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A lawsuit alleging three reporters stole trade secrets when they took news sources with them to new jobs has been dismissed. The trio also received letters of apology from their former employer, San Francisco-based Paperloop.com, for dragging them into court, their lawyer said Monday. Paperloop, which publishes forest product industry news, withdrew the complaint after court-ordered mediation. “Over time, they became convinced there was no way they could win,” First Amendment lawyer Neil Shapiro said. The McCutchen, Doyle, Brown & Enersen partner also said the plaintiffs decided it just wasn’t worth pursuing from a financial standpoint. “By going through the appellate process, they would have owed us a ton of money,” he said, adding that details of the settlement are confidential. The three reporters — Ola Jane Gow, James McClaren and Diane Keaton — worked for Paperloop or its predecessor, Miller Freeman Inc., then moved to Forestweb.com, an online competitor of their former employer. Paperloop sought an injunction preventing the former employees from publishing information from sources they developed at Paperloop and preventing Forestweb from printing it. In September, San Francisco Superior Court Judge A. James Robertson II denied a motion by the defendants to dismiss the suit. He said Paperloop would probably prevail at trial. Arguing that the lawsuit was an unconstitutional prior restraint of free speech, Shapiro appealed Robertson’s ruling to the 1st District Court of Appeal, which ordered mediation. The issue never got to the appellate bench, after mediation “worked out a rough framework” for parties to fashion an exit strategy, the attorney said. “They not only agreed to dismiss the complaint but also wrote letters of apology to the defendants and the company,” Shapiro said. “We didn’t pay any damages or any other consideration of any kind.” Paperloop’s attorneys, Laurence Weiss of San Francisco-based Heller Ehrman White & McAuliffe, and Stephen Baldini of New York’s Akin, Gump, Strauss Hauer & Feld, did not return calls by press time. Keaton said she was relieved by the dismissal news. “I’m not surprised, but it’s nice to have it in writing and be done with,” she said. Keaton said this letter of apology was sent to all three reporters: “Based upon subsequent information made available to us, Paperloop is now satisfied that that you did not misappropriate trade secrets from Paperloop. “It is regretful that litigation of this nature imposes such a burden on individuals and it was particularly helpful to us and to the settlement process to hear you express your sentiment and outline your position. “We certainly hope that now that the settlement is complete that you can conduct your business successfully. Good luck in your future endeavors.” Keaton said several of her sources were outraged that Paperloop considered them the company’s “property.” “I had some who implied that they weren’t going to be sources for Paperloop anymore,” she said.

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