Mahamedi IP v. Paradice & LI: DTSA Between Patent Lawyers

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.

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

8 thoughts on “Mahamedi IP v. Paradice & LI: DTSA Between Patent Lawyers

  1. The alleged trade secrets were known or accessible to the defendant partner before the separation. How did they suddenly become “confidential” as to him? Also, the defendant did not copy the alleged trade secrets — the firm’s IT staff did and the plaintiff apparently failed to take reasonable steps to instruct the IT staff about the limitations of the separation agreement. This is a contract action, not a trade secret action.

    Bad start for DTSA.

  2. The DTSA was signed into law May 11, 2016.

    18 U.S.C. § 1836(e) states, “Effective Date.—The amendments made by this section shall apply with respect to any misappropriation of a trade secret (as defined in section 1839 of title 18, United States Code, as amended by this section) for which any act occurs on or after the date of the enactment of this Act.”

    Does it apply to a partnership breakup in April 2016?

  3. Paradice allegedly copied the old firm database including billings, contacts, etc.

    Shocking!

    Why it seems like only yesterday I can remember an ambitious associate bragging about how easy it was to view all kinds of “confidental” firm information by searching the firm’s computer system. Nevermind that anybody who wishes to can see who viewed the files, and when.

    That associate was quickly made partner. Who can guess why? It would be imprudent to speculate.

    I’m trying to remember what else I can rember this character boasting about. Oh right: talking a client into a dropping one partner in favor of another. I’m totally sure that no “secrets” were revealed in the course of that intrafirm switcheroo.

    Where is this crafty attorney now, you ask? Who cares.

        1. Although one wonders if MM is an attorney, wouldn’t he be indirectly dumping on himself? Or is he holier than everyone else? He’s great, but everyone else is terrible?

          It seems as if he’s in or knows about chemicals, so likely has a chemical background. On the other hand, he’s completely clueless about computers, communication, encryption, pretty much everything else. It’s easy to take the positions he does when you’re patenting chemicals. It’s more difficult to take those positions when you’re patenting pretty much anything else, as those inventions have to use computers/processors/circuitry at some level.

          1. PatentBob,

            Bingo.

            Malcolm may be an attorney but he has some serious cognitive dissonance issues in that he is “involved” in creating property rights (maybe) and yet exhibits loathing of those that create such personal property BECAUSE such property is not “of the commons” and is used to (gasp) make money.

            Look at how often his views can be looked at as simply anti-patent (much of his screed is simply not limited to the computer arts or “business methods,” albeit that is the nominal aim of his rants).

            Anyone employing some minimal level of critical thinking can easily see the utter CR@P that has issued from Malcolm for a full decade now.

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