Employees and Trade Secrets

By Steven M. Chanley

While many trade secret disputes can often be nipped in the bud with a stern and timely cease-and-desist letter coupled with diligent monitoring, a very recent federal district court case in Massachusetts illustrates the reality that companies can and will, nonetheless, misappropriate a competitor’s trade secrets when they believe the information may be leveraged to generate enough revenue to warrant the legal risk.

Insulet Corp. v. EOFlow Co. Ltd. et al., Case No. 1:23-cv-11780 (D. Mass.) arose out of the departure of several employees from biotech company Insulet Corporation to joint South Korean-owned competitor, EOFlow Company. Several years later, Insulet was forced to protect its trade secret rights by suing EOFlow in federal court for misappropriating IP relating to Insulet’s wearable insulin patch technology of which the former employees were aware.

The jury awarded Insulet $452 million in damages against EOFlow and its CEO, $282 million of which were punitive damages. It is believed to be the largest award in a trade secrets case in decades.

chanley@EAGLAwGroup.com