Viken Detection Corp. v. Videray Techs. Inc.

384 F.Supp.3d 168

VIKEN DETECTION CORPORATION, Plaintiff,

v.VIDERAY TECHNOLOGIES INC. and Paul E. Bradshaw, Defendants.

Civil Action No. 19-10614-NMG

United States District Court, D. Massachusetts.

Signed June 14, 2019

Lawrence P. Cogswell, III, Hamilton Brook Smith & Reynolds, P.C., Concord, MA, for Plaintiff.

Michael L. Mason, Bennett & Belfort PC, Robert Vincent Donahoe, Rhodes Donahoe, LLC, Cambridge, MA, for Defendants.

MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District Judge

Viken Detection Corporation ("Viken" or "plaintiff") filed a complaint against Videray Technologies Inc. ("Videray") and its founder and president, Paul Bradshaw ("Bradshaw") (collectively "defendants"), alleging that Bradshaw misappropriated confidential information of Viken when he left the company to form Videray and to produce and market a competing product using that information. Viken asserts that defendants' conduct constitutes a violation of 1) the Defend Trade Secrets Act ("the DTSA"), 18 U.S.C. § 1836(b)(1), and 2) the Computer Fraud and Abuse Act ("the CFAA"), 18 U.S.C. § 1030, as well as 3) misappropriation of trade secrets under M.G.L. c. 93, §§ 42 and 42A, 4 ) breach of contract, 5) breach of the duty of loyalty and 6) tortious interference with contracts.

In April, 2019, Viken filed a motion for a temporary restraining order and a preliminary injunction enjoining defendants and their agents and employees from: 1) using and/or disclosing Viken's trade secrets or other confidential information; 2) proceeding with the commercialization, sale, marketing and development of Videray's competing product; and 3) destroying any potentially relevant information, including but not limited to data in defendants' business and personal email accounts, Dropbox accounts, cellular telephones and business and personal computers and components which relate to handheld X-ray backscatter imagers.

Viken also sought an order directing defendants to return to plaintiff all confidential and proprietary information acquired during their confidential relationship with Viken or obtained from another having a confidential relationship with Viken. Shortly thereafter, this Court denied the motion for a temporary restraining order but scheduled a hearing on the motion for a preliminary injunction. For the reasons that follow, the motion for a preliminary injunction will be denied.

I. Background

A. The Parties

Viken is a Delaware corporation with its principal place of business in Newton, Massachusetts. Prior to February, 2019, it was named Heuresis Corporation. Viken produces and sells hand-held x-ray scanners used by law enforcement and security professionals to discover concealed explosives, narcotics and other contraband quickly and cost-effectively. Among Viken's main products is the HBI-120, which is an ergonomic, hand-held x-ray backscatter imaging device.

Videray is alleged to be a Delaware corporation with its principal place of business in Boston, Massachusetts. Bradshaw is allegedly a resident of Hull, Massachusetts, and the founder and president of Videray. He is also a former employee of Viken. Videray has developed the PX1 which is a hand-held x-ray backscatter imager.

B. Bradshaw's Employment with Viken

Viken hired Bradshaw in November, 2013, as its Director of Engineering. He also allegedly acted as Viken's Information Technology ("IT") Administrator during his time at the company. At some point during his employment, Bradshaw and six other employees were assigned to a team to develop the HBI-120. Dr. Peter Rothschild, Viken's physicist and Chief Technology Officer, led this team in developing the HBI-120 which took over two years and cost millions of dollars.

As part of his role on that team and as Viken's Director of Engineering, Bradshaw had access to the company's proprietary and confidential information regarding the design, performance, marketing and strategic plan for the HBI-120, as well as potential modifications, improvements and design changes to that device. That information was stored electronically on Viken's server and on certain employee computers which were subject to access restrictions and password protection. In his capacity as IT Administrator, Bradshaw was also allegedly charged with implementing and overseeing most or all of the electronic access controls used to protect the HBI-120 proprietary and confidential information.

In addition to storing proprietary and confidential information on his desktop computer and laptop, Bradshaw also stored nearly 1,800 files related to the manufacturing, design and cost of the HBI-120 in his personal Dropbox account. He also maintained files related to the plans for other Viken products in his personal Dropbox, including trade secrets with respect to Viken's x-ray fluorescence systems. That account also contained nearly 1,000 files that are allegedly confidential property of American Science & Engineering ("AS&E"), the company for which both Bradshaw and Dr. Rothschild worked before joining Viken.

Other employees on Viken's research and development team purportedly had access to the files in Bradshaw's Dropbox account, including Dr. Rothschild, and the former CEO of Viken (then known as Heuresis), Henry Grodzins ("Grodzins"), who was also aware that Bradshaw was using his Dropbox account to store sensitive information. The current CEO of Viken, Jim Ryan, attests, however, that he is not aware that anyone at the company previously knew that Bradshaw stored sensitive Viken documents in his personal Dropbox account.

Viken requires all new employees to sign a nondisclosure agreement ("the NDA") to further ensure protection of its trade secrets and confidential information. Bradshaw signed the NDA as a condition of his employment. Pursuant to that contract, he agreed that

[a]t all times, both during my employment by [Viken] and after its termination for whatever reason, I will keep in strictest confidence and trust all Proprietary Information, and I will not use or disclose any Proprietary Information without the written consent of the Company, except as may be necessary in the ordinary course of performing my duties to the Company.

The NDA defines "Proprietary Information" as including, among other things,

(i) information relating to products, inventions, materials, compounds, discoveries, trade secrets, know-how, improvements, developments, methods, designs, algorithms, techniques, processes, formulas, strategies, software and documentation, and computer programs of the Company ..., (ii) reports, studies, data, plans, forecasts, projections, financial statements, budgets, business forms, contract forms, licenses, prices, costs, and lists of (and other information relating to) investors, customers, clients, suppliers and employees of the Company ..., [and] (iii) information relating to transactions or prospective transactions involving the Company ....

Bradshaw also agreed that

[i]n the event of the termination of my employment by me or by the Company for any reason, I will deliver to the Company all documents, notes, drawings, specifications, data, and other materials of any nature pertaining to my work with the Company and/or containing Proprietary Information (and delete all electronic copies of such documents, notes, drawings, specifications, data and other materials from any personal computers and other electronic storage devices that I own or control), and I will not retain any copies of the foregoing.

Furthermore, he agreed that during his employment and for a period of one year thereafter, he would not 1) recruit or solicit for employment an employee of Viken or an affiliate of the company (or a former employee within his or her one-year grace period) or 2) interfere with Viken's business relationships with other persons or companies by inducing or attempting to induce a person or company to refrain from or discontinue doing business with Viken. Finally, he agreed that damages at law would be an insufficient remedy to Viken in the event of a breach of the NDA and that it could obtain immediate injunctive relief to restrain the breach or threatened breach of the agreement or to specifically enforce any of its terms.

C. The Alleged Misconduct

In June, 2017, Katie McCabe ("McCabe"), a former employee of Viken, informed the company that while Bradshaw was still working at Viken, he told her that he planned to leave and start a new company that would produce and sell a competing product. She also alleged that Bradshaw met with a potential investor while employed at Viken to solicit funds for his new company. He also purportedly solicited co-workers at Viken to join him at his new company and that as part of that solicitation, he accessed confidential salary and equity information from Viken's protected server to induce the employees to join him. She also alleged that Bradshaw failed to share customer feedback with Viken as to potential product improvements while telling his co-workers that his new product would include those improvements. She told Viken that Bradshaw asked other employees to help him collect confidential Viken customer information for use at his new company. Finally, Bradshaw apparently told McCabe that, in reference to a computer on which he kept proprietary and confidential information about the HBI-120, "I have everything I need". Bradshaw denies those allegations but at least one other employee of Viken has verified McCabe's assertions.

In May or June, 2017, as a result of McCabe's allegations, Viken terminated Bradshaw's employment. A few days later, however, then-CEO Grodzins offered to reinstate Bradshaw because he believed that McCabe was lying or exaggerating about Bradshaw's alleged misconduct. Bradshaw alleges that Dr. Rothschild was aware that he was asked to return to Viken. Bradshaw refused the offer of reemployment and has also declined to sign a proffered non-compete agreement with Viken on two occasions since leaving the company.

Viken alleges that...