In one of the largest recent awards in a trade secrets case, Kelley Drye attorneys successfully represented Advanced Duplication Services (ADS) in a lawsuit against a former employee and his new company, obtaining a judgment of more than $30 million in damages and fees.
Kelley Drye partner Robert Steiner and senior associate Martin Krolewski represented ADS in the litigation against Next Generation Media (NGM) and Scott Suedbeck, its executive officer. Minnesota State Court Judge Janet N. Poston held that ADS was entitled to damages, as well as its attorneys’ fees and costs incurred during the two year litigation. The order was entered on April 1, 2010 in Hennepin County, Minnesota.
) operates out of Plymouth, Minnesota. It is a leading manufacturer, replicator and duplicator of high quality CDs, DVDs and a provider of complementary studio services. NGM was a direct competitor of ADS that was founded by former ADS vice president Scott Suedbeck.
The Court found that prior to ending his employment with ADS, Mr. Suedbeck willfully and maliciously obtained and used ADS confidential and proprietary business information to start NGM. Among other things, Mr. Suedbeck electronically copied ADS customer information and then used that information to obtain sales for NGM. The Court concluded that ADS had invested a substantial amount of time and effort assembling this customer information and that is was a trade secret of ADS with substantial value. During the course of discovery, Kelley Drye attorneys were able to obtain documents and testimony which evidenced that not only had Mr. Suedbeck stolen ADS proprietary information upon his departure from ADS but actually used that information and had other NGM employees do so as well.
ADS filed its action against NGM, Mr. Suedbeck and others in May, 2008 after it obtained information that led it to believe that NGM was not competing with ADS fairly. The lawsuit claimed that NGM and Mr. Suedbeck misappropriated trade secrets and proprietary information, and that Mr. Suedbeck breached his fiduciary duty and duty of confidentiality, which caused ADS lost profits. In June, 2008, the Minnesota State Court entered a preliminary injunction against NGM and Mr. Suedbeck and ordered them to return any ADS customer information to ADS and make their computer servers and individual computers available for inspection.
Working with forensic experts, Kelley Drye was able to retrieve the ADS customer information from NGM’s computer servers as well as individual computers. Thereafter, depositions of Mr. Suedbeck and NGM employees as well as documents produced in the litigation revealed NGM had possession of further ADS trade secret information.
Commenting on the judgment, Jean A. Lagotte, Jr., ADS’s Executive Chairman, said, “We are very pleased with the result. ADS has always prided itself on delivering a quality product to its customers at competitive prices. We believe that this judgment sends a strong message to those that would seek to obtain an unfair advantage in the marketplace.”