trade secrets, it does not preempt such claims for confidential information that doesn’t fall under the definition of a trade secret.

Key Takeaways

This case emphasizes the importance of robust data security measures to protect trade secrets and confidential information. It also underscores the complexities of navigating trade secret litigation, particularly in relation to proving damages and understanding the interplay between statutory and common law claims.

Additional Sources: BRAND SERVICES, L.L.C., v. IREX CORPORATION

Written by Berniard Law Firm

Other Berniard Law Firm Articles on Business Disputes: Unfair Trade Practices in Louisiana and Home Foreclosure and Can You Sue an Out-of-State Employer in Louisiana? Personal Jurisdiction Limits