Apple Sued by Advanced Lithium Battery Maker on Several Counts Including Employee Raiding & Misappropriation of Trade Secrets
A Delaware limited liability company by the name of A123 with a principal place of business in Michigan and offices in Middlesex County, Massachusetts is suing Apple and several former employees (Don Dafoe, Michael Erickson, Dapeng Wang and Indrajeet Thorat) that now work at Apple. A123 is in the business of designing and manufacturing advanced lithium-ion battery technology and energy storage systems for commercial and industrial applications, including automotive. The company has filed seven counts against Apple and their former employees now at Apple. The counts cover breach of contract, tortious interference, unfair competition, misappropriation of trade secrets and employee raiding. Apple has already has partly responded by filing a Notice of Removal to get the case moved out of the Massachusetts Federal Court. Our report presents you with actual court document facts of the case as presented by A123.
Background Facts as Presented in A123's Court Filing
The following information is directly from A123's court filing: The Individual Defendants formerly worked in A123's System Venture Technologies division, located in Waltham, Massachusetts. That division conducts research and development related to A123's lithium-ion battery technology business.
While employed at A123, the Individual Defendants were responsible for, among other things, developing and testing new battery technology and products and validating and testing existing battery technology and products.
Defendants Erickson, Wang, and Thorat are PhD scientists and while employed by A123 were each in charge of separate projects related to A123's business.
Defendants Dafoe, Erickson, Wang, and Thorat reported directly to defendant Ijaz. Defendant ljaz was in charge of A123's Waltham, Massachusetts office and, therefore, acted as the head of A123's System Venture Technologies division.
The Individual Defendants' Non-Compete, Non-Solicit, and Non-Disclosure Obligations
The Individual Defendants were in constant contact with and utilized A123's confidential and proprietary information as part of their employment. In recognition of this, and as a prerequisite to their employment with Al23, the Individual Defendants each executed an Invention, Non-Disclosure, Non-Competition and Non- Solicitation Agreement for the benefit of A123. Copies of defendant Ijaz's, defendant Dafoe's, defendant Erickson's, defendant Wang's, and defendant Thorat's executed Invention, Non-Disclosure, Non-Competition and Non-Solicitation Agreements are attached hereto as Exhibits A, B, C, D, and E, respectively.
The Individual Defendants' Non-Disclosure, Non-Competition and Non- Solicitation Agreements were intended to provide A123 with reasonable protections concerning its confidential and proprietary information and to otherwise protect A123's legitimate business interests.
Specifically, the Individual Defendants agreed that:
all information, whether or not in writing, of a private, secret or confidential nature concerning the Company's [A123] business, business relationships or financial affairs (collectively, "Proprietary Information") is and shall be the exclusive property of the Company . ... [the Individual Defendants] will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of [their] duties as an employee of the Company) without written approval by an officer of the Company, either during or after [their] employment with the Company, unless and until such Proprietary Information has become public knowledge without fault by [the Individual Defendants].
Non-Disclosure, Non-Competition and Non-Solicitation Agreement
The Individual Defendants had access to and utilized A123's Proprietary Information in connection with their employment. Such Proprietary Information is not public knowledge, is safeguarded by A123, and none of the Individual Defendants are authorized to use or disclose any Proprietary Information.
The Individual Defendants further agreed to refrain from competing with A123 in its battery business for a reasonable time period following the termination of their employment. Specifically, they agreed that, for a period of one year after the termination of their employment with A123, they would not:
Engage in any business or enterprise ... that is competitive with the Company's business, including but not limited to any business or enterprise that develops, manufactures, markets, or sells any product or service that competes with any product or service developed, manufactured, marketed, sold or provided, or planned to be developed, manufactured, marketed, sold or provided, by the Company while the [Individual Defendants were] employed by the Company; or Either alone or in association with others, sell or attempt to sell to any person or entity that was, or to whom the Company had made or received a proposal to become, a customer or client of the Company at any time during the term of the [Individual Defendants'] employment with the Company, any products or services which are competitive with any products or services developed, manufactured, marketed, sold or provided by the Company.
Non-Disclosure, Non-Competition and Non-Solicitation Agreement at if 4(a), (c)
The Individual Defendants further agreed to refrain from soliciting A123's employees. Specifically, they agreed that, for a period of one year after the termination of their employment with A123, they would not:
Either alone or in association with others (i) solicit, or permit any organization directly or indirectly controlled by the Employee to solicit, any employee of the Company to leave the employ of the Company, or
(ii) solicit for employment, hire or engage as an independent contractor, or permit any organization directly or indirectly controlled by the Employee to solicit for employment, hire or engage as an independent contractor, any person who was employed by the Company at the time of the termination or cessation of the [Individual Defendants'] employment with the Company.
Non-Disclosure, Non-Competition and Non-Solicitation Agreement at if 4(b).
The Individual Defendants specifically acknowledged that the above- quoted restrictions on their post-employment activity were necessary for the protection of A123, that the breach of any of those restrictions would cause irreparable harm to A123, and that A123 would be entitled to an injunction restraining any such breach.
Non-Disclosure, Non-Competition and Non-Solicitation Agreement at if 9(g)
The Individual Defendants each consented to the applicability of Massachusetts laws and the jurisdiction of the Massachusetts courts. Non-Disclosure, Non-Competition and Non-Solicitation Agreement at if 9(h).
Apple's Entry into A123's Business and the Poaching of A123's Employees
Upon information and belief, Apple is currently developing a large scale battery division to compete in the very same field as A123.
In connection with that development, beginning in or around June of 2014, defendant Apple embarked on an aggressive campaign to poach employees of A123 and to otherwise raid A123's business.
To date, Apple has poached the five (5) Individual Defendants from A123.
On information and belief, Apple has targeted companies in addition to A123 to hire employees with experience in Al23's battery business, including LG, Samsung, Panasonic, Toshiba, and Johnson Controls.
With the exception of defendant Ijaz, all of the Individual Defendants terminated their employment with A123 and began working for Apple within the last month. Defendant Ijaz ceased working with A123 and began working for Apple in June of 2014.
Upon information and belief, and in direct violation of his Non-Disclosure, Non-Competition and Non-Solicitation Agreement, defendant Ijaz has solicited one or more of the other Individual Defendants to leave their employment with A123 and begin working with Apple.
A123's belief is informed by, among other things, defendant Dafoe having involved defendant Ijaz in his hiring communications with Apple's agents. Attached hereto as Exhibit F is an e-mail message from defendant Dafoe with Apple's hiring personnel in which defendant Ijaz is included.
This e-mail confirms that defendant Ijaz either directly or indirectly solicited or was otherwise wrongfully involved in the hiring of defendant Dafoe, in violation of defendant Ijaz's Non-Disclosure, Non-Competition and Non-Solicitation Agreement.
Upon information and belief, this e-mail confirms that defendant Dafoe is working as a direct report to defendant Ijaz, as was the case when both were employed by A123.
Upon information and belief, in connection with their employment at Apple, defendants Dafoe, Erickson, Wang, and Thorat report directly to defendant Ijaz, as was the case when the Individual Defendants were employed by A123.
Upon information and belief, defendant Ijaz and/or defendant Dafoe improperly solicited defendants Erickson, Wang, and Thorat to leave A123 and join Apple, in violation of their Non-Disclosure, Non-Competition and Non-Solicitation Agreements.
In the wake of defendants Erickson, Wang, and Thorat's departures, the projects that each was individually and principally responsible for have been effectively shut down for lack of PhD employees to replace these defendants.
Furthermore, the departures of the Individual Defendants means that A123 has lost the substantial investment it made in each of these employees and are now forced to scramble to find replacements at substantial cost to A123.
Upon further information and belief, all of the Individual Defendants are working in a field of battery science, technology, and/or products that is substantially similar if not identical to the field they worked in at A123.
A123's belief is informed by, among other things, defendant Ijaz's contact and solicitation of one of A123's external collaborators - SiNode Systems, on behalf of Apple.
SiNode Systems, like A123, is in the business of researching, developing, and marketing lithium-ion battery technology.
Defendant Ijaz worked with SiNode Systems on behalf of A123 in connection with its battery business.
Al23 has learned from SiNode Systems that defendant Ijaz solicited it on behalf of Apple.
Defendant Ijaz's solicitation of SiNode Systems confirms that his work on behalf of Apple is at least substantially similar (if not identical) to his work at A123.
Apple's belief that the Individual Defendants are working in a field of battery science, technology, and/or products that is substantially similar if not identical to the field they worked in at A123 is further informed Apple's job description for an "Engineering Program Manager, Battery Technology." This job description generally describes the type of work that the Individual Defendants performed while employed by A123. A copy of this job description is attached hereto as Exhibit G.
Further, this job description was discovered on defendant Thorat's work computer at A123 following his departure, further confirming that the Individual Defendants are working in a field of battery science, technology, and/or products that is substantially similar if not identical to the field they worked in at Al23.
Apple Disregards the Individual Defendants' Non-Disclosure, Non-Competition and Non-Solicitation Agreements
On December 22, 2014, A123 notified Apple in writing of defendant Ijaz's Non-Disclosure, Non-Competition and Non-Solicitation Agreement and A123's concerns that defendant Ijaz was violating that agreement by, among other things, soliciting employees and working in a similar if not identical field to the one he was involved in at A123. A copy of correspondence in this regard is attached hereto as Exhibit H.
A123 also expressed concerns that defendant Ijaz would inevitably disclose Al23's Proprietary Information in connection with his employment with Apple.
Also on December 22, 2014, A123 wrote to defendant Ijaz directly to remind him of his obligations under his Non-Disclosure, Non-Competition and Non- Solicitation Agreement and to request that he provide Al23 with assurances that he has and will continue to adhere to that agreement. A copy of this correspondence is attached hereto as Exhibit I. Defendant Ijaz never responded or provided the requested assurances.
Apple responded to A123's correspondence in writing on January 12, 2015, but failed to provide any assurance that defendant Ijaz has not and will not disclose or utilize A123's Proprietary Information, improperly solicit A123 employees, or improperly compete with A123. A copy of this correspondence is attached hereto as Exhibit J.
A123 responded by letter dated January 16, 2015 reiterating its concerns to Apple and its belief that defendant Ijaz and defendant Dafoe were violating their Non-Disclosure, Non-Competition and Non-Solicitation Agreements. A copy of correspondence in this regard is attached hereto as Exhibit K.
A123 also advised Apple that its continued employment of former A123 employees may constitute, among other things, unlawful interference with A123's contractual rights under the Non-Disclosure, Non-Competition and Non-Solicitation Agreements.
A123 demanded that Apple advise it as to what defendants Ijaz and Dafoe were working on at Apple and whether or not said work was similar to the work they performed on behalf of A123.
A123 did not receive a response to its January 16th correspondence.
Both before and after A123's contact with Apple, Apple has openly disregarded A123's concerns and its rights under the Individual Defendants' Non- Disclosure, Non-Competition and Non-Solicitation Agreements by employing defendants Ijaz and Dafoe.
Following A123'8 contact with Apple, Apple further disregarded Al23's rights by hiring defendants Erickson, Wang, and Thorat, despite knowledge of these defendants' Non-Disclosure, Non-Competition and Non-Solicitation Agreements.
A123's Seven Causes of Action
FIRST CAUSE OF ACTION: BREACH OF CONTRACT - VIOLATION OF NON-COMPETE COVENANT (INDIVIDUAL DEFENDANTS)
SECOND CAUSE OF ACTION: BREACH OF CONTRACT - VIOLATION OF EMPLOYEE NON-SOLICITATION COVENANT (INDIVIDUAL DEFENDANTS)
THIRD CAUSE OF ACTION: BREACH OF CONTRACT - VIOLATION OF NON-DISCLOSURE COVENANT (INDIVIDUAL DEFENDANTS)
FOURTH CAUSE OF ACTION: TORTIOUS INTERFERENCE (DEFENDANTS IJAZ AND APPLE)
FIFTH CAUSE OF ACTION: UNFAIR COMPETITION/MASS GEN. LAWS 93A (ALL DEFENDANTS)
SIXTH CAUSE OF ACTION: MISAPPROPRIATION OF TRADE SECRETS/MASS GEN. LAWS 93 (ALL DEFENDANTS)
SEVENTH CAUSE OF ACTION: RAIDING (APPLE)
What A123 Seeks from the Court
1. Enter judgment for A123 and against Defendants on all Counts of this Complaint;
2. Enjoin Individual Defendants, for one-year from the date of such order, from participating, directly or indirectly, on their own behalf or as an employee of any business entity, in any capacity, in any business or activity which is in direct or indirect competition with A 123, which intends to compete directly or indirectly with A 123 or which otherwise provides any products or services similar to any products or services provided or proposed to be offered by A123;
3. Enjoin Individual Defendants from disclosing or using A 123's Proprietary Information, as defined in their Non-Disclosure, Non-Competition and Non-Solicitation Agreements, in any way except for the benefit of A123;
4. Enjoin Individual Defendants, for one-year from the date of such order, from soliciting employees to leave Al23, in violation of their Non-Disclosure, Non-Competition and Non-Solicitation Agreements;
5. Enjoin Apple from hiring additional employees from A123's Venture Technologies division;
6. Award A123 monetary damages, in an amount to be proved at trial, for the economic injury it has sustained as a consequence of Defendants' conduct; and
7. Award Al 23 its costs and attorney fees incurred in connection with this action and such other and further relief as the Court deems just and proper.
The case was filed in the Commonwealth of Massachusetts Middlesex County, Superior Court Department.
Apple immediately filed a Notice of Removal to move the case to another court as noted below. The February 17th filing was made by Apple's Boston representative Littler Mendelson, P.C.
NOTICE OF REMOVAL
Defendant Apple Inc. ("Apple") files this Notice of Removal in accordance with U.S.C. §§ 1332, 1441 and 1446 and hereby removes this action from the Superior Court of the Commonwealth of Massachusetts, Middlesex County (the "Superior Court"), to the United States District Court for the District of Massachusetts.
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Also see our report about Foxconn seeking to enter the battery business for the iPhone 6 and electric cars: Foxconn may be seeking to enter the iPhone Battery Business