Trade-Secrets Case Against Patterson Belknap Survives

Trade-Secrets Case Against Patterson Belknap Survives

A misappropriation of trade secrets case against Patterson Belknap Webb & Tyler and a former associate has survived a motion to dismiss after the judge found the plaintiff stated a “plausible factual basis” to show the defendants “obtained the trade secrets by improper means.”

Dr. Enrico Nicolo, an inventor who created, among other things, surgical staplers, alleged that Patterson Belknap associate Kevin Malek had set up a meeting with him in Pittsburgh to discuss other companies’ possible infringement of Nicolo’s patents and Patterson Belknap’s possible representation of Nicolo in enforcing his patents, according to the opinion by U.S. District Judge David S. Cercone of the Western District of Pennsylvania.

As part of that meeting, Nicolo disclosed to Malek what Nicolo considered to be proprietary information about his patents. That information included the coverage of Nicolo’s patents and his perceived strengths and weaknesses of the patents, particularly for the surgical staplers, according to the opinion in Nicolo v. Patterson Belknap Webb & Tyler.

Nicolo said he never heard from Malek after that and found out from separate counsel that Patterson Belknap had for a number of years represented competitor Ethicon in relation to Ethicon’s intellectual property and surgical staplers, according to the opinion.

Nicolo had previously entered into business arrangements with Ethicon and had sued Ethicon for patent infringement. That case settled, Cercone said.

According to the opinion, Nicolo alleged in his suit against Malek and Patterson Belknap that Malek’s purpose in scheduling the meeting with Nicolo was to obtain confidential information regarding Nicolo’s patent for the benefit of Patterson Belknap client Ethicon. Nicolo argued Ethicon was unjustly enriched by the defendants’ actions and their actions prevented Nicolo from dealing at arm’s length with Ethicon in regard to surgical-stapler patents, Cercone said.

Patterson Belknap and Malek argued Nicolo failed to establish that Malek wrongfully obtained any information and that there was no evidence the defendants ever used or disclosed the information they obtained from Nicolo, Cercone said.

Cercone said the defendants failed to acknowledge that the Pennsylvania Uniform Trade Secrets Act makes actionable two forms of misappropriation: the acquisition of trade secrets through improper means and the improper disclosure of properly-obtained trade secrets in violation of a duty to maintain its secrecy.

Cercone said the complaint lays out facts that plausibly show the existence of trade secrets, that they were obtained by Malek through improper means and that Patterson Belknap had reason to know Malek did so.

“Defendants vehemently deny that a confidential relationship existed when [Nicolo] and Malek met,” Cercone said. “And in this regard the complaint stops short of averring that such a relationship actually was formed. Nevertheless, the facts alleged are sufficient to give rise to a relationship that will protect communications that were made in confidence on the attempt to form such a relationship at Malek’s invitation.”

Cercone outlined the criteria for establishing an implied attorney-client relationship in Pennsylvania. He also noted that Nicolo alleged Malek identified himself as an attorney with Patterson Belknap, purported to have information about companies potentially infringing Nicolo’s patents and asked for confidential information under the pretense of forming an attorney-client relationship.

“These alleged facts are enough for a reasonable person to believe legal assistance was being offered by an attorney who was competent in the area,” Cercone said, noting Pennsylvania law protects the confidentiality of the communications like those had between Nicolo and Malek.

Cercone further said that Nicolo’s alleged facts support an inference that Malek never intended to form an attorney-client relationship. Cercone said Malek never disclosed Patterson Belknap’s relationship with Ethicon, requested information that had a direct bearing on the value of the technology as it related to Ethicon’s decisions concerning the same technology, and never followed up with Nicolo after the first meeting.

Cercone also noted Nicolo’s allegations that Ethicon decided not to have further dealings with Nicolo after Malek and Nicolo met, making it “plausible” that the information was disclosed to Ethicon.

“It may be that [Nicolo] will be unable to discover sufficient evidence to support a finding of liability,” Cercone said. “Similarly, he might well be unable to establish a basis for a jury to return an award of quantifiable damages for his injury and other claimed resulting harm, particularly with regard to his assertion that he was harmed in the form of a decision by Ethicon not to deal with him in the area of surgical staplers.

“But once a complaint has adequately stated a claim, that claim ‘may not be dismissed based on a district court’s assessment that the plaintiff will fail to find evidentiary support for his allegations or prove his claim to the satisfaction of the fact-finder.’”

Cercone said a further development of the record as to liability and what, if any, damages can be recovered is warranted. Cercone said any perceived shortcomings in Nicolo’s ability to prove his claim and resulting harms can be addressed at a later juncture.

Malek is represented in the case by David Strassburger of Strassburger McKenna Gutnick & Gefsky in Pittsburgh.

James R. Schadel of Weinheimer, Schadel & Haber in Pittsburgh represents Patterson Belknap. Blynn L. Shideler II of the BLK Law Group represents Nicolo. None of the attorneys returned calls for comment.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.

(Copies of the 14-page opinion in Nicolo v. Patterson Belknap Webb & Tyler, PICS No. 14-0463, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •

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