A dental technology company has obtained a $6.8 million judgment against a former employee accused of stealing the company’s designs. The federal district court in Central California entered the judgment after finding the defendant, Jian Lu, liable for stealing trade secrets. Sirona Dental Systems Inc., et al. v. Jian Lu, No. 2:15-cv-08777 (C.D. Cal. Oct. 19, 2017). This case highlights the importance of non-disclosure agreements, paying close attention to developments in your industry, as well as vigorously protecting your rights in court.
Sirona Dental Systems is one of the world’s largest manufacturers of dental technology, employing more than 3,300 people worldwide, and marketing its products in more than 135 countries. It develops, manufactures, and markets a complete line of dental products. One product in particular, the Apollo DI, combines highly confidential software and hardware to create an optical imaging equipment/system designed to provide dentists low-cost 3-D images of their patient’s teeth. At all times, Sirona treated the Apollo DI technology and designs as extremely confidential business secrets and proprietary information. Sirona took significant steps to protect the technology and information and keep them secret.
In 2011, Sirona acquired Arges Imaging, Inc., a company that focused on 3-D imaging technology. Defendant Jian Lu was Arges’ Senior Technical Director at the time. Lu had entered into a Non-Disclosure Agreement (NDA) with Arges’ in 2009. Lu became a senior engineer at Sirona beginning in approximately May 2011. While at Sirona, Lu worked on the Apollo DI technology and designs.
In 2013, Lu resigned from Sirona. In 2014, Sirona learned that two companies in China were placing orders with Sirona’s vendors for Apollo DI materials and were essentially creating a duplicate of the Apollo DI system and bringing it to market. When Sirona learned that these companies were owned by Lu, it filed suit for misappropriation of trade secrets and breach of the NDA agreement.
Although Lu and his companies answered Sirona’s complaint and initially participated in discovery, in July 2016, Lu’s attorneys withdrew from the case. Lu briefly represented himself, and then stopped participating in the case altogether. At that point, default judgment was entered against Lu’s companies and, in December 2016, the trial court granted summary against Lu. It held that Lu had stolen trade secrets. When Lu failed to participate in the subsequent damages proceedings, the court found Sirona was entitled to $6.66 million in damages for research and development that Lu allegedly saved by stealing information from Sirona, as well as $150,000 in penalties for intentional copyright infringement. Judgment was entered in October 2017.
While internal safeguards are important, when it comes to protecting trade secrets, companies also need to be vigilant and act quickly and decisively when it appears that a former employee is attempting to use the former employer’s secrets or copyrighted material to compete in the marketplace.