On October 26, a U.S. District Judge for the Central District of California issued an arrest warrant for two parties in a trade secrets dispute involving a water-splitting technology and formula. The two parties violated a court order from August which required them, among other things, to appear in court on October 26, and cease using the Internet to post messages regarding their alleged knowledge of plaintiff’s trade secret.
The trade secrets at issue relate to the formulation for nutrient supplement Cellfood. The formulation was developed by Everett Storey. When he died, he bequeathed the formulation to someone who subsequently sold it to a person who assigned the trade secret to NuScience Corp.
John Henkel (the brother of the beneficiary of Storey’s will) later claimed to have access to Storey’s materials and threatened to sell the trade secret. After securing a permanent injunction against John Henkel in Iowa state court, NuScience filed a complaint in the Central District of California against John Henkel’s son, Robert Henkel, for offering to sell the formula and a similar product (Deutrocell).
In an amended complaint, NuScience added Robert Henkel’s brother Michael as a defendant. According to NuScience, Robert and Michael Henkel were aware of the injunction against their father. NuScience further alleged that the Henkels represented on their respective websites that they had received the formula and technology from Storey (Uncle Ev or UNCLE Everett). The Court entered a default judgment in April 2009 against the defendants after they failed to answer or otherwise respond. The Court later found defendants to be in contempt of court in June 2012. The Court also found Robert Henkel’s counsel to be in contempt of court for “publicly filing documents purporting to reveal the trade secret.”
In August 2015, the Court issued an order of contempt against the defendants, as well as two third parties, Joseph Henkel and Sharon Henkel. In that order, the Court noted that the April 2009 default judgment remained in effect and that defendants “have . . . misappropriated NuScience’s trade secret formula, threatened to release NuScience’s formula and actually did release portions of NuScience’s formula to attempt to destroy NuScience’s business, have run several businesses selling products based on NuScience’s trade secret formula, and have illegally used NuScience’s trademarks.” The Court ordered, among other actions, that the Henkels delete internet posts disparaging NuScience and/or representing knowledge of its trade secret. The Order further required each of the four Henkels to surrender password information for their respective Facebook and other social media accounts. The parties were to reconvene at a hearing on Monday, October 26.
Only one defendant appeared on the appointed date. Michael Henkel, Joseph Henkel, and Sharon Henkel each submitted declarations that they could not afford to travel from Iowa to California for the hearing. The judge found this reasoning insufficient to withstand the issuance of an arrest warrant and ordered that two of the defendants be placed in custody until such time as they properly respond to the Court’s order. (The judge did not maintain an arrest warrant for one of the defendants at the urging of Plaintiff’s counsel as that individual was found to have minimal involvement).
The one defendant who appeared was also ordered to produce additional information by January 2016.