Georgia jury says "no trade secrets" in Boeing wing-component dispute

Earlier this year, the AmeriKat found herself in Atlanta, Georgia for a work meeting.  Not yet faced with the sweetly sticky weather of the southern summers, she was instead greeted with cool breezes and bright blue skies from which she could spy the airplanes coming into land at Atlanta's Hartsfield-Jackson airport (the busiest airport in the world).  This Kat loves airplanes.  Before she hangs up her litigation gloves, her goal is to work on a case involving airplanes.  If that case involved trade secrets, even better.  So it was with great interest (and a touch of jealously), that the AmeriKat spotted a jury verdict from last week in a case concerning just that from Atlanta. 

Alcoa claimed that over 25 painstaking years it had developed trade secrets relating to its manufacturing process which is referred to "stretch-form extrusion process".  The process generates pieces of contoured aluminum ranging from 60-110 feet in length which are, in turn, is used primarily in constructing airplane wings for Boeing.  The processes "carefully sequences a number of steps and controls a variety of precisely and individually calibrated variables to manufacture the Stretch Form Extrusion Parts to meet tight tolerances within Boeing's exacting specifications" (see [19] of the First Amended Complaint).  Alcoa also stated that besides expending significant time, effort and expense in developing the trade secrets, they also protected them.  The information was stored on a secure database which had restricted access on a "need to know" basis.  Those who needed to know then had to sign a separate confidentiality agreement.  

Alcoa claimed that Georgia-based Universal Alloy Corporation (UAC) hired several former and current Alcoa employees and consultants who had possession of the trade secrets and who "[a]t UAC's urging...improperly disclosed Alcoa's trade secrets to UAC".  Alcoa stated in its Complaint that once it had the information, UAC marketed itself to Boeing as a new, low cost supplier of the Stretch Form Extrusion Parts (despite it not "yet even own[ing] the equipment necessary to manufacture those parts") ([5]-[6]), thus misappropriating its trade secrets under the Georgia Trade Secrets Act.  Alcoa asked for $264 million in damages. 

UAC however, as argued at the trial that started on 11 July, stated that Alcoa's technology was well-known, part of industry standards (and thus could not constitute a trade secret), that they had independently developed their own technology and employees are free to change jobs.  UAC also argued that Alcoa was time-barred.  There is a 5-year statute of limitations under the Georgia Trade Secrets Act and had Alcoa been concerned about UAC they should have brought their claims in 2005.  However, it was only when Alcoa learned that Boeing was redirecting $200 million in sales to UAC in August 2014 did Alcoa say it became aware of the extent of the alleged trade secret misappropriation (see [7] of Complaint).  UAC also claimed that Alcoa's efforts to maintain information as confidential were flawed, arguing that it had stamped 20-year old documents as proprietary weeks before suing.   UAC also has an antitrust counterclaim against Alcoa that will be heard at a separate trial.  

During opening statements, UAC's lawyer said that it got all of the information it needed from suppliers like Boeing and publicly available sources.  Last week, the federal jury in Atlanta ultimately agreed with UAC's thematic defence that Alcoa's claimed trade secrets were not trade secrets at all, determining that none of the trade secrets claimed were Alcoa's property.  

There are two immediate take homes that are universal to every trade secrets case. First, demonstrating concrete steps to protect trade secrets month-on-month and year-on-year consistently before there is any whiff of a dispute helps to prevent the forensic argument and optics hit of "you did not think these things were trade secret until you decided to issue a claim".  So for those in-house lawyers reading this, check-in with your internal trade secret processes now to make sure things are stored securely, accesses is limited, the lists of those who have accessed and are accessing trade secrets are being audited (subject to governing privacy laws) and soft and hard-copy documents are already marked with the trade secrets notifications.  There may not be a whiff of a dispute brewing that you are aware of, but getting the house in order early and making sure the systems are working, can help beat back a "laissez-faire" argument.  This is particularly important under the EU Trade Secrets Directive and national implementations, as you will need to show that these steps have been taken (an consistently) to help support a trade secrets subsistence claim.  

Second, the arguments at trial identified another age-old lesson about trade secrets litigation - making sure you can particularize your trade secrets specifically enough such that it is distinguishable from what is known publicly. The overlap between what is publicly known and your trade secret needs to be as small as possible  Asking your researchers, scientists and engineers about why this processes is unique and different from what is publicly known or an industry standard early will help not only identify what needs to be protected (and put those systems in place), but can quickly identify what is protectable when it comes to litigation (and speedy interim relief).