Company Wins $35 Million Verdict in Trade Secrets Case

Company Wins $35 Million Verdict in Trade Secrets Case Gary Lewis James Roberston, Fatima Lahnin, John Horvack, Jennifer Peschell

What’s written on a bag of Doritos might be an afterthought for most customers.

But for two competitors in the niche business of supplying materials to companies that print words on their products, it’s a livelihood.

That competition fueled a hotly contested intellectual property battle in U.S. District Court in Connecticut over the past several years that came to a head last week.

After three weeks of testimony, a federal jury awarded Waterbury-based MacDermid Printing Solutions $35.4 million for breach of contract, trade secret theft and state and federal anti-trust law violations.

“We were fortunate in that we had the better evidence and a jury that fully understood it,” said one of the plaintiff’s lawyers, James Robertson Jr. of Carmody Torrance Sandak & Hennessey. Assisting Robertson were John Horvack Jr., Jennifer Peschell and Fatima Lahnin, of the same firm.

The lawyers explained that MacDermid, whose corporate headquarters are in Waterbury, are in the business of making what’s called photopolymer technology, including its use in the manufacturing of printing plates.

They said when a customer goes into a grocery store, many of the products, whether it’s a bag of Doritos or a container of bacon, have writing on the package that doesn’t easily get there. Companies use what’s called flexographic printing plates.

“It’s the type of plate used to print most packaging you see when you go to the supermarket and drug store,” said Horvack.

Horvack said around the year 2000, E.I. DuPont de Nemours and Co., more commonly known as just DuPont, began selling a type of flexographic printing plate using a thermal heat.

For about five years, DuPont was the only company using this technology and had a monopoly in the marketplace. Then at a trade show about five years later, MacDermid announced they too were joining the market and selling a similar product.

In order to make this happen, MacDermid reached an agreement with another company named Cortron Corporation from Minnesota that made the machines that create the printing plates and designed improvements to the machines over time.

Unhappy MacDermid had entered into what they believed was their market, DuPont filed a patent claim in New Jersey asking a judge to stop MacDermid from selling the thermal equipment. That claim was unsuccessful, said Horvack.

Undeterred from trying to rid themselves of MacDermid, the plaintiff’s lawyers say DuPont next concocted a scheme that gave rise to this lawsuit.

DuPont organized a business meeting with Cortron in Minnesota. DuPont executives outlined in a Power Point presentation a proposal that would lead to millions of dollars’ worth of business for Cortron if they were to do business with them instead.

Following that 2008 morning business meeting, another afternoon session was scheduled. There, lawyers representing DuPont told Cortron officials that they were suing them for patent infringement.

According to the plaintiff’s lawyers, DuPont then told the Cortron officials they would drop the lawsuit against them if they went into business with them, as outlined in their earlier morning meeting.

The strong-arm approach worked, at least at the time, as Cortron agreed to settle the lawsuit by agreeing to DuPont’s terms for a settlement. Those terms, Horvack explained, included Cortron not telling MacDermid about the DuPont lawsuit.

More importantly, however, the settlement required Cortron to turn over all documents relating to MacDermid’s thermal processing machine and all of MacDermid’s customer information relating to it. Also, the settlement prevented Cortron from doing any more work for MacDermid without their approval first, effectively ending the MacDermid – Cortron partnership.

The lawyers said that when DuPont received the documents from Cortron relating to MacDermid’s technical engineering information, DuPont deleted it all.

Later, a public announcement of the patent infringement suit and settlement was made. MacDermid’s lawyers said that significantly impacted their clients’ business going forward.

“Before this, customers were buying MacDermid’s machine,” said Horvack. “People no longer wanted to buy the machine.”

In an attempt to mitigate their damages, MacDermid publicly announced it was not out of the market and that they were seeking an alternative supplier. However, the lawyers explained that the company had no way of retrieving the information that Cortron gave to DuPont that had been deleted.

“The engineering upgrade for the machine sold in 2008 was entirely in the possession of Cortron,” said Horvack. “So when they deleted it from the computer system, MacDermid had no way to get the upgraded new designs for the upgraded machine they were selling. They had to get the 2004 information, get a new supplier and get to the place that they were [before]. It took nine months to recreate all that information.”

MacDermid then filed a lawsuit against Cortron alleging breach of contract, misappropriation of trade secrets, computer crime, and state and federal antitrust violations. In time, Cortron filed a countersuit against MacDermid, for claims including breach of contract, fraud and negligent misrepresentation. At the trial, the jury ultimately denied all of the counterclaims.

Robertson said DuPont entered into a contract with Cortron in which it promised to indemnify Cortron on this lawsuit, and, according to the testimony of the Cortron witnesses, DuPont paid all the litigation expenses including an hourly rate for the witnesses. Robertson noted that Cortron is no longer in business.

The case proceeded to trial in U.S. District Court in Hartford before Judge Michael Shea.

Representing Cortron at the trial were attorneys Craig Raabe, Nuala Droney, Jamie Landry and Kristopher Moore of Robinson & Cole. Raabe declined interview requests.

The jury sided with the plaintiffs and awarded $35,423,977.

A key witness at the trial for the plaintiffs was an economics expert Jim Levinsohn, the director of the Jackson Institute for Global Affairs at Yale University. Levinsohn opined that the DuPont-Cortron conspiracy cost MacDermid significant sales and revenue, thus once again creating a monopoly for DuPont in the marketplace.

Robertson said there will still be further proceedings in the case.

“The jury found that some of the conduct was willful and malicious, which means that Judge Shea will now be considering the award of punitive damages,” said Robertson. “Also pending is our request for a declaratory judgment that MacDermid is the sole owner of certain technology and that Cortron’s attempt to transfer it is invalid.”

Robertson said that his legal team really focused on nothing but this case for the past month.

“I think it’s fair to say we pretty much worked around the clock for the last month,” said Robertson. Robertson, who works out of Carmody & Torrance’s Waterbury office, while Horvack and Lahnin work out of the New Haven office, said the team stayed in a hotel in Hartford the entire time.

Robertson said a separate suit by MacDermid against DuPont is still pending in New Jersey.•

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