KPM Analytics North America Corporation v. Blue Sun Scientific, LLC
4:21-cv-10572
| D. Mass. | Aug 23, 2021Background
- KPM manufactures SpectraStar NIR analyzers and maintains proprietary calibration databases and UCAL/USCAN software; it protects client lists, pricing, and calibration data as confidential/trade secrets and requires NDAs from employees.
- Blue Sun (a sales arm formed with ITG’s manufacturing) recruited multiple former KPM employees (Lucas, Gajewski, Glenister, Eilert) who then solicited KPM customers, performed preventive maintenance (PM), calibrations, and UCAL-related services for Blue Sun while some were still at KPM.
- Discovery showed employees used KPM pricing records and customer information to underbid KPM, transferred customer relationships to Blue Sun, and Blue Sun posted application notes and marketed Phoenix analyzers using materials derived from KPM work.
- KPM sued under the DTSA/MUTSA, for breach of confidentiality agreements, tortious interference, M.G.L. c.93A, conversion, and related claims, and moved for a preliminary injunction after limited expedited discovery.
- The court found KPM likely to succeed on trade secret, breach-of-contract (NDA), tortious interference, and 93A claims (but not conversion), applied a modest spoliation inference against Blue Sun for lost emails, and granted a partial preliminary injunction requiring return of KPM materials, prohibiting use/disclosure of KPM confidential information, and enforcing NDAs; it denied overbroad relief as to ITG and declined full sweeping service bans.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trade secret misappropriation (DTSA/MUTSA) | KPM: client lists, pricing history, calibration data, and related non-technical info are trade secrets and were used to divert customers. | Defendants: employee memory and lawful post-employment solicitation; no access to UCAL source code; training used customers’ UCAL licenses. | Court: Likely success on trade secret claims as to confidential client/pricing/service information and misuse; no evidence defendants cloned UCAL source code. |
| Breach of nondisclosure agreements | KPM: Individual Defs. violated broad NDAs by using KPM confidential info to solicit customers and perform Blue Sun work. | Defs.: Some activities legitimate (memory, permitted customer use); no proof of accessing protected source code or wrongful retention. | Court: Likely success on breach claims involving solicitation and use of UCAL while employed/with KPM access; insufficient evidence on source-code access or other asserted breaches. |
| Conversion of electronic/physical property | KPM: thumb drive and retained hardware/firmware constitute converted property containing KPM data. | Defs.: Thumb drive was created innocently during IT work and misplaced; Eilert’s items include personal/consented items. | Court: No likelihood of success on conversion at this stage; discovery didn’t show intentional wrongful exercise of dominion sufficient for conversion. |
| Scope of preliminary injunction / irreparable harm / balance of equities | KPM: broad injunction necessary to prevent ongoing diversion, require return of materials, bar defendants from servicing/selling KPM-related products during suit. | Defs.: Requested relief is overbroad (esp. vs ITG), disrupts legitimate aftermarket service and ITG’s longstanding business; some conduct lawful. | Court: Granted limited injunction (return materials, bar use/disclosure of confidential info, enforce NDAs; enjoin Blue Sun from certain competitive acts pending order), denied overbroad bans (notably forcing ITG to cease longstanding servicing/sales); KPM must post $70,000 bond. |
Key Cases Cited
- Incase Inc. v. Timex Corp., 488 F.3d 46 (1st Cir. 2007) (elements for trade secret misappropriation)
- Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835 (Mass. 1972) (factors for confidentiality of customer information)
- New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1 (1st Cir. 2002) (likelihood of success is the touchstone for preliminary injunction)
- Phillip Morris, Inc. v. Harshbarger, 159 F.3d 670 (1st Cir. 1998) (preliminary injunction framework)
- Maine Educ. Ass'n Benefits Trust v. Cioppa, 695 F.3d 145 (1st Cir. 2012) (movant bears burden on all injunction factors)
- Optos, Inc. v. Topcon Medical Systems, Inc., 777 F. Supp. 2d 217 (D. Mass. 2011) (customer/pricing information may be confidential)
- Governo Law Firm LLC v. Bergeron, 166 N.E.3d 416 (Mass. 2021) (conversion of electronic databases/downloaded data may be actionable)
- Asseo v. Pan American Grain Co., Inc., 805 F.2d 23 (1st Cir. 1986) (court may rely on hearsay in preliminary injunction decisions)
- Voice of the Arab World, Inc. v. MDTV Medical News Now, Inc., 645 F.3d 26 (1st Cir. 2011) (application of the four-factor injunction test)