IP Law Daily, TRADE SECRETS—DConn: Companies Could Have Misappropriated Trade Secrets by Using Lighting Controls Technology in Violation of License Agreement, (Nov 19, 2012)

By Thomas Long, J.D.

A designer of products and services related to energy management and controls technology (Powerweb) stated plausible claims that a lighting company (Hubbell Lighting) and an electrical products company (Hubbell Automation) violated the Connecticut Uniform Trade Secrets Act (CUTSA) by improperly using information that Powerweb had disclosed in reliance on a confidentiality agreement, the federal district court in Bridgeport, Connecticut has decided (Powerweb Energy, Inc. v. Hubbell Lighting, Inc., November 16, 2012, Eginton, W.).

In April 2007, Powerweb entered into a confidentiality agreement with Hubbell Lighting, so that the parties could exchange information necessary for the design, development, and manufacture of certain lighting components and equipment. In November 2008, Powerweb and both of the Hubbell defendants entered into a license agreement, which, Powerweb contended, precluded the defendants from using information that Powerweb had marked or otherwise described as “confidential,” without Powerweb’s written consent. In December 2010, the parties entered into an expanded license agreement with the same effective date as the 2008 agreement.

In reliance on the confidentiality agreement, Powerweb allegedly disclosed confidential trade secrets and proprietary technical details to the Hubbell defendants, regarding a method of controlling lighting fixtures to maximize a building’s energy efficiency. This information was marked “Confidential” when Powerweb disclosed it, Powerweb asserted. Hubbell allegedly had planned to incorporate Powerweb’s technology into its newly manufactured products and into retrofitting kits for existing products.

According to Powerweb, the Hubbell defendants stopped working with Powerweb in February 2011 and then used the Powerweb technology with another company without Powerweb’s consent. The Hubbell defendants allegedly offered the same products contemplated by the license agreement under another name without compensating Powerweb.

Powerweb brought claims for breach of contract, violation of CUTSA, and violation of the Connecticut Unfair Trade Practices Act, among other things, asserting lost profits. The Hubbell defendants filed a motion to dismiss.

With regard to the trade secrets claims, the Hubbell defendants argued that Powerweb failed to identify the relevant technology with specificity and failed to explain how the defendants misappropriated the technology. In addition, the Hubbell defendants contended that the technology was already known by the industry and was not confidential.

In the court’s view, the technology was adequately defined in the complaint and exhibits. Furthermore, the complaint alleged that the technology was marked “Confidential” when it was disclosed, pursuant to an agreement that it would not be used; that Powerweb retained ownership of the technology and took reasonable measures to protect its secrecy; that the technology was not generally known or readily ascertainable by others who would obtain economic value from its disclosure or use; that the technology was used without Powerweb’s consent; and that Powerweb sustained harm from use of the technology.

At the pleadings stage, the court had to accept as true Powerweb’s assertion that the technology was not already known in the industry and that Powerweb had taken measures to keep it secret. Contrary to the Hubbell defendants’ contention, Powerweb did not have to allege that the defendants misappropriated patented information to state a viable trade secrets misappropriation claim, the court said. The motion to dismiss was denied.

Powerweb also adequately pleaded claims for common-law misappropriation of idea, conversion, and breach of fiduciary duty, the court determined.

The case is No. 3:12CV220 (WWE).

David Schumacher (Buchanan Ingersoll & Rooney PC) for Powerweb Energy, Inc. Alfred N. Goodman (Roylance, Abrams, Berdo, & Goodman, LLP) for Hubbell Lighting, Inc.

Cases: TradeSecrets ConnecticutNews