Canon U.S.A. Sues Rival For Using Stolen Trade Secrets

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Canon U.S.A. Sues Rival For Using Stolen Trade Secrets
Canon Unit’s Rival Stole Workers, Trade Secrets, Suit Says
 By Cara Salvatore
Law360, New York (March 17, 2014, 7:57 PM ET) — A Canon USA Inc. unit filed suit against competitor Ray Morgan Co. Inc. on Monday, telling a California federal court that the rival poached at least five account executives and paid them incentives to flip Canon customers using stolen trade secrets.

Office equipment provider and servicer Canon Solutions America Inc. says senior account executive Deborah Royston departed for RMC on Feb. 21, following four colleagues also named as defendants: Mark Hipperson, Steve Rieger, Craig Collins and Anthony Bishop. According to CSA, RMC relies on a business strategy of stealing CSA employees and their insider information.

Chico, Calif.-based RMC “directed its employees — particularly those who formerly worked at CSA — to use CSA’s confidential information and trade secrets to induce certain specifically targeted CSA employees to terminate their contractual relationships with CSA and join RMC,” Canon said in its complaint.

“RMC’s objective was to lure CSA’s key employees so that it could use their knowledge of CSA’s confidential information and trade secrets to steal CSA’s customers, business and trade secrets.”

Bishop resigned from CSA in May 2013. The resignation dates for the other three individual defendants were not immediately available.

RMC's website bills itself as the number two independent Canon dealer nationally, with more than $65 million in annual revenue.

Emails sent from Royston's CSA email account painted a picture of a “willful and malicious” conspiracy, CSA said. Royston allegedly met with Rieger and Collins for lunch in early January to discuss her “bet” that she would soon “have a new job.”

Royston also allegedly attempted to access the company offices on Jan. 1, when she knew no one would be there, according to CSA. CSA also alleges that Royston accessed its highly confidential customer and sales database “after hours” on Feb. 20, the day before her resignation.

The plaintiff said these facts indicate a well-considered plot.

“[RMC has] caused and induced numerous CSA employees to quit their employment with CSA and join RMC in furtherance of RMC’s wrongful plan and intent to misappropriate CSA’s confidential information and usurp CSA’s
rightful customer relationships and contracts,” the complaint states. It names 13 other employees, not defendants in this case, who have allegedly taken the bait in the past.

CSA also says ex-major account executive Bishop handed RMC information on the biggest fish in his CSA book of business.

“On information and belief, while he was still employed by CSA and was negotiating employment with RMC, Bishop reviewed CSA confidential data to determine which of his CSA accounts had the highest revenue service contracts. He then presented that information to RMC, in violation of his contractual, statutory and common law duties to CSA, to show RMC the significant customers he could divert from CSA to RMC.”

One such customer, according to the complaint, is a business referred to as UCB, which CSA says Royston steered toward RMC with a carrot-and-stick approach.

“After disparaging CSA and failing to respond to this customer for weeks, Royston contacted defendant Hipperson at RMC and arranged for Hipperson (on behalf of RMC) to offer to provide service to the customer and thereby displace CSA and usurp this valuable contractual relationship from CSA,” the plaintiff alleged.

CSA says all the employees named as defendants have improperly provided to RMC such items as cost information, employee compensation information, customer and contract information, including negotiated tradeoffs and concessions and number and types of machines at individual customers.

The complaint names individual claims for breach of contract, tortious interference with contractual relations, tortious interference with at-will employment relations, tortious interference with prospective economic advantage, misappropriation of trade secrets, breach of fiduciary duties and duty of loyalty, defamation, unfair competition and unjust enrichment.

CSA seeks an immediate injunction, direct and exemplary damages and repayment by Royston and Bishop of “all compensation and benefits they received during any period of time they were in breach of their fiduciary duty and/or duty of loyalty."

Representatives for CSA and RMC were not immediately available for comment on Monday.

Counsel information for RMC was not immediately available on Monday.

CSA is represented by Joe Hammell, Joel O'Malley, JoLynn Markison and David Murphy of Dorsey & Whitney LLP.

The case is Canon Solutions America Inc. v. Ray Morgan Co. Inc. et al., case number 3:14-cv-01202, in the U.S. District Court for the Northern District of California.

–Editing by Stephen Berg.

Canon U.S.A. Sues Rival For Using Stolen Trade Secrets
Canon Unit’s Rival Stole Workers, Trade Secrets, Suit Says
 By Cara Salvatore
Law360, New York (March 17, 2014, 7:57 PM ET) — A Canon USA Inc. unit filed suit against competitor Ray Morgan Co. Inc. on Monday, telling a California federal court that the rival poached at least five account executives and paid them incentives to flip Canon customers using stolen trade secrets.

Office equipment provider and servicer Canon Solutions America Inc. says senior account executive Deborah Royston departed for RMC on Feb. 21, following four colleagues also named as defendants: Mark Hipperson, Steve Rieger, Craig Collins and Anthony Bishop. According to CSA, RMC relies on a business strategy of stealing CSA employees and their insider information.

Chico, Calif.-based RMC “directed its employees — particularly those who formerly worked at CSA — to use CSA’s confidential information and trade secrets to induce certain specifically targeted CSA employees to terminate their contractual relationships with CSA and join RMC,” Canon said in its complaint.

“RMC’s objective was to lure CSA’s key employees so that it could use their knowledge of CSA’s confidential information and trade secrets to steal CSA’s customers, business and trade secrets.”

Bishop resigned from CSA in May 2013. The resignation dates for the other three individual defendants were not immediately available.

RMC's website bills itself as the number two independent Canon dealer nationally, with more than $65 million in annual revenue.

Emails sent from Royston's CSA email account painted a picture of a “willful and malicious” conspiracy, CSA said. Royston allegedly met with Rieger and Collins for lunch in early January to discuss her “bet” that she would soon “have a new job.”

Royston also allegedly attempted to access the company offices on Jan. 1, when she knew no one would be there, according to CSA. CSA also alleges that Royston accessed its highly confidential customer and sales database “after hours” on Feb. 20, the day before her resignation.

The plaintiff said these facts indicate a well-considered plot.

“[RMC has] caused and induced numerous CSA employees to quit their employment with CSA and join RMC in furtherance of RMC’s wrongful plan and intent to misappropriate CSA’s confidential information and usurp CSA’s
rightful customer relationships and contracts,” the complaint states. It names 13 other employees, not defendants in this case, who have allegedly taken the bait in the past.

CSA also says ex-major account executive Bishop handed RMC information on the biggest fish in his CSA book of business.

“On information and belief, while he was still employed by CSA and was negotiating employment with RMC, Bishop reviewed CSA confidential data to determine which of his CSA accounts had the highest revenue service contracts. He then presented that information to RMC, in violation of his contractual, statutory and common law duties to CSA, to show RMC the significant customers he could divert from CSA to RMC.”

One such customer, according to the complaint, is a business referred to as UCB, which CSA says Royston steered toward RMC with a carrot-and-stick approach.

“After disparaging CSA and failing to respond to this customer for weeks, Royston contacted defendant Hipperson at RMC and arranged for Hipperson (on behalf of RMC) to offer to provide service to the customer and thereby displace CSA and usurp this valuable contractual relationship from CSA,” the plaintiff alleged.

CSA says all the employees named as defendants have improperly provided to RMC such items as cost information, employee compensation information, customer and contract information, including negotiated tradeoffs and concessions and number and types of machines at individual customers.

The complaint names individual claims for breach of contract, tortious interference with contractual relations, tortious interference with at-will employment relations, tortious interference with prospective economic advantage, misappropriation of trade secrets, breach of fiduciary duties and duty of loyalty, defamation, unfair competition and unjust enrichment.

CSA seeks an immediate injunction, direct and exemplary damages and repayment by Royston and Bishop of “all compensation and benefits they received during any period of time they were in breach of their fiduciary duty and/or duty of loyalty."

Representatives for CSA and RMC were not immediately available for comment on Monday.

Counsel information for RMC was not immediately available on Monday.

CSA is represented by Joe Hammell, Joel O'Malley, JoLynn Markison and David Murphy of Dorsey & Whitney LLP.

The case is Canon Solutions America Inc. v. Ray Morgan Co. Inc. et al., case number 3:14-cv-01202, in the U.S. District Court for the Northern District of California.

–Editing by Stephen Berg.

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March 20, 2014 at 11:56 AM