Earlier this month, a federal judge ruled that a copycat trade secrets theft claim could not be re-litigated in federal court, having already been dismissed in a state court action. That decision came out of a complex dispute between a stem cell company and its prior President and CEO.
After former CEO Alan Smith left Cognate Bioservices Inc. in 2010, he sued Cognate for wage violations in Maryland state court. Cognate then counterclaimed for misappropriation of trade secrets alleging that Smith failed to return his company computer and passwords and misappropriated Cognate’s trade secrets. Meanwhile, Cognate filed a separate lawsuit in Maryland federal court alleging that Smith violated the Computer Fraud and Abuse Act and misappropriated Cognate’s trade secrets, among other things. Both the state court and federal court actions ran in parallel until May 2014 when the state court action went to a jury trial. The jury found against Cognate on its misappropriation counterclaim. Smith accordingly moved to dismiss the federal suit.