Ordinance Technologies has sued Raytheon over an alleged misappropriation of trade secrets pertaining to the design of the Lancer Multiple Warhead System (“LMWS”). Ordinance claims to be a small private defense contractor specializing in the design, development, testing and manufacturing of weapons systems. The suit, filed in federal court in Tucson, claims that Ordinance owns the proprietary and intellectual rights to the design of the systems, which have been adapted to the Tomahawk Cruise Missile. It claims that it worked with Raytheon on the warhead project with the understanding, and under the agreement, that any intellectual property rights it created would remain its property. Raytheon allegedly agreed not to disclose or use any proprietary information belonging to Raytheon.
The suit claims that, in 2005, Raytheon began generating briefings using proprietary data owned by Ordinance. Then, according to the suit, Raytheon entered into a project with the United States to modify the Tomahawk Cruise Missile to enable it to destroy targets in “multi-effects” system. In doing so, according to Ordinance, Raytheon misappropriation trade secrets valued at over $12,000,000. Additionally, Ordinance claims that Raytheon’s actions constituted breach of contract, breach of the implied covenant to preserve and protect the trade secrets, breach of the implied covenant of good faith and fair dealing, unjust enrichment, conversion, interference with contract or business expectancy, unfair competition and violations of the Lanham Act (the primary federal trademark protection statute of the United States).
Texas also allows persons and companies to sue for misappropriation of trade secrets. Texas defines a “trade secret” as “the whole or any part of any scientific or technical information, design, process, procedure, formula, or improvement that has value and that the owner has taken measures to prevent from becoming available to persons other than those selected by the owner to have access for limited purposes”. A victim of trade secret misappropriation can sue if it can establish that (1) a trade secret existed (2) the trade secret was acquired through a breach of a confidential relationship or was discovered by improper means (3) the defendant used the trade secret without the plaintiff’s authorization, and (4) the plaintiff suffered damages as a result.
Very often, the central fight is over whether a particular idea, design or process is, in fact, a trade secret. To make this determination the court weighs six factors, including (1) the extent to which the information is known outside of the business (2) the extent to which it is known by employees and others involved in the business (3) the extent of measures taken to guard the secrecy of the information (4) the value of the information to the business and to its competitors (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
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