by Dennis Crouch
Many aspects of trade-secret & non-compete law do not apply cleanly when a lawyer leaves the firm. Confidentiality outside the firm is already required by the rules of professional conduct and client-secrets are thought of as the property of the client rather than the firm. Further, agreements between former partners divvying-up clients (or other covenants not to compete) are largely unenforceable because they are seen as improperly limiting clients ability to choose their lawyer.
With that in mind, a new Defend Trade Secrets Act (DTSA) lawsuit has been filed by the patent attorney Zurvan (Van) Mahamedi against his former partner William (Trip) Paradice. The Mahamedi-Paradice firm split in April 2016 and both lawyers reached-out to firm clients (including Qualcomm) claiming to be the successor firm.
The complaint alleges that Paradice misappropriated confidential information and client files in violation of the Defend Trade Secrets Act. In the background is a Partnership Separation Agreement (“PSA”) that was allegedly signed by both parties that purported to give Paradice access only to client files only after providing Mahamedi with written consent from the client. Instead of following that procedure, Paradice allegedly copied the old firm database including billings, contacts, etc. Paradice also allegedly asked firms to pay him for past work rather than the Mahamedi firm. The complaint alleges: “These revenues from these canceled invoices rightfully belonged to the old firm, and such revenue was to be distributed between Mahamedi and Paradice in accordance with the old firm’s standard practices.”
Read the Complaint: DTSAComplaint.
Although it is still unclear the extent that patent attorneys will take-on DTSA practice – at least we know that they will serve as the subject matter for the actions.
Thus far, DTSA actions (like most Computer Fraud and Abuse Act actions) stem from an ‘abuse’ of contract. Here, the Partnership Separation Agreement spells out a number of duties and obligations and Mahamedi’s basic allegation is that Paradice has failed to comply with those terms. The hook with the DTSA and CFAA is that the plaintiff gets to protect its property right (rather than merely suing for breach) and do so in Federal Court.
Read the Separation Agreement: Separation Agreement.