Advanced Micro Devices, Inc. (AMD), one of the world’s largest manufacturers of computer graphics cards, has sued four former employees alleging a massive theft of company trade secrets. The case was filed last week in the United States District Court for the District of Massachusetts.
According to the complaint, former AMD executive Robert Feldstein was the ringleader of a conspiracy to steal AMD’s trade secrets then jump ship to go work for the company’s primary competitor, NVIDIA Corp. Feldstein left AMD in July of 2012 but he did not leave empty handed. Instead, he apparently took certain confidential licensing agreements along with the entire contents of his Outlook mailbox, all done via flashdrive.
Over the next few weeks, Feldstein allegedly solicited tother AMD employees – Manoo Desai, Nicolas Kociuk and Richard Hagen – to join him at NVDIA. When the time came for Desai and Kociuk to make their exit from AMD, they apparently launched an aggressive plan to take as much AMD information as possible. In the days prior to Desai’s departure, hundreds of files were downloaded from her computer onto an external hard drive. Many of the documents taken had confidentiality designations as they contain technical information related to the latest generation of products and processes presently being developed by AMD. But it gets better. After Desai left the company, Kociuk remained on board. In the weeks immediately prior to his resignation, more than 150,000 files – believed to be full copies of his AMD laptop and desktop computer – were transferred to an external hard drive. Three of the defendants now work for NVIDIA, with Kociuk apparently planning to begin work there in the near future.
The complaint is well done and the allegations are fairly shocking. If true, the defendants have brazenly perpetrated a massive theft of AMD’s intellectual property and trade secrets. But they have also displayed a shocking degree of stupidity. Most professionals who work in the computer and technology arena understand the concept of an electronic paper trail. Everything leaves a trail: every email, every print job and certainly every download to an external hard drive. Apparently, certain of the defendants failed to grasp that concept.
Strangely, this is not a non-compete case. AMD is not suing these former employees for breaching a non-compete agreement. From a review of the complaint, it seems likely that these employees did not have non-compete agreements. Instead, the former employees had agreements regarding confidentiality and solicitation. They agreed not to use AMD’s confidential information when they left the company; to return any AMD materials upon termination; and not to solicit other AMD employees to leave the company to work for a competitor. In my view, such restrictions are perfectly reasonable and – in many instances – are just as effective as a non-compete agreement. Beyond contractual protections, there are other tools a company can use when former employees engage in unfair conduct. Most states recognize some type of unfair competition claim predicated on the type of conduct at issue here. And when actual trade secrets (not baseless, unsupported claims about trade secrets) are at issue, a claim for misappropriation of trade secrets is always available. In short, I believe that our legal system provides a number of ways to protect legitimate business interests, and punish those who injure such interests, such that non-compete agreements are rarely necessary. Call it the California paradigm.
The case is Advanced Micro Devices v. Feldstein, 13-40007, U.S. District Court, District of Massachusetts. The complaint is available here: AMD Lawsuit
Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida. He focuses his practice on cases involving non-compete disputes, antitrust and business torts. He represents clients in Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Jupiter, Fort Myers, Tampa, and Orlando.
Even considering cases in which former employees do not take secrets with them, it is always clear that their main secrets are inside their brains. Moreover, the issue involves also Labor Law.
Interesting case and the your commentary is insightful.