Our Pittsburgh lawyers keep a close watch on decisions that impact Pennsylvania law regarding noncompete agreements and trade secret disputes. As we have previously written, changes are coming to PA law — to possibly eliminate the enforcement of non-compete agreement. With this, employers will pivot from employment restriction enforcement to instead sue former employees for stealing “trade secrets.”
Status of “Trade Secret” Case Law — A Pittsburgh Company In the Fight
A company based in Pittsburgh, PPG Industries (“PPG”), found itself embroiled in a trade secret dispute in federal court. PPG maintained a competitor, Jiangsu Tie Mao Glass Co. Ltd. (“TMG”), enlisted a former PPG employee, Thomas Rukavina, to share PPG’s proprietary (and confidential) information relating to PPG’s Opticor plastic for windows. See PPG Industries v. JIANGSU TIE MAO GLASS CO., LTD.
In a binding decision, the U.S. Court of Appeals (Third Circuit) held that Jiangsu Tie Mao Glass Co. Ltd. (TMG) did too little, too late. It should have acted earlier to contest a trade secrets misappropriation lawsuit brought against it by PPG Industries. Instead, TMG had waited until after PPG had entered a default judgment against TMG. The district court had also entered an award for unjust enrichment. Thus, it was “too little, too late,” for TMG to contest the proceedings, according to the U.S. Court of Appeals.
Background in the PPG v. TMG Litigation Over Trade Secrets
Allegedly, back in 2013, TMG had invited a former PPG employee, Thomas Rukavina, to misappropriate PPG’s allegedly protected information (the tech for PPG’s Opticor plastic for plane windows). Rukavina shared the information with TMG, notwithstanding a non-disclosure agreement. In other words, it was also breach of contract, and not just the theft of trade secrets.
PPG first brought action against TMG in 2015. However, TMG failed to oppose the claims on the civil docket. Then, after more than one year, the district court clerk entered a default judgment. With that, PPG then asked for a judgment by default for the defendant’s violations of the Pennsylvania Uniform Trade Secrets Act, further seeking a permanent injunction. Moreover, PPG sought punitive damages for TMG’s “willful and malicious” misappropriation, plus attorneys’ fees.
Appeal of the Default Judgment Relating to Trade Secrets
On appeal, TMG disputed the total claim for $9,909,687.31. TMG further asserted that PPG’s evidence was inadequate to establish actual damages of $8,805,929. PPG had focused on TMG’s unjust enrichment from the misappropriation, evidenced by “by the costs TMG would have incurred to develop its own version of the Opticor technology without guidance from the Proprietary Report and other misappropriated trade secrets” that had been provided by Rukavina. PPG also asserted that the “benefit” related to the money PPG had spent to develop the Opticor know-how.
In response, TMG alleged that “it obtained no commercial benefit from any use of PPG’s trade secrets,” and thus no “unjust enrichment” had occurred. However, the court refused to buy TMG’s claim that it never put the protected information at issue to use. According to the appellate court:
“In other words, TMG was able to skip the R&D process completely and begin preparing for production without developing anything like the Opticor technology on its own,” said the court. “That amounts to use of … trade secrets.”
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