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COA: Company sought to prevent competition, not protect trade secret

April 14, 2015

The Indiana Court of Appeals affirmed the grant of a directed verdict in favor of the defendants in a lawsuit alleging they divulged confidential information and trade secrets after departing a computer systems company and began working for a competitor.

This is the third time litigation brought by Think Tank Software Development against former employees and their new employer, Chester Inc., has made its way before the appeals court. The employees named in the lawsuit left Think Tank within a year of each other and joined Chester. Think Tank sued, alleging violations of noncompete contracts, breach of contract, and misappropriation of trade secrets.

The trial court ruled in favor of the defendants, but the COA sent it back to the lower court for further proceedings, noting in part that Think Tank had designated evidence to prevent summary judgment in favor of the defendants on its trade secret misappropriation claims. The COA later clarified the issue of damages in another appeal.

At issue in Think Tank Software Development Corp., d/b/a Think Tank Networking Tech. Group and Think Tank Info. Systems v. Chester, Inc., Mike Heinhold, John Mario, Joel Parker, Thomas Guelinas, et al., 64A03-1404-PL-134, is whether the trial court erred in granting a directed verdict on the misappropriation of trade secrets and determining that Think Tank’s non-solicitation claim was barred.

Think Tank believed that the trial court acted contrary to the law of the case, pointing to the earlier ruling that it had presented enough evidence to raise the issue of whether the defendants had misappropriated the trade secrets. But the defendants argued that what constitutes a trade secret is a determination for the court to make as a matter of law, so there was no error in granting a directed verdict instead of submitting the issue to the jury.

“[W]hile we acknowledge the tension between the parties’ positions regarding who is to determine whether information is a trade secret, we need not determine today if the question of whether information constitutes a trade secret is a matter of law or a question of fact. Instead, we determine that, as a matter of law, Think Tank failed to produce enough evidence to allow a reasonable fact finder to determine that the proffered information was trade secrets. More particularly, we find that Think Tank failed to show that any of the information alleged to be trade secrets was not generally known or ascertainable to the public, and, therefore, was not a trade secret,” Judge John Baker wrote.

The judges also found that Think Tank did not appeal the trial court’s grant of summary judgment with regard to the non-solicitation claim in its first appeal and therefore waived the issue.
 

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