The Chemical Abstracts division of the American Chemical Society (ACS) sued three software developers who left ACS to start their own company, Leadscope. ACS sued for trade secret misappropriation, alleging that the software developers used ACS trade secrets to develop their own product. The filing of the lawsuit scuttled several pending (very promising) deals that Leadscope was about to close on. Leadscope counterclaimed for defamation, tortious interference, unfair competition and deceptive trade practices.
The lawsuit was filed in 2002 was hotly contested. Among other things, there was a dispute over insurance coverage, resulting in a court of appeals decision in favor of coverage, see Am. Chem. Soc. v. Leadscope, Inc. , 2005-Ohio-2557.
The trial lasted 2 months in the Franklin County Court of Common Pleas (Columbus, Ohio). On March 27, the jury returned a verdict ruling in favor of Leadscope (the defendant and counterclaimant), awarding counterclaim compensatory damages of $27 million.
In closing arguments, Leadscope’s attorney argued, that ACS “destroyed the reputations of three dedicated scientists…They have ruined the financial position of LeadScope…These scientists did their own work. They didn’t take anything from [ACS]”. Much of the case focused on expert analysis of Leadscope’s source code. Leadscope presented expert testimony that the source code of their own product was NOT copied.
Certainly, a cautionary tale for people filing trade secret lawsuits!
The Columbus Dispatch has reported on the verdict. See