IP Law Daily, TRADE SECRETS—D. Mass.: Cloud video platform provider enjoined from using competitor’s trade secrets pending trial, (Jul 13, 2018)

By Cheryl Beise, J.D.

A cloud-based video platform services provider has been preliminarily enjoined by the federal district court in Boston from using a competitor’s confidential information allegedly misappropriated by two individuals who had worked for both companies and from communicating with 22 media and broadcast companies identified as current and prospective customers of the competitor. The plaintiff established a likelihood of success on its trade secret misappropriation claims under federal and Massachusetts law, and was likely to suffer irreparable harm in the absence of injunctive relief. Even though the defending company had terminated the individual defendants’ employment, the company could be held liable as the beneficiary of their misappropriation (Ooyala, Inc. v. Dominguez, July 10, 2018, O’Toole, G.).

California-based Ooyala, Inc., and Massachusetts-based Brightcove, Inc., are competitors in the business of providing cloud-based video platform services and products to media and broadcast companies. Raul Francisco Garcia Dominguez ("Garcia") served as Ooyala’s Regional Vice President for Latin America, and Dario Perez Real ("Perez") served as the business development manager reporting to Garcia. Both were bound by Ooyala’s confidentiality policies and agreements. In 2016, Garcia left Ooyala to work for Brightcove as General Manager for Latin America. After Perez left Ooyala in February 2017, Ooyala later discovered that Perez had sent dozens of emails purportedly containing Ooyala’s confidential information from his personal email account to Garcia at Brightcove. Ooyala sent a cease and desist letter to Brightcove’s CEO on March 1, 2017. Perez and Garcia were eventually terminated by Brightcove on July 25 and August 2, 2017, respectively.

Ooyala, Inc., and Ooyala Mexico, S. de R.L. de C.V. (collectively "Ooyala") filed suit against Garcia, Perez, and Brightcove, asserting claims for trade secret misappropriation under the Defend Trade Secrets Act, 18 U.S.C. § 1836 and Massachusetts law, Mass. Gen. Laws ch. 93, § 42, unfair or deceptive trade practices, Mass. Gen. Laws ch. 93, § 11, and common law tortious interference. Ooyala claimed that proprietary information taken by Perez at the direction of Garcia enabled Brightcove to benefit from Ooyala’s business development efforts, and poach its current and prospective customers. Before the court was Ooyala’s motion for a preliminary injunction.

Trade secret misappropriation. Brightcove argued that the information at issue was not protectable as trade secrets because it was too vague, and the customer lists included contact information for individuals who had publicly accessible LinkedIn profiles. The court disagreed. The information Perez emailed to Garcia included a full-term customer contract, an 81-page slide deck, a schedule of meetings with prospective clients, and internal communications discussing client needs. The customer information was valuable because it revealed specific contact information for individuals and identified them as key decision makers in ongoing business dealings. Brightcove did not dispute that Ooyala took reasonable steps to preserve the secrecy of its information or that the information was acquired by Perez and Garcia through improper means in violation of various Ooyala confidentiality policies and agreements.

Brightcove also argued that it did not encourage the misappropriation by Garcia and Perez and, therefore, it could not be held responsible. The court again disagreed. The record showed that it was clear that Brightcove had reviewed the matters described in the cease and desist letter by at least March 28, 2018. However, it chose not to take prompt action upon them. Under Massachusetts law, liability for trade secret theft may extend to third parties not directly responsible for the misappropriation if they knowingly benefit from trade secrets that were obtained from a plaintiff in breach of a confidential relationship or through improper means. The court determined that Ooyala was likely to succeed on its trade secret misappropriation claims.

Other injunction factors. The court additionally found that the other preliminary injunction factors—the presence of irreparable harm, the balance of equities, and the public interest—favored issuance of a preliminary injunction. A threat of future harm is presumed when a plaintiff successfully demonstrates a likelihood of success on the merits of a claim for trade secret misappropriation, the court said. The potential harm to Ooyala from denying the injunction was significant, while there was no burden on Brightcove, apart from preventing further use of Ooyala’s information. Strong protection for trade secret information was in the public interest.

The court granted Ooyala’s motion, ordering Brightcove to: (1) refrain from disclosing or using any of Ooyala’s confidential information; (2) return or cease to retain any and all such information; and (3) refrain from communicating with 22 companies identified by Ooyala as current and prospective customers.

This case is No. 1:17-cv-10943-GAO.

Attorneys: William J. Trach (Latham & Watkins LLP) for Ooyala, Inc. and Ooyala Mexico, S. de R.L. de C.V. Mark E. Tully (Goodwin Procter, LLP) for Brightcove, Inc.

Companies: Ooyala, Inc.; Ooyala Mexico, S. de R.L. de C.V.; Brightcove, Inc.

Cases: TradeSecrets MassachusettsNews