Business Defense From Dishonest Employees Protection of Trade Secrets

Sometimes you must protect your business interests from employees who steal customers, business ideas, methods of operation and more. If you need to protect your business from a dishonest employee call Jerry Berkowitz directly at (610) 889-3200.

Below is a complaint we filed in the Eastern District of Pennsylvania on behalf of a client alleging violation of the Copyright Act.

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

COMPLAINT

Introduction

1. This complaint is brought against the defendants for violations of the Copyright Act of 1976, 17 U.S.C. § 101 et seq., and for the other related claims as set forth below.

-1-Jurisdiction and Venue

2. This Court has original subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1338 because of the copyright claims set forth herein, and supplemental jurisdiction over the other related claims alleged in the complaint pursuant to 28 U.S.C. § 1367.

3. Venue is proper in the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events or omissions giving rise to the plaintiff’s claims occurred within this judicial district.

The Parties

4. The plaintiff,  (“BKI”) is a Pennsylvania corporation with its principal place of business located at Pike,  County,  Pennsylvania.

5. Defendant Brown (“Brown”) is an individual citizen of the Commonwealth of Pennsylvania residing at Road, County, Pennsylvania.

6. Defendant G (“G”) is an individual citizen of the Commonwealth of Pennsylvania residing at Boulevard, County, Pennsylvania.

7. Defendant W  is an individual citizen of the Commonwealth of Pennsylvania residing at Road, County, Pennsylvania

8. Defendant Mark  is an individual citizen of the State of Connecticut residing at Lane, Connecticut.

Background

9. BKI is a well establish manufacturer which has been in business for over fifty years and under the current ownership since 1990. Its products are expressed in a copyrighted catalogue (“The BKI Catalogue”) which had been developed over fifteen years at great cost to BKI. BKI is the author of The BKI Catalogue which is registered with the United States Copyright Office. BKI has numerous proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operation which are not generally known and which are not ascertainable by proper means by other persons and which are of great economic value to BKI.

10. Brown was a salaried employee of BKI employed as its General Manager, and had been employed by BKI and its predecessor for over twenty years until December 15, 2005 when he gave two weeks notice that he was resigning his position with BKI. Brown was the highest executive in the company other than its president.

11. On December 19, 2005 Brown reported for work at the usual time and then walked out.

12. On December 19, 2005 G gave two weeks notice of his resignation from his position with BKI.

13. G was a salaried employee of BKI employed as its Plant Manager, and had been employed by BKI and its predecessor for nineteen years until he resigned his position on December 19, 2005. G was the next highest executive in the company behind Brown.

14. Brown and G, by virtue of their positions in the company, had access to all of BKI’s trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operation.

15. While Brown was employed by BKI and prior to his departure from BKI, Brown removed BKI property from the BKI premises including The BKI Catalogue, job files, drawings, customer proposals, bids, trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operation all to be used in a new business venture with Gochnauer, Welkowitz and Schibanoff competitive with that of BKI.

16. While G was employed by BKI at a time prior to his departure from BKI, G removed BKI property from the BKI premises including tools, The BKI Catalogue, job files, drawings, customer proposals, trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operation all to be used in his new business venture with Brown, W and S.

17. After it became apparent to BKI that Brown and G were going into business together in competition with BKI, G was asked whether he had tried to solicit any employees of BKI to leave the employ of BKI and join Brown and G, and whether he had solicited any of BKI customers to become customers of his new business together with Brown. G refused to answer and left the BKI premises after turning in his keys and company credit cards.

18. After the abrupt departure of Brown and G on December 19th, employees of BKI came forward and stated that they had been solicited by Brown and G to become employed by their new business venture, that customers of BKI were contacted by Brown and G, and that BKI orders were diverted to the defendants’new business venture.

19. After the departure of Brown and G BKI undertook an investigation to determine whether and what assets of BKI may have been diverted by Brown and G to their new venture while they were employed by BKI, and BKI determined that during all or part of 2005 Brown and G, while highly compensated salaried employees of BKI, were surreptitiously working on their new venture together and: a) used cell phones and laptop computers to conduct business for their new venture; b) engaged in efforts to undermine BKI business, production efforts, employee relations and customer relations by not performing their jobs; c) used The BKI Catalogue to price orders for their new venture and to make derivative works and commit other violations of BKI’s exclusive copyright rights; e) used BKI job files, drawings, customer proposals, trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operation for their new venture; f) solicited orders from BKI customers; g) ordered products, machinery and raw materials for their new venture; and h) hired prospective employees based on responses to BKI’s employment advertisements, all for the purpose of starting their new business together with W and S.

20. The defendants intend to formally open their new business on or about January 2, 2006 having used, and by continuing to use The BKI Catalogue, BKI’s job files, drawings, customer proposals, trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods and compilations of operations of operations all acquired by the defendants through breaches by Brown and G of their fiduciaries duties to BKI and through theft, deception and other improper means.

COUNT I

Copyright Infringement In Violation of 17 U.S.C. § 106

21.Plaintiff hereby incorporates by reference paragraphs 1 –20 as though fully set forth herein.

22. The BKI Catalogue contains wholly original writings, drawings, product specifications and descriptive narrative authored by BKI and copyrighted in accordance with the laws of the United States.

23. Plaintiff is the author and sole owner of all right, title, and interest in and to the copyright of The BKI Catalogue pursuant to 17 U.S.C. § 201(a).

24. The defendants infringed the plaintiff’s copyright rights by copying The BKI Catalogue, using it without the permission of the author and making derivative use of The BKI Catalogue in violation of 17 U.S.C. §106.

25. As a direct and proximate result of defendants’actions and in violation of plaintiff’s copyright rights of ownership of The BKI Catalogue, plaintiff has suffered monetary damages.

26. The surreptitious theft, copying, use and derivative use of The BKI Catalogue by the defendants was willful, wanton, outrageous and an intentional effort by the defendants to deprive BKI of its copyright rights in The BKI Catalogue.

WHEREFORE, plaintiff demands that judgment be entered in its favor and against the defendants as follows:

1. That the defendants and their agents, servants, employees, attorneys, confederates, related companies, and all other persons acting for, with, by, through or under them be enjoined from:

a. infringing on plaintiff’s copyright;

b. using, copying, disseminating, transmitting, and/or sharing The BKI Catalogue and any reproduction or colorable imitation or derivative of The BKI Catalogue for any purpose;

c. committing any acts calculated to cause any person or entity to believe that the The Catalogue or any derivative belongs to the defendants;

d. committing any acts calculated to cause any person or entity to believe that plaintiff is affiliated with the defendants; and from

e. otherwise violating any rights of plaintiff’s copyright ownership in The BKI Catalogue.

2. That the defendants be ordered to pay to plaintiff statutory damages pursuant to 17 U.S.C. § 504 as the result of defendants’ copyright infringement and unfair competition, and to account for and pay to plaintiff all gains, profits and advantages derived by the defendants as the result of their copyright infringement.

3. That the defendants be ordered to pay plaintiff punitive damages for their willful, wanton and outrageous actions.

4. That defendants be required to recall and account for all copies of The BKI Catalogue and all derivative works thereof.

5. That all copies of The BKI Catalogue and derivatives be purged from all of defendants’computer systems.

6. That the defendants be ordered to compensate plaintiff for all reasonable attorneys’fees, interest and costs.

7. That the Court grant such other relief that the Court deems just and reasonable under the circumstances.

COUNT II Breach of Fiduciary Duty

27. Plaintiff hereby incorporates by reference paragraphs 1 through 26 as though fully set forth herein.

28. Brown and G were high level trusted employees of BKI with access to The BKI Catalogue, and all of BKI’s job files, drawings, customer proposals, trade secrets, lists of employees, employee performance reviews, applications for employment, customer lists, proprietary formulas, methods, techniques and processes for its custom finishes and other methods of operations as well as all of the company’s confidential information, competitive and internal information concerning the company, and each had a fiduciary duty to at all times act in the best interests of BKI.

29. Brown and G breached their fiduciary duties to BKI.

30. As a direct and proximate result of their individual and collective breaches, Brown and G have caused financial damage to BKI and each have been unjustly enriched.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown and G for disgorgement of all salary, benefits, bonuses and remuneration of every type and kind paid by BKI to Brown and G during 2005 and any prior periods for which they were in breach of their fiduciary duties to BKI.

COUNT III Conspiracy

31. Plaintiff hereby incorporates by reference paragraphs 1 through 30 as though fully set forth herein.

32. W was a customer of BKI who from time to time purchased product from BKI, and BKI product in W’s office is featured in BKI’s promotional material.

33. S is a dealer located in Connecticut who had been a purchaser of BKI cabinetry for many years.

34. W and S became acquainted with Brown and G as a result of their business dealings with BKI over the years.

35. Brown and G enlisted W and S to provide financial support and other consideration to enable Brown and G to use their positions with BKI in their scheme to steal BKI’s business.

36. W and S financed and encouraged Brown and G to remain employed by BKI, and induced and encouraged Brown and G to breach their fiduciary duty to BKI, and use their positions of trust to plan their new business venture, divert BKI assets, trade secrets, confidential information, proprietary business methods, employees, and customers to their new venture, and plan their coordinated departure all with the intention to sabotage and steal BKI’s business.

37. The wrongful acts of Brown and G were induced, encouraged, supported and promoted by W and S, who together with Brown and G met, planned and schemed together while Brown and G were working for BKI, during the working day, to execute their scheme to deprive BKI of its business.

38. The plans, acts and intentions of Brown, G, W and S were willful, wanton, malicious and pernicious and done in reckless disregard and indifference to the rights of BKI.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT IV Tortious Interference With Contractual Relations

39. Plaintiff hereby incorporates by reference paragraphs 1 –38 as though fully set forth herein.

40. The defendants, through the actions of Brown and G, and at the behest of W and S, tortiously interfered with BKI’s customers by inducing those BKI customers to become customers of the defendants, and cease being BKI customers, while Brown and Gr were employed by BKI and on the BKI premises.

41. The defendants, through the actions of Brown and G, and at the behest of W and S, tortiously interfered with BKI’s relationships with its employees by inducing those employees to become employees of the defendants, and cease being BKI employees, while Brown and G were employed by BKI and on the BKI premises.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT V Tortious Interference with Prospective Advantage

42. Plaintiff hereby incorporates by reference paragraphs 1 –41 as though fully set forth herein.

43. The defendants, through the actions of Brown and G, tortiously interfered with BKI’s prospective customers by inducing those prospective BKI customers to become customers of the defendants, and cease being BKI customers, while Brown and G were employed by BKI and on the BKI premises.

44. The defendants, through the actions of Brown and G, and at the behest of W and S, tortiously interfered with BKI’s prospective relationships with potential employees who had applied for jobs with BKI by inducing those potential employees to become employees of the defendants, while Brown and G were employed by BKI and on the BKI premises.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT VI Violation of Uniform Trade Secrets Act

45. Plaintiff hereby incorporates by reference paragraphs 1 –44 as though fully set forth herein.

46. The defendants, through improper means and in a willful and malicious manner, have violated Pennsylvania’s Uniform Trade Secrets Act, 12 Pa.C.S.A. § 5301 et seq. (the “Uniform Trade Secrets Act”) contrary to the interests of BKI.

47. The defendants are liable to BKI for monetary damages and exemplary damages pursuant to 12 Pa.C.S.A. § 5304 for their violation of the Uniform Trade Secrets Act.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT VII Conversion

48. Plaintiff hereby incorporates by reference paragraphs 1 –47 as though fully set forth herein.

49. Brown and G converted the property of BKI by their surreptitious removal of tools, catalogues, samples, trade secrets, confidential information, business methods and other assets from BKI’s premises, tangible and intangible, through improper means and in a willful, malicious and pernicious manner done in reckless disregard and indifference to the rights of BKI.

WHERFORE, plaintiff demands that Brown and G be ordered to return to BKI all of the assets of BKI that Brown and G converted and together with the other defendants pay damages to BKI, jointly and severally, for the fair value of all assets of BKI which were converted, plus interest, cost and attorney’s fees to the extent permitted under Pennsylvania law, plus punitive damages in amount sufficient to punish the defendants for their willful, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT VIII Inducement of Breach of At-Will Employment

50. Plaintiff hereby incorporates by reference paragraphs 1 –49 as though fully set forth herein.

51. W and S induced Brown and G to leave the employ of BKI in order to damage BKI’s ability to conduct business and to reveal to them BKI’s trade secrets and confidential information.

52. Brown, G, W and S induced employees of BKI to leave

the employ of BKI in order to damage BKI’s ability to conduct business.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT IX Fraud

53. Plaintiff hereby incorporates by reference paragraphs 1 –52 as though fully set forth herein.

54. The theft of trade secrets and confidential information by the defendants, the misrepresentations of Brown and G to BKI, Brown’s and G breach of their fiduciary duty to BKI, and the defendants use of BKI’s trade secrets and confidential information to compete with BKI constitutes fraud.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

COUNT X Procuring Information by Improper Means

55. Plaintiff hereby incorporates by reference paragraphs 1 –54 as though fully set forth herein.

56. The defendants, for the purpose of advancing their business interests, procured by improper means information about the business of BKI, and caused harm to BKI by their possession, disclosure and use of such information.

WHEREFORE, plaintiff demands injunctive relief (as set forth above in Count I) and judgment in its favor and against Brown, G, W and S, jointly and severally, for all damages sustained by BKI, plus punitive damages in an amount sufficient to punish the defendants for their willful, wanton, malicious and pernicious acts done in reckless disregard and indifference to the rights of BKI.

Respectfully submitted, BERKOWITZ · KLEIN LLP