DOC 308:

Pursuant to Rule 41(a)(1)(ii) and (c) of the Federal Rules of Civil Procedure, Counterclaim Plaintiff e.Digital Corporation hereby requests that the Court enter an Order dismissing, with prejudice, the Second Counterclaim for Breach of Contract, Third Counterclaim for Injunction, and Fourth Counterclaim for Violation of Utah Trade Secrets Act set forth in e.Digital’s Second Amended Counterclaim (dkt 78), each party to bear its own attorneys’ fees and costs with respect to these claims. Counterclaim Defendant digEcor, Inc. does not object to the dismissal of these claims on these terms. The parties request that the Court enter the order submitted herewith.

SECOND COUNTERCLAIM (Breach of Contract) OF DOC 78 :

26. e.Digital incorporates by reference the allegations in the preceding paragraphs of this Counterclaim.

27. digEcor and its agents’ use (as alleged above) of e.Digital’s confidential information in the XT project breaches the 2002 Agreement and the other written, oral and/or implied agreements or duty of confidentiality of digEcor.

28. e.Digital is entitled to recover the damages caused by or the profits derived from digEcor’s breach of confidentiality in an amount to be established at trial.

THIRD COUNTERCLAIM (Injunction) OF DOC 78:

29. e.Digital incorporates by reference the allegations in the preceding paragraphs of this Counterclaim.

30. digEcor’s improper use of e.Digital’s confidential information has caused and will continue to cause e.Digital irreparable harm.

31. e.Digital is entitled to an injunction against digEcor’s manufacture and/or sale of the XT based on digEcor and its agents’ improper use of e.Digital’s confidential information (as alleged above).

FOURTH COUNTERCLAIM (Violation of Utah Trade Secrets Act) OF DOC 78:

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.