IP Law Daily, TRADE SECRETS—3d Cir.: Employer’s litigation was about protecting its IP, not retaliating for scientist’s EEOC charges, (Apr 17, 2017)

By Lorene D. Park, J.D.

The Third Circuit in an unpublished opinion has affirmed a district court’s conclusion, following a bench trial, that litigation activities by a scientist’s former employer through its in-house intellectual property (IP) attorney were based on a reasonable belief that she was disclosing confidential information in violation of an agreement and a state court order. This was a legitimate reason and was not retaliation under Title VII and the Pennsylvania Human Relations Act (PHRA). For the same reasons, the in-house attorney did not unlawfully retaliate by communicating with the Department of Energy about the scientist’s DOE-funded research (Lin v. Rohm and Haas Co., dba Dow Advanced Materials, April 14, 2017, Shwartz, P.).

The research scientist worked for Rohm and Haas (R&H) focusing on acrylic acid for a decade before filing an EEOC charge in 1999 alleging discrimination and retaliation. Late that year the EEOC mediated a settlement in which she agreed not to disclose confidential information. She also agreed to let the company do a trade secret review before she published research. In 2000, she sent a proposed public presentation about acrylic acid to R&H, which it concluded revealed its trade secrets. It threatened to sue, but she went forward with her presentation.

First retaliation suit. R&H sued her in state court for a trade secrets violation, and she filed two more EEOC charges alleging retaliation. She then filed a Title VII retaliation suit which failed on summary judgment in 2004. The federal judge found that the state trade secrets litigation was not sufficiently related to her employment to be an adverse action.

State court injunction. Meanwhile, in its trade secrets suit, R&H sought discovery on the scientist’s work with a different compound (methacrylic acid) at EverNu, a start-up company she founded. Her colleagues at R&H had worked with that compound and there were concerns that she was again using its trade secrets. R&H sought information on her DOE grant proposals. She refused and R&H obtained sanctions for her defiance of court orders and a default judgment enjoining her and affiliated entities from using or divulging its confidential information.

This retaliation suit. At the same time the scientist refused to produce discovery, she filed a fourth EEOC charge claiming the discovery requests in the state suit were retaliatory. She filed this suit in 2011, alleging retaliation under Title VII and the PHRA. The court dismissed her retaliation claims based on the 2003 discovery requests and prior events because she litigated those in the prior suit. However, she could bring retaliation claims for events after 2003.

Scientist loses at trial. Following an 11-day bench trial, the court entered judgment for R&H, concluding that R&H and its in-house IP attorney were motivated by a good faith belief that the scientist was using its confidential information in the DOE grant work on methacrylic acid when it served discovery requests, filed motions to compel production, and subpoena on her company, EverNu. At the time, R&H knew she had violated her confidentiality obligations in the past. In-house counsel also testified that his concern grew after he spoke to two senior scientists who said the title of her proposed DOE project summarized a research area to which she was exposed at R&H. Thus, his actions in directing the state court litigation and contacting the DOE were motivated by a good faith belief that the scientist was jeopardizing R&H’s intellectual property.

No error in finding in-house counsel credible. On appeal, the parties did not dispute the protected activities or adverse actions; the sole issue was whether the scientist proved that "her protected activity was the but-for cause of the adverse actions." According to her, the lower court clearly erred by finding credible the IP attorney’s testimony. Noting that it gives "great deference to factual findings that rest on credibility determinations," the Third Circuit affirmed.

Though the scientist claimed the in-house attorney’s testimony was inconsistent, implausible, and contradicted by the evidence, the appeals court was not swayed. She placed much emphasis on his trouble recalling when he first learned of her fourth EEOC charge, but the trial court found it understandable that he would remember a chance encounter with outside counsel in 2007 and not a single email referencing the charge in 2005, given that nearly a decade had passed. Nor was it clear error to conclude that the in-house attorney did not monitor the progress of her fourth EEOC charge; there was no indication he played an active role and the EEOC’s notice went to the employment group, of which the IP attorney was not a member. Also, given the long history and numerous disputes, it was not surprising or suspicious that the attorney might have trouble recalling certain details and there was no error in finding him credible despite his memory lapses.

Missing witness did not mean R&H retaliated. According to the scientist, during a break in a 2007 deposition (during which testimony suggested she was indeed revealing trade secrets), outside counsel for R&H extended a settlement offer and the in-house IP lawyer threatened to destroy EverNu’s relationship with the DOE if she did not accept R&H’s terms. He denied making a threat but, in any event, the scientist rejected the offer. Though R&H indicated outside counsel would testify as to her recollection of the conversation, she was not called to testify.

On appeal, the scientist argued that the lower court should have drawn an adverse "missing witness" inference that the testimony would be adverse to R&H. However, noted the appeals court, the lower court did her one better by assuming the in-house IP lawyer made the threat. But assuming the lawyer’s account of this conversation was not truthful did not mean the lower court erred in finding the remainder of his testimony truthful.

Moreover, a finding that the threat was made would not establish that the in-house attorney’s actions were motivated by an intent to retaliate against the scientist for her EEOC charges. Nor was there evidence that R&H acted in retaliation for her charges. To the contrary, the evidence showed that she took numerous actions provoking the company’s well-founded concern that she was using its confidential information, including that she took documents when she left its employ; presented confidential information at a conference; submitted a DOE grant proposal that appeared to draw from a R&H colleague’s research; and submitted 45 pages of confidential information to the DOE in violation of a confidentiality stipulation filed in court, among other actions. For all these reasons, the lower court did not err.

The case is No. 16-1887.

Attorneys: Stephen L. Braga, University of Virginia Law School, for Manhua Mandy Lin. Jason A. Cabrera (Cozen O’Connor) for Rohm and Haas Co. dba Dow Advanced Materials.

Companies: Rohm and Haas Co.; Dow Advanced Materials

Cases: TradeSecrets DelawareNews NewJerseyNews PennsylvaniaNews