Fort Lauderdale-based MAKO Surgical Corporation has filed a lawsuit against a former employee, Jeffrey Gellman, and his new company, Blue Belt Technologies, Inc., alleging the parties conspired to steal MAKO’s confidential information and clients.
MAKO is a company that is principally engaged in the design, manufacture and sale of robotic surgical systems. These systems use an intelligent robotic arm and specialized software that help guide the surgeon in performing various procedures, specifically bone resurfacing. MAKO is widely regarded as a pioneer in the industry. In August 2010, Gellman applied for and obtained a job with MAKO as a sales manager. In that capacity, Gellman was responsible for selling MAKO’s robotic surgical systems and related products to hospitals and orthopedic surgeons throughout the country. As a condition of his employment with MAKO, Gellman signed an agreement that contained non-compete, non-solicitation, non-disclosure and confidentiality provisions. In short, the agreement prevented Gellman from working for a competitor or soliciting MAKO employees for one-year following his departure from the company.
Throughout 2011 and 2012, Blue Belt Technologies (BBT) was gearing up to enter the same market space with a new product, the NavioPFS orthopedic surgical system. The NavioPFS, like the systems offered by MAKO, is a robotic surgical system. In late 2012, according to the complaint, BBT aggressively began recruiting Gellman. In December 2012, the NavioPFS received FDA clearance. At that point, BBT apparently redoubled its efforts to recruit Gellman. At some point in January, Gellman allegedly agreed to leave MAKO and go work for BBT. Throughout January 2013, while still employed by MAKO, Gellman allegedly sent dozens of emails from his MAKO email account to his personal email account and his wife’s personal email account. These emails contained (1) account, client and customer lists (2) marketing proposals (3) financial statements (4) and compensation plans. On January 25, 2013, Gellman resigned from MAKO. He immediately began work for BBT as the vice president of sales for orthopedic robotics.
On February 19, MAKO filed suit against Gellman and BBT in the United States District Court for the Southern District of Florida. In addition to claims for breach of contract against Gellman, the complaint also includes claims against both Gellman and BBT for tortious interference, misappropriation of trade secrets and conspiracy. Granted, there are two sides to every story, but judging from the allegations in the complaint, Gellman has not done himself any favors.
First, the terms of the MAKO employment agreement are very reasonable. The agreement contains one-year non-compete and non-solicitation provisions. In contrast, many non-compete agreements in the technology sector include two or three year bans on competition. Also, the agreement is reasonable in scope, only prohibiting Gellman from working in the realm of guided surgical devices or surgical robotics. In other words, Gellman is still free to sell other medical devices. This is significant. Prior to joining MAKO, Gellman spent seven years selling more traditional medical devices for GE Healthcare. Gellman could have returned to the traditional medical device market. Alternatively, Gellman could have sat on the bench or done something else for a year and then went to work for BBT. But he did not.
Instead, against the backdrop of a relatively reasonable non-compete agreement, Gellman did (perhaps) the stupidest thing imaginable: He took a bunch of MAKO’s documents with him on his way out the door. According to the complaint, Gellman emailed himself (and his wife) dozens of documents related to MAKO’s clients, accounts, marketing plans and company finances. In my view, this fact is basically dispositive. If Gellman had not taken any documents with him, he would be in a much different position. On the issue of confidential information, he would be in the world of inevitable disclosure (which is an open question under Florida law). In that case, Gellman could argue that he may have been exposed to general sales and marketing information, but that he did not remember anything specific, and – besides – he was just a salesman. He never had access to real trade secrets. And on the issue of customers, Gellman could argue that there were no substantial customer relationships at issue. In other words, the clients – the hospitals and surgical centers – are all well-known throughout the industry. But all of that is out the window. Instead, Gellman apparently has taken a bunch of MAKO’s documents with him. The fact that Gellman thought those documents were important enough to take with him (i.e. to steal) suggests that those documents, and the information they contain, really are valuable to a competitor and new market entrant like Blue Belt.
If the allegations in the complaint are true, then Gellman is up the proverbial creek without a paddle. With regard to Blue Belt’s potential liability, that is less clear. If Blue Belt knew about the non-compete agreement, there is a case against the new employer for tortious interference. But the claim for misappropriation is a bit more of a stretch and will require at least some evidence that Blue Belt knew about the stolen files.
The case is MAKO Surgical Corp. v. Jeffrey Gellman and Blue Belt Technologies, Inc., 2013 WL 785537 (S.D.Fla. Feb. 19, 2013)
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.
Despite Blue Belt’s spin tonight claiming they “resolved” the lawsuit, the swiftness of the outcome and wording of MAKO’s PR suggests otherwise: “The Order for Permanent Injunction was entered contemporaneous to a separate settlement agreement among Blue Belt, Mr. Gellman and MAKO, which provided MAKO with the described stipulated order, along with additional relief and future protections.”