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Mobile Mark v. Pakosz

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Citation

Mobile Mark v. Pakosz, 2011 WL 3898032 (N.D. Ill. Sept. 6, 2011) (full-text).

Factual Background

Mobile Mark, a designer of commercial antenna products, brought this action against former employee Daniel Pakosz, and two competitors, Hascall-Denke Corporation and Denke Laboratories, Inc., for violations of the Illinois Trade Secrets Act ("ITSA"), the Federal Computer Fraud and Abuse Act ("CFAA"), and the Illinois Computer Crime Prevention Law ("ICCPL"), as well as for claims of breach of contract, conspiracy and for intentional and negligent spoliation. Mobile Mark's complaint alleged that, before leaving Mobile Mark to work for Hascall-Denke, Pakosz accessed Mobile Mark’s computer system and copied proprietary information to a laptop that Mobile Mark had loaned him. Pakosz then allegedly transferred the proprietary information to a number of external hard drives, and ran a "Window Washer" program on the laptop to delete files and other data to conceal his activities.

Defendants file a motion to dismiss each of the counts in Mobile Mark's complaint.

Trial Court Proceedings

Illinois Trade Secrets Act

Defendants' first challenge to Plaintiff's claims is that the complaint does not allege specific trade secrets that were allegedly accessed, copied, and transferred without authorization. While the complaint does make mention of specific antennas that Hascall-Denke allegedly developed based on the misappropriated trade secret information, Illinois Trade Secrets Act plaintiffs "are not required to plead highly specific facts on improper trade secret use, because such facts often will not be available before discovery."[1]

Defendants also challenge Plaintiff's claim under ITSA for insufficiently pleading the "inevitable disclosure" theory.

Using a theory of inevitable disclosure, a plaintiff may prove a claim of trade secret misappropriation by demonstrating that defendant's new employment will inevitably lead him to rely on the plaintiff’s trade secrets.[2]

Under Illinois law, inevitable disclosure is not assumed when an employee has general knowledge in their memory as a result of working for a company. However, where evidence exists that the employee copied the employer's confidential information, it leads to a conclusion of inevitable disclosure.[3] Plaintiff's complaint sufficiently plead the ITSA claim and inevitable disclosure because it alleged that Pakosz had copied Mobile Mark's proprietary information, and that Hascall-Denke encourage Pakosz to do so in order to gain a competitive advantage.

Computer Fraud and Abuse Act and the Illinois Computer Crime Prevention Law

To state a civil claim for violation of the CFAA, a plaintiff must allege: (1) damage or loss; (2) caused by; (3) a violation of one of the substantive provisions set forth in §1030(a); and (4) conduct involving one of the factors in §1030(c)(4)(A)(i)(I)-(V). To satisfy the third requirement, Mobile Mark's complaint relied on §1030(a)(2), which makes it a violation of the CFAA to

intentionally access[] a computer without authorization or [to] exceed [] authorized access, and thereby obtain[] information from any protected computer.[4]

Defendants again argued that Plaintiff must plead with particularity the file(s) or document(s) that Pakosz allegedly accessed without authorization, however the district court disagrees that such a requirement exists under the CFAA and also pointed out that Plaintiff's complaint does specify the date and time when Pakosz' unauthorized activity took place. Defendants also claimed that the complaint should be dismissed for failing to allege that the files on which the claim is based "involved interstate commerce." Once again, the district court rejects argument as there is no such requirement to bring a CFAA claim.

Defendants further challenged the Plaintiff's CFAA claim by arguing that Mobile Mark failed to allege that is suffered any loss in connection with Pakosz' alleged activities. The court rejected this argument, however, finding that Plaintiff has properly alleged several types of damages, including costs to perform a forensic computer analysis, and loss of "customers, goodwill, sales, and business opportunities." Defendants' challenge to Plaintiff’s ICCPL claim based on the same argument regarding damages was similarly rejected by the court. While the court did dismiss Plaintiff's claim for intentional spoliation (because the Seventh Circuit has previously stated that there is no such cause of action under Illinois Law), Plaintiff's remaining claims, including negligent spoliation were not dismissed by the court.

References

  1. Motorola, Inc. v. Lemko Corp., 609 F.Supp.2d 760, 771 (N.D. Ill. 2009) (full-text).
  2. Stenstrom Petroleum Services Group, Inc. v. Mesch, 375 Ill.App.3d 1077, 314 Ill. Dec. 594, 874 N.E.2d 959, 976 (2007) (full-text).
  3. Saban v. Caremark Rx, L.L.C., 780 F.Supp.2d 700 (N.D. Ill. Apr. 11, 2011) (full-text).
  4. 18 U.S.C. §1030(a)(2)(C).

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