Re: From Document 78 Filed 04/27/2007 - 4th Counterclaim
posted on
May 28, 2007 05:43AM
FOURTH COUNTERCLAIM
(Violation of Utah Trade Secrets Act)
32. e.Digital incorporates by reference the allegations in the preceding paragraphs of this Counterclaim.
33. Some or all of e.Digital’s confidential information that, upon information and belief, was used by digEcor or its agents in the digEplayer XT project, constituted trade secrets of e.Digital, which digEcor knew or had reason to know it had acquired under circumstances, including express agreements and notices of confidentiality, giving rise to a duty of confidentiality to maintain its secrecy or limits it use in connection with e.Digital’s design activities.
34. Upon information and belief, digEcor used or disseminated in violation of that duty without or beyond the scope of e.Digital’s consent, which constitutes misappropriation of e.Digital’s trade secrets under Utah Code Ann. § 13-24-2(2)(b).
35. e.Digital is entitled to an injunction against digEcor’s misappropriation of its trade secrets extending at least for a reasonable period of time in order to eliminate commercial advantage enjoyed by digEcor that otherwise would be derived from the misappropriation pursuant to Utah Code Ann. § 13-24-3(1).
36. e.Digital is entitled to damages of both the actual loss caused by digEcor’s misappropriation and digEcor’s unjust enrichment resulting from that misappropriation or, in the alternative, for a reasonable royalty for digEcor’s misappropriation pursuant to Utah Code Ann. § 13-24-4(1).
37. digEcor’s misappropriation was willful and malicious, thereby entitling e.Digital to an award of exemplary damages in an amount not exceeding twice any damages awarded pursuant to the preceding paragraph as well as attorney’s fees pursuant to Utah Code Ann. §§ 13-24-4(2), 5.
Additional Background Facts for Breach of Duty to Negotiate
38. The 2002 Agreement provided that the parties would participate in “revenue sharing for future markets, customers and/or added enhancements of peripherals and services for this [in-flight entertainment] device.”
39. In July 2004, e.Digital negotiated with digEcor regarding the appropriate split of “maintenance fees” and “cost of key parts used in the repair of the digEplayers,” which negotiations were confirmed in an email from e.Digital to digEcor dated July 19, 2004, concluding with an invitation from e.Digital that “if your team is in agreement with this maintenance structure, we’ll draft up a simple letter agreement.”
40. digEcor never responded with their indication of agreement or disagreement with the terms reached in these prior negotiations.
41. When Wencor purchased APS, e.Digital was told by Wencor that it didn’t matter what had been said in prior negotiations because Wencor was not going to split maintenance revenue and was taking over repairs of the DigEplayers from e.Digital.
42. digEcor has derived substantial revenues from markets, customers and services and has never accounted for revenues from which e.Digital is entitled to receive revenue sharing payments.
