Lost In Translation – Federal Court Issues Preliminary Injunction Against Language Interpreter For Misappropriation of Competitor's Trade Secrets

A U.S. District Court judge has issued a preliminary injunction against a language interpreter and translation company based on claims it misappropriated the trade secrets and confidential information of a competitor. The Plaintiff, Language Line Services ("Language Line") sued a competitor, Defendant Language Services Associates ("LSA"), and others for misappropriation of trade secrets, among other things.

Language Line provides language interpretation and translation services throughout the U.S. and alleges it is the largest provider of those services in the country. One of the Defendants had worked for Language Line from August 2007 to August 2008. Another had worked there from May 2008 to February 2010. Both of them had signed written confidentiality agreements. After leaving Language Line, both employees went to work for LSA.

The Complaint alleged that one of the employees went to work for LSA first, and that he and other LSA employees later successfully conspired to recruit the other employee to join LSA with the purpose of obtaining trade secrets and confidential information from Language Line. The second employee secretly took extensive amounts of Language Line's trade secrets and confidential information and gave it to LSA, including Language Line's customer list and, for each customer, valuable trade secrets and confidential information that included pricing information, actual and projected annual volumes of interpretation needs, and actual and projected revenues. In turn, the information was distributed to LSA's sales force to use in soliciting Language Line's customers.

Under the California Uniform Trade Secret Act, Cal. Civil Code § 3426 et seq. (the "Act"), a trade secret is considered information that (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Under the Act, a prima facie claim for misappropriation of a trade secret requires a plaintiff to demonstrate that:

(1) the plaintiff owned a trade secret,

(2) the defendant acquired, disclosed or used the plaintiff's trade secret through "improper means", and

(3) the defendant's actions damaged the plaintiff.

In these circumstances, the Court found that Language Line had shown a likelihood of success on the merits and otherwise satisfied the test for a preliminary injunction.

LSA argued that it could not be liable for the acts of the employees because their actions violated LSA's policies and were not known to LSA's executives. But the court dismissed that argument and found that the employees had acted within the scope of their employment, because this was the sort of act that was generally foreseeable as part of their duties to solicit customers for LSA. Language Line also submitted evidence that at least one customer has already started to give business to LSA.

The case is Language Line Services, Inc. v. Language Services Associates, LLC, U.S. District Court Case No. C 10-02605 JW (N.D.Cal., July 13, 2010).