Secrets Exposed: Trade Secrets, Trust, and a Multi-Million Dollar Lesson |  Seyfarth Shaw

Secrets Exposed: Trade Secrets, Trust, and a Multi-Million Dollar Lesson | Seyfarth Shaw

At the beginning of the pandemic, concerns were raised that trade secret misappropriation might take a new form. Indeed, with large swaths of the workforce working from home, spouses, roommates, or others living in the same area had an increased opportunity to purloin confidential information that might not have been available to them previously.

But a recent case in Massachusetts highlights that this is not unique to pandemic-era work-from-home setups. While the events formed the basis of the dispute in BioPoint, Inc. v. Dickhaus et al. occurred during the pandemic, the facts reveal that information sharing between employees of competitors can happen even in traditional settings.

in BioPoint, the plaintiff employed non-party Leah Attis, who was engaged to defendant Andrew Dickhaut. Dickhaut was managing director for the newly opened Boston office of defendant Catapult Staffing, LLC, which like BioPoint, provides consulting services and recruits short-term labor for its clients. Initially, Catapult did not make placements in the life sciences industry, instead focusing on the tech, light industry, accounting and finance industries. Despite having had “little, if any” experience in the life sciences and pharma industries (in contrast to BioPoint, whose employees had years of life sciences recruiting experience), Catapult decided to explore those industries in 2018.

At trial, BioPoint introduced evidence that Attis had repeatedly shared proprietary BioPoint information with Dickhaut at his request, including pricing information, candidate information (including their bill rate and pay rate, which are highly confidential), and even internal notes on client agreements. Using this information, Dickhaut approached prospective BioPoint clients to successfully pitch Catapult’s services, and proposed candidates to those clients whose information he was only aware of from Attis—despite BioPoint’s warnings to Attis not to share such information with Dickhaut. In one case, a BioPoint recruiter was about to make a placement for a medical director at a BioPoint client, only for Catapult to lure the candidate away for its own client placement, offering the candidate a better rate for her services—information which Dickhaut obtained from Attis.[1] As a result, the jury awarded BioPoint over $300,000 in damages based on misappropriation of trade secrets and tortious interference.

Following the jury trial, the judge conducted a bench trial on BioPoint’s remaining claims for unjust enrichment and violation of Massachusetts’ unfair and deceptive acts and practices statute, known in the Commonwealth as Chapter 93A. Ultimately, the court determined that “the jury’s verdict was amply [on both misappropriation of trade secrets and tortious interference] supports a determination that Catapult violated Chapter 93A” through its agent, Dickhaut. Specifically, the court found that “Dickhaut’s conduct and culpable state of mind is imputable to Catapult as his employer under the long-established principles of vicarious liability,” and awarded BioPoint treble damages jointly against both Dickhaut and Catapult, resulting in a total damages award of over $5 million. Additionally, under Chapter 93A, BioPoint was reasonably entitled to recover its attorneys’ fees (over $2.5 million), for a total award of more than $7.5 million, plus pre- and post-judgment interest.

This decision (and the accompanying eye-popping damages award) serves as a reminder that employees must be advised of the need to keep an employer’s trade secrets and other proprietary information strictly confidential, including from their friends and family members—and should also be advised of the consequences for failing to do so. Even with BioPoint’s warnings to Attis, she still shared information with Dickhaut that permitted Catapult to develop relationships with BioPoint prospects and to make placements that would otherwise have likely been made by BioPoint. Employers must remain vigilantes and take appropriate measures to protect their proprietary information from being shared by employees. While BioPoint is surely pleased with the verdict, it no doubt wishes it had been able to prevent the misappropriation to begin with and avoid the headache of a long federal suit.

[1] Perhaps unsurprisingly, upon learning of her conduct, BioPoint fired Attis, who afterward joined Catapult.

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