Ocean Tomo, LLC v. Jonathan Barney and PatentRatings LLC, Docket No. 12-cv-8450 (N.D. Ill. 2013)
Jonathan Barney is the founder of PatentRatings, the company that holds the patent on rating patents based upon a variety of objective criteria. See U.S. patent No. 6,556,992, 7,657,476, 7,716,226, 7,949,581, 7,962,511, 8,131,701, 8,504,560. In 2005, Barney joined Ocean Tomo and the company licensed use of his patent ratings information. According to the court documents, that agreement ended on a bad note in 2011:
After Barney began to work at Ocean Tomo, he quickly soured on the company as he discovered that "the environment at Ocean Tomo was rife with conflict, back-biting, and shady business and accounting practices." According to Barney, Ocean Tomo attempted to freeze him out, deprive him of the benefits he had been promised, and destroy him and PatentRatings financially so Ocean Tomo could appropriate the PatentRatings system and the associated intellectual property. Barney alleges that by February of 2011, the working environment at Ocean Tomo was so intolerable that he had no choice but to resign. He also alleges that Ocean Tomo used his resignation as an excuse to redeem a portion of his equity units without paying consideration and to reduce his share of profits and equity based on groundless claims of misconduct. . . . Barney also contends that Ocean Tomo wrongfully disclosed PatentRatings' confidential information to third-party software developers so they could reverse engineer the PatentRatings system and develop knock-off products based on PatentRatings' intellectual property. In addition, Barney asserts that Ocean Tomo wrongfully accessed PatentRatings' computer servers in Irvine, California, copied confidential data on the servers, and transferred that data to its own servers so it could attempt to reverse-engineer PatentRatings' product.
Prior to this lawsuit, the parties had actually arbitrated some of their disputes and a three-member panel found largely for Barney in rejecting Ocean Tomo's request for $2.5 million in damages. However, Ocean Tomo then sued in Illinois state court Barney for violation of his employment agreement, violation of the Illinois Trade Secret Act, violation of the Computer Fraud and Abuse Act (CFAA), and conversion. Barney removed the case to Federal Court countersued as noted above.
Although the case is still ongoing, the district court has dismissed several of Barney's claims for failure to state a claim upon which relief can be granted. These include Barney's claims of violation of an implied covenant of good faith and fair dealing; fraud; and the CFAA violation allegation. In particular, under Illionois law there is no independent cause of action for violation of the implied covenant of good faith and fair dealing, but rather that covenant is a part of each contract and thus must instead be alleged as part of a breach of contract claim. Barney's claim that Ocean Tomo committed fraud stemmed from his joining with the firm in 2005 and was thus barred by the Illinois five-year statute of limitations. Finally, the CFAA claim alleges that in September 2012 (long after the break-up) Ocean Tomo accessed PatentRatings' servers without authorization, copied confidential data and thereby caused at least $5,000 in damages. For a CFAA civil action, the damage threshold is a required element of a claim. However, in oral arguments PatentRatings admitted it was in the process of evaluating the damage an/or loss. The court therefore also dismissed the CFAA claim based upon PatentRatings' "tacit concession that its CFAA claim is deficient."
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Based upon an ongoing license, In Ocean Tomo continues to use the PatentRatings algorithms to report on patent quality through its Ocean Tomo Ratings.
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District Court Decision: Download Gov.uscourts.ilnd.275661.52.0