IP Law Daily, TRADE SECRETS—S.D. Cal.: Bird removal companies’ legal battle over trade secrets continues, (Feb 12, 2024)

By George Basharis, J.D.

Tort claims were dismissed from a patent-infringement lawsuit between two bird removal and wildlife management companies, but counterclaims of trade secret misappropriation will continue to trial.

The federal district court in Virginia has issued a mixed ruling in a patent and trade secrets dispute involving rival bird removal companies. Safe Haven Wildlife Removal and Property Management Experts initiated the lawsuit against Meridian Wildlife Services, alleging infringement of its patented animal capture systems and methods. These systems employ mist netting to trap birds inside commercial buildings. Meridian countered with claims against Safe Haven and its founder, a former Meridian employee. The counterclaims included allegations of breach of fiduciary duty, tortious interference, business conspiracy, trade secret misappropriation, and patent infringement. The court dismissed Meridian’s state-law claims, finding they were time-barred by applicable statutes of limitations. However, the court found Meridian had adequately pled its trade secrets counterclaims and denied Safe Haven’s motion to dismiss (Safe Haven Wildlife Removal and Property Management Experts LLC v. Meridian Wildlife Services LLC , February 9, 2024, Dillon, E.).

Background. In June 2021, Safe Haven sued Meridian for allegedly infringing its patents for bird capture systems and methods, which involve using mist netting to trap birds inside commercial buildings. In May 2023, Meridian filed a counterclaim against Safe Haven and its founder, a former Meridian employee. Meridian accused Safe Haven and its founder of various state and federal claims, including breach of fiduciary duty, tortious interference, business conspiracy, trade secret misappropriation under the Virginia Uniform Trade Secrets Act (VUTSA), and the federal Defend Trade Secrets Act (DTSA), as well as patent infringement.

Meridian alleged that when Safe Haven’s founder began working for Meridian in 2012, he received significant training in commercial bird removal and wildlife management services, along with access to Meridian’s confidential and proprietary information, trade secrets, and customer data. Safe Haven was established in 2013 while its founder was still employed by Meridian. Although the founder left Meridian in 2014, Meridian claimed he continued to use Meridian’s proprietary information for his and Safe Haven’s advantage. Along the way, Safe Haven acquired patents for bird removal methods that were central to its original lawsuit against Meridian. Meridian, in turn, possessed its own patents for bird capture systems, which the company alleged Safe Haven infringed upon.

Safe Haven sought to dismiss Meridian’s counterclaims, contending that the state-law claims were time-barred and the trade secret claims were implausible. The court granted the motion in part and denied it in part, determining that while some of the state-law claims were indeed untimely, the trade secret claims were adequately pled.

Tolling. The court initially ruled that Meridian’s counterclaims were not tolled by the filing of Safe Haven’s original complaint, as they did not stem from the same transaction or occurrence nor were they temporally related. Safe Haven’s initial complaint pertained to patents issued subsequent to the departure of Safe Haven’s founder from Meridian and the subsequent actions taken by Meridian to infringe upon these patents. Conversely, Meridian’s counterclaims arose from issues concerning employment and business practices.

Time-barred claims. The statute of limitations for a breach of fiduciary duty claim is two years, with a cause of action accruing at the time of the breach. Meridian claimed that Safe Haven’s founder began soliciting Meridian’s then-current and prospective customers and using Meridian’s purported trade secrets immediately upon forming Safe Haven in 2013, nearly 10 years before the counterclaim was filed. To avoid dismissal, Meridian argued that Safe Haven’s founder continues to owe Meridian fiduciary duties. The court rejected the argument as Meridian failed to identify any case law in which fiduciary duties were found to be ongoing for almost a decade after the termination of an employment relationship. Therefore, the court ruled that the statute of limitations had lapsed, rendering Meridian’s breach of fiduciary duty claim time-barred.

Similarly, the court determined that Meridian’s tortious interference claims were time-barred. The statute of limitations for tortious interference under state law is five years. Meridian argued that the claims had not yet accrued because the alleged wrongful acts behind the claims were ongoing. However, Meridian did not assert that Safe Haven and its founder continued to interfere with Meridian’s contracts and business expectancies; rather, it claimed ongoing harm and damage from past interference. The court found that the statute of limitations instead accrued when Meridian alleged its first measurable damages occurred, which was more than two years before the counterclaim was filed.

Meridian’s business conspiracy counterclaim was based on allegations that Safe Haven and its founder misappropriated Meridian’s proprietary bird behavior assessment techniques and methods and customer lists. Meridian claimed that the harm caused by these wrongful acts also was continuing and ongoing. However, the court noted that claims of injury to property do not allow for continuous breaches; instead, they accrue when the injury occurs, which in this case was more than five years before the statute of limitations lapsed.

Trade secrets. The court declined to dismiss Meridian’s VUTSA or DTSA claims based on the statute of limitations because it was unclear when Meridian knew or should have known about the alleged misappropriation of its trade secrets. Both state and federal laws governing trade secret claims include a discovery rule. Meridian claimed that the first public disclosure that Safe Haven was performing bird removal services using a non-lethal mist netting process was when Safe Haven’s patent was issued, falling within the statute of limitations period. However, the question remained as to when Meridian actually had notice of and discovered Safe Haven’s alleged misappropriation. Consequently, the court concluded that Safe Haven’s motion to dismiss the trade secret counterclaims was premature.

Moreover, the court found that Meridian had sufficiently described the trade secrets at issue, which included financial, business, technical, and engineering information related to its bird capture systems, customer information, and behavior analysis methods. Safe Haven argued that Meridian’s description of its trade secrets as involving “innovative techniques and processes” and “analyzing specific behavior patterns” was too vague. However, the court explained that Virginia courts have rejected a heightened pleading standard for trade secret descriptions under VUTSA and DTSA. The court also rejected the argument that Meridian’s trade secrets were no longer secret because of its patent filings, as the patents only covered certain non-proprietary aspects of the bird capture systems and did not disclose the trade secrets implicated in the suit, such as the trade secret status of Meridian’s customer information or behavior analysis methods.

Injunction. The court deferred ruling on Meridian’s requests for injunctive relief, which included turning over all materials containing its trade secrets, prohibiting their use in business, and refraining from soliciting Meridian’s customers. The court noted that the scope of a motion to dismiss is limited to the sufficiency of claims rather than consideration of any potential relief.

The Case is No. 7:21-cv-00577-EKD-CKM.

Attorneys: Andrew L. Fitzgerald (Fitzgerald Hanna & Sullivan, PLLC) for Safe Haven Wildlife Removal and Property Management Experts, LLC. David W. Hearn (Sands Anderson PC) for Meridian Wildlife Services, LLC d/b/a Meridian Bird Removal, Inc.

Companies: Safe Haven Wildlife Removal and Property Management Experts, LLC; Meridian Wildlife Services, LLC d/b/a Meridian Bird Removal, Inc.

Cases: Patent TradeSecrets CaliforniaNews GCNNews