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Catapult Communications Corp. v. Foster

July 30, 2010

CATAPULT COMMUNICATIONS CORP., PLAINTIFF,
v.
LEWIS N. FOSTER; DEFENDANT.



The opinion of the court was delivered by: Wayne R. Andersen United States District Judge

Wayne R. Andersen District Judge

MEMORANDUM OPINION AND ORDER

This matter is before the Court on Defendant Lewis N. Foster's motion [172] for summary judgment. Plaintiff Catapult Communications Corp. has filed a three count complaint against Defendant, a former employee of Plaintiff, alleging misappropriation of trade secrets, breach of contract, and violation of the Computer Fraud and Abuse Act. For the following reasons, this Court grants Defendant's motion for summary judgment [172] with regards to Count III of Plaintiff's complaint but denies summary judgment [172] for Counts I and II.

BACKGROUND

Plaintiff, a seller of telecommunications testing equipment employed Defendant until March 2003. Defendant's employment contract with Plaintiff included a confidentiality agreement. Defendant subsequently left Plaintiff's employ and became a sales manager for Nethawk, one of Plaintiff's large competitors. In September 2006, Plaintiff filed this suit against Defendant after discovering that Defendant's hard drive at Nethawk contained Plaintiff's reports concerning price lists, marketing strategies, information regarding customers' requests and requirements, technical information, and other internal records.

Plaintiff alleges the following three counts against Defendant: (1) misappropriation of a trade secret in violation of the Illinois Trade Secrets Act, (2) breach of a confidentiality agreement, (3) and violation of the Computer Fraud and Abuse Act. Defendant filed the instant motion seeking summary judgment on all three counts. For the following reasons, this Court denies Defendant's motion with regards to Counts I and II and grants Defendant's motion with regards to Count III.

LEGAL STANDARD

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Fed. R. Civ. P. 56(c). In order to rebut the motion summary judgment, the non-moving party must present specific evidence. Butts v. Aurora Health Care, Inc., 387 F.3d 921, 924 (7th Cir. 2004). A genuine issue of material facts exists only if "he evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242 , 248 (1996). In evaluating a motion for summary judgment, the Court must construe all evidence and draw all reasonable inferences in a light most favorable to the non-moving party. Id. at 255.

DISCUSSION

A. Count I: Illinois Trade Secrets Act Claim

With regards to Count I of Plaintiff's complaint against Foster, Foster is not entitled to summary judgment because genuine issues of material fact exist as to all three essential elements of Plaintiff's trade secret claim. A successful claim of trade secret misappropriation under the Illinois Trade Secret Act ("ITSA") consists of three elements: (1) existence of a trade secret; (2) misappropriation of the secret through improper acquisition, disclosure, or use; and (3) damage to the trade secret owner as a result of the misappropriation. Parus Holdings, Inc. v. Banner & Witcoff, Ltd., 585 F. Supp. 2d. 995, 1005 (N.D. Ill. 2008).

With regards to the existence of a trade secret, a genuine issue of material fact exists as to whether the information Defendant misappropriated qualifies as a "trade secret." Under the ITSA, whether information falls with the ambit of a "trade secret" depends upon the secrecy of the protected information. Id. Defendant argues that the pricing information was readily available to Plaintiff's customers and thus, not a secret. In opposition, Plaintiff claims that pricing information was never made available to customers without a confidentiality agreement. A genuine issue of material fact exists as to whether Plaintiff kept the pricing information secret.

Second, a genuine issue of material fact exists as to whether Defendant actually misappropriated the trade secret. The term "misappropriate" under the ITSA includes improper acquisition, disclosure or use. Id. Defendant argues Plaintiff has not offered evidence that Defendant used Plaintiff's alleged trade secrets; however, Plaintiff offers evidence that Defendant acquired trade secrets by accessing emails belonging to Plaintiff's employees and subsequently disclosed Plaintiff's information to Defendant's fellow Nethawk colleagues. Misappropriation, as defined by the statute, is not restricted to usage of the information. Thus, a genuine issue of material fact exists as to whether Defendant misappropriated Plaintiff's trade secrets.

Third, a genuine issue of material fact exists as to whether Plaintiff was damaged by Defendant's alleged misappropriation of Plaintiff's trade secrets. Under the ITSA, a plaintiff can be awarded actual damages or "a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret." 765 ILCS 1065/4(a). Defendant argues that Plaintiff was not damaged by the alleged misappropriation. However, the ITSA states that Plaintiff can either show actual damages or provide ...


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