In late May, after a three-week trial, a Houston federal court jury ruled M3 Technology, Inc. had misappropriated trade secrets from innovative engineering software provider AspenTechnology, Inc., infringed copyrights, and illicitly interfered with AspenTech’s non-compete agreement with a former employee, an expert on refinery efficiency and head of AspenTech’s R&D Division.
AspenTech sued the former employee and M3 in April 2010, four months after the employee resigned. AspenTech asserted the former employee violated a 1997 non-compete by prematurely joining M3, a direct competitor formed by another former AspenTech employee. The non-compete prohibited “competition” for 12 months post-employment without AspenTech’s written permission. Texas law, which has grown increasingly favorable to enforcement of non-competes from 1992 to 2012, governed.
The dispute between AspenTech and the departing employee settled before trial, and included a consent permanent injunction with liquidated damages.
The jury was charged by District Judge David Hittner to consider the evidence for or against tortious interference, misappropriation, and copyright infringement by M3. The trial evidence showed M3 did not possess specific knowledge about a product (PIMS) designed to maximize refinery efficiency before the ex-employee arrived. Aspen claimed it spent $28 million to develop PIMS over 13 years.
Ultimately, AspenTech successfully persuaded the jury that M3 used secrets brought from AspenTech to compete improperly. The jury awarded AspenTech both actual and punitive damages.
This case demonstrates the risks of hiring from competitors without a rigorous risk assessment and protocol for rejecting the use of a prior employer’s trade secrets.