Denver Jury Hands Victory to Harris Group Inc. in Dispute with Former Employees.
Court Protects Harris Group's Intellectual Property Rights in the Digital Age
DENVER -- In the District Court for the City and County of Denver, a jury awarded Harris Group Inc. a major victory in its lawsuit against Luminate LLC, a firm founded by its former employees. Harris Group, an international engineering company, was represented by Denver law firm Hale Friesen, LLP. The jury awarded Harris Group $2.6 million against Luminate and seven of Harris Group's former employees who left to join that company.
"This is an important decision for companies of all sizes, especially those that rely on intellectual property, like engineering firms, for their business," said Dan Friesen, a partner of Hale Friesen who tried the case for the company. "The Harris Group decision is clearly of national importance because it squarely addresses the 'duty of loyalty' and confidentiality all employees owe to their employer when considering a spin-off venture of their own. In many ways, it provides a roadmap of what departing employees can and cannot do."
The jury awarded punitive damages against all the defendants. This required a finding beyond a reasonable doubt against every defendant that he or she acted either maliciously or fraudulently in connection with their other wrongful actions. The verdict was based on findings of liability against the three principals of Luminate on breach of their fiduciary duties of loyalty to Harris Group. It was also based on liability against all of the individual defendants on the following claims: breach of contract, intentional interference with contract, unjust enrichment, and common law conversion.
"Harris Group does not restrict its employees' right to leave and compete in the marketplace through non-competition agreements," explained Friesen. "As a matter of fact, Harris Group believes firmly in free enterprise and competition. The way the defendants chose to leave Harris Group, however, violated commitments to keep information confidential, and the three principals' duty of loyalty to work exclusively for Harris Group's interests while they were still employed by Harris Group."
"This case reflects a new and serious problem for companies in the digital age," said Friesen. As he alleged throughout the case, "using simple modern technology, the spin-off group was able to copy Harris Group's entire business unit for their own use in starting a new business. What once would have required a moving van, a team of movers, and dozens of boxes full of paper, was done discretely, without Harris Group's knowledge or consent, by e-mailing data to their homes, by burning 13 data CDs of active client files, and by using flash drives to transfer Harris Group files and business information to their new business."
