Intellectual Property Law Knowledge Center

Court Finds Actual Use Not Required Grants Preliminary Injunction Against Ex-AMD Employees for Trade Secret Theft

June 25th, 2013

By John D. Simmons, Esq.

It’s not hard to figure out what happens when a group of rogue employees copy over one million files from their employer’s network immediately prior to taking new positions with a chief competitor. Beyond impressing Dr. Evil with the sheer volume of documents copied, protracted trade secret litigation often ensues!

In an important decision issued a few weeks ago, a Massachusetts federal court tackled this very issue and granted a preliminary injunction for Advanced Micro Devices, Inc. (AMD) against four ex-AMD employees accused of stealing confidential computer files shortly before they left AMD to join rival Nvidia Corp. (Advanced Micro Devices v. Feldstein, 13-cv-40007, U.S. District Court, District of Massachusetts). In the ongoing litigation, AMD contends that the ex-employees violated Massachusetts trade secret and unfair competition laws, as well as federal computer fraud rules, by copying strategic planning and licensing documents and archived Outlook files from AMD’s network and devices before departing for Nvidia. Under the preliminary injunction, the ex-AMD employees are prohibited from destroying or using any of documents and information at issue.

In reaching its decision, the Court emphasized the compelling nature of the forensic evidence presented by AMD, and also concluded that misappropriation does not require proof of actual use of trade secrets. The Court focused on the volume and timing of the employees’ data transfers to support its finding that the employees were likely already using or likely to use the trade secrets in the future. This decision contradicts other recent cases ruling that a trade secret claimant must provide evidence of actual use to maintain its claim. Such splits in authority highlight the importance of remembering that state laws govern theft of trade secrets, which can vary greatly state-to-state, and even sometimes lack uniformity within states.

Stay tuned for further updates as we monitor whether other courts follow this Court’s lead concerning actual use.

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