Windrock, Inc. v. Resonance Systems, Inc.

2022 WL 202891 (2022)

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Nature Of The Case

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Facts

D is a Tennessee corporation and a direct competitor of P. Kelley (D) served as a software developer for P from 2007 until 2018 and as an independent contractor for P from 2018 until 2019. Kelley (D) is currently an employee of D. Kelley (D) executed a Retention Agreement (RA) with P in 2017. P agreed to provide Kelley (D) with 'Confidential Information' 'in exchange for Kelley's (D) promises made in' the RA, and Kelley (D) agreed not to disclose this information to outsiders or use it for inappropriate purposes. The confidentiality obligations under the RA last indefinitely. When Kelley (D transitioned from employee to independent contractor P and Kelley (D) executed the Mutual Confidentiality and Non-disclosure Agreement. The NDA protects certain of P's confidential information. P agreed to disclose confidential information to D 'following the execution and delivery' of the NDA. Kelley (D) agreed not to disclose this information or use it for any unpermitted purpose. The confidentiality obligations under the NDA last three years. P sells portable analyzers, which assess and provide output data regarding machine conditions, and software that allows users to read this otherwise unreadable output data. P's software uses its proprietary 'C-structures,' which enable the software to translate the unreadable output data into a readable format. Only a computer programmer familiar with P's C-structures and P's data indexing scheme, or with access to P's source code, can decode the unreadable output data. D demonstrated and advertised its ability to decode and translate P's C-Structure output data. P alleges Kelley (D) violated his confidentiality obligations by using knowledge of the C-structures gained during his employment to translate the data for D. P asserts seven causes of action: (1) violation of the Defend Trade Secrets Act against Ds (Count I); (2) violation of the Tennessee Uniform Trade Secrets Act (the UTSA) against Ds (Count II); (3) statutory procurement of breach of contract against Ds (Count III); (4) statutory procurement of breach of contract against D (Count IV); (5) intentional interference with contractual relations against D (Count V); (6) breach of the RA against Kelley (D) (Count VI); and (7) breach of the NDA against Kelley (D) (Count VII). Ds moved to dismiss Counts IV, V, and VI.

Issues

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Holding & Decision

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Legal Analysis

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