BFV Perspectives, Noncompete & Trade Secrets, | Oct 17, 2014

Protracted Dispute Involving Camera Technology Competitors

Earthcam, Inc. v. Oxblue Corporation, No. 1:11-CV-2278-WSD, 2013 WL 1693959 (N.D. Ga. April 17, 2013), is a dispute between competitors in the camera technology industry. Earthcam, Inc. (“Earthcam”) brought a lawsuit against Oxblue Corporation (“Oxblue”), as well as Oxblue’s officers. Earthcam alleged that the defendants engaged in corporate espionage to misappropriate Earthcam’s technology and customers. Earthcam’s complaint asserted claims for violation of the Georgia Trade Secrets Act, copyright infringement, violation of the Computer Fraud and Abuse Act, and breach of contract.

The case involved substantial motion practice regarding discovery and other issues. A series of blog entries, starting with this one, will discuss the Court’s ruling on some of the various motions filed in the case.

One motion addressed by the Court was Earthcam’s motion to compel. This motion stemmed from previous discovery disputes. In November 2012, the Court had held a discovery conference to address disputes regarding the scope of Earthcam’s document requests and interrogatories. In one set of requests, Earthcam sought a number of documents pertaining to Oxblue’s overall financial information, including its net gross profit or loss from 2006 to the present. Earthcam also sought Oxblue’s balance sheets, statement of earnings, trial balances and payroll registers for the last ten fiscal years. In another set of requests, Earthcam sought information and documents pertaining to Oxblue’s customers, including Oxblue’s net and gross profit or loss for each customer acquired since 2006, as well as various information and documents pertaining to customers common to Earthcam and Oxblue.

Oxblue had objected to the breadth of these requests as well as the fact that they sought confidential and proprietary information. The Court held it would not require Oxblue to respond to the first set of requests unless Earthcam made a threshold showing that Oxblue had used technology alleged to have been stolen from Earthcam. The Court further held that Oxblue would not be required to respond to the second set of requests except as to customers potentially misappropriated from Earthcam.

Not surprisingly, the parties ended up disagreeing on whether the parameters by which Oxblue would be required to respond to these requests had been met, and Earthcam moved to compel. With respect to the first set of requests seeking financial information regarding Oxblue, Earthcam submitted evidence it contends demonstrates Oxblue’s use of Earthcam’s copyrights and trade secrets. The evidence was a handful of emails in which the individual defendants discussed Earthcam’s product and the Oxblue products that were being developed. The Court found that this evidence was sufficient for purposes of discovery to show that Oxblue may have used Earthcam’s technology in the development of its products. The Court rejected Oxblue’s argument that the emails did not prove actual use of Earthcam’s information by Oxblue, reasoning that the documents did not have to establish liability, but rather only show that the requests for Oxblue’s financial information were reasonably calculated to lead to the discovery of admissible evidence.

The Court also granted Earthcam’s request to compel information regarding Oxblue’s customers. Earthcam argued that the information was relevant to its claims for damages, to the extent Oxblue acquired the customers by using information misappropriated from Earthcam. Oxblue had sought to limit discovery only to customers which could have been possibly acquired through the alleged misappropriation. Earthcam was willing to narrow its request for customer information in a way that was consistent with Oxblue’s proposed limitation. The Court found that the parties’ proposed limitations reasonably limited the scope of Earthcam’s request to those customers who had been acquired improperly.

This case illustrates how courts often take pragmatic approaches to determine the appropriate amount of discovery in disputes between competitors where discovery usually covers sensitive and proprietary information. By acting as the gatekeeper, courts ensure that a party does not attempt to conduct a fishing expedition into its competitor’s businesses and that discovery is reasonably limited to the claims and defenses at issue.

Stay tuned for more blog entries regarding other rulings in Earthcam, Inc. v. Oxblue Corporation.

BFV Perspectives, Noncompete & Trade Secrets, | Oct 17, 2014
Neal F. Weinrich
Neal F. Weinrich

Neal Weinrich knows noncompetes and trade secrets inside and out. A shareholder at Berman Fink Van Horn, Neal counsels clients in all industries on matters involving restrictive covenants, trade secrets and other competition-related issues.