Intertek United States v. Amspec

Summarized by:

  • Court: Intellectual Property Archives
  • Area(s) of Law: Trade Secrets
  • Date Filed: 09-11-2014
  • Case #: 14 CV 6160
  • Judge(s)/Court Below: United States District Court for the Northern District of Illinois, Eastern Division
  • LexisNexis Citation: 2014 U.S. Dist. LEXIS 127120
  • Full Text Opinion

Under the Illinois Trade Secrets Act, a plaintiff must demonstrate that the information at issue was a trade secret, that it was misappropriated and that it was used in the defendant’s business.

Opinion (Gottschall): Intertek USA, Inc. ("Intertek") sued its competitor, AmSpec, LLC; its former employees, Jim Graca, Lisa Graca, and Melanie McMahon; and AmSpec officer Matthew Reilley and Malcolm Vella (“Defendants”), alleging, among other things, that the Defendants misappropriated Intertek’s trade secrets. Intertek is a Louisiana corporation that tests and inspects petroleum products and chemicals. Intertek has a Chicago branch, and it owns roughly 60% of the market share for petrochemical testing and inspection in Chicago. As employees of Intertek, the Gracas and McMahon were required to execute “Employee Confidentiality and Innovation Agreements.” These agreements included non-solicitation clauses, which prohibited former employees from attempting to solicit any Intertek employee for one year following resignation or termination of their employment. The agreements also included confidentiality agreements regarding Intertek’s trade secrets and confidential information, including its financial information, customer lists, and information related to its testing methods. AmSpec competes with Intertek in the petrochemical-testing industry. In 2013, AmSpec decided to expand into new markets, including Chicago. Jim Graca heard that AmSpec was coming to Chicago, and called inquiring about a job; after meeting with AmSpec executives, Jim Graca, via email, gave information to Vice President Matt Reilly regarding potential clients, staffing requirements to handle the anticipated workload, and a listing of analytical capabilities required to accommodate the regional needs. Reilly and Graca continued to email back and forth information regarding the Chicago market; Graca even supplied a recent Intertek profit and loss statement for Intertek’s Chicago branch (with the help of Lisa Graca and Melanie McMahon), which included information about the quantities of chemicals that Intertek tested, the payroll structure of Intertek’s Chicago branch, and the branch’s rent and electricity costs, among other things. Jim Graca and Melanie McMahon later resigned from Intertek, and Lisa Graca was fired; Jim Graca then became AmSpec’s regional manager for the Inland Waterways & Midwest Region, and McMahon is the lab manager for AmSpec’s Chicago branch. Intertek filed its complaint against the Defendants, alleging five counts, including violation of the Illinois Trade Secrets Act. Under the Illinois Trade Secrets Act, a plaintiff must demonstrate that “the information at issue was a trade secret, that it was misappropriated and that it was used in the defendant’s business.” Illinois courts frequently refer to six common law factors in determining whether a trade secret exists: (1) the extent to which the information is known outside of the plaintiff's business; (2) the extent to which the information is known by employees and others involved in the plaintiff's business; (3) the extent of measures taken by the plaintiff to guard the secrecy of the information; (4) the value of the information to the plaintiff's business and to its competitors; (5) the amount of time, effort and money expended by the plaintiff in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Here, the Court found that Intertek established at least two categories of information are trade secrets under the Act: (1) the financial information contained in Intertek’s P&L statements and aging and sales reports that Graca emailed to his personal email and saved in a folder titled "AmSpec" and (2) information containing testing capabilities and equipment lists for an Amspec lab closely reflected the testing capabilities and equipment in one of Intertek's labs. For this reason, the portion of the motion for preliminary injunction relating to trade secrets was GRANTED.

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