Judge: California company’s trade secrets’ suit can move forward

Alleged corporate betrayal is at the heart of a lawsuit filed by a California game chip maker against five former employees. Advanced Micro Devices Inc. claims the defendants downloaded company trade secrets before resigning and then lured former coworkers to join them at competitor Nvidia Corp.

The employees were only partially successful in getting a federal judge to dismiss the trade secrets lawsuit. The court recently dropped charges of unfair competition but refused to toss out allegations of breach of contract and trade secret misappropriation.

Breach of contract charges refers to nondisclosure agreements between employers and their workers.

By signing an NDA contract, workers promise not to share confidential company information like product designs, operations and sales methods, client data, finances and future plans.

AMD’s worker contracts also included no solicitation agreements, which forbid workers from trying to persuade colleagues or customers to leave the company. The agreements are valid during employment and for a set period after a worker exits a job.

Advanced Micro officials alleged that the ex-employees used external hard drives to copy 100,000 graphics processing files in the days before leaving the company. Some of the sensitive information that was electronically stored reportedly included customer licensing arrangements and new or proposed process and product strategies.

By rejecting the defendants’ motion to dismiss, the judge agreed the plaintiff’s claims had merit. The same judge issued an injunction last month forbidding the accused workers from sharing company knowledge or soliciting AMD staff members.

Nvidia is not named in the lawsuit. The omission from the defendant list indicates AMD does not believe its competitor encouraged or participated in contract and trade secret violations.

Trade secrets do not encompass all information about a company nor are trade secrets registered and protected in the same way patents and trademarks are. Intellectual property attorneys can advise California businesses about the legal limitations and protection options for confidential company information.

Source:  bloomberg.com, “Ex-AMD Workers at Nvidia Lose Bid to End Secrets Lawsuit” Don Jeffrey, Jun. 11, 2013