IP Law Daily, TRADE SECRETS—N.D. Cal.: Cybersecurity firm’s trade secrets claim dismissed against competitor who hired alleged misappropriator, (Mar 20, 2023)

By Kevin M. Finson

There was no allegation that the competing firm had used the plaintiff’s claimed secrets or induced the former employee to steal them.

A cybersecurity company failed to state claims for trade secret misappropriation under federal or state law or related claims against a competing cybersecurity firm that had hired the plaintiff’s former employee, the U.S. District Court in San Francisco has held. The complaint did not allege the new employer induced an act of misappropriation or has used the misappropriated secrets. The plaintiff’s claims against its former employee had been stayed pending the outcome of a related arbitration proceeding (Alert Enterprise, Inc. v. Rana, March 16, 2023, Corley, J.).

Alert Enterprises, Inc. (Alert) was a company that described itself as a leader in the intersection of cyber and physical security. Alert employed Imran Rama in a number of roles over 12 years, culminating in his being named Vice President of Global Sales. Rama eventually left Alert and took a position with SoloInsight, Inc. (SoloInsight) a direct competitor. Alert alleged that Rama downloaded a number of confidential files, including product and client information, from Alert’s Google Drive immediately prior to leaving for his new job. Alert brought suit against both Rama and SoloInsight for misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA), the California Uniform Tarde Secrets Act (CUTSA) and related claims. SoloInsight moved to dismiss the claims against it.

Trade secrets. Alert argued that SoloInsight was vicariously liable as his employer for Rama’s acts of appropriation. The court held, however, that SoloInsight was not Rama’s employer at the time and that there was no allegation SoloInsight had induced Rama to misappropriate the documents. Alert’s allegations that Rana was acting as SoloInsight’s agent when he took the trade secrets were conclusory.

State law claims. Claims for tortious interference and violation of a state computer access statute were preempted by the trade secret statute because they relied on the same set of facts as were central to the trade secrets claim. Other claims failed on the merits.

The court granted the motion to dismiss.

The Case is No. 22-cv-06646-JSC.

Attorneys: Grace Lin Waddell (Littler Mendelson P.C.) for Alert Enterprise, Inc. Olga Savage (Husch Blackwell, LLP) for Imran Rana.

Companies: Alert Enterprise, Inc.; SoloInsight, Inc.

Cases: TradeSecrets CaliforniaNews