Proofpoint, Inc. v. Vade Secure, Incorporated

Background

Proofpoint, Inc. and Cloudmark LLC sued Vade Secure, Inc., Vade Secure SASU, and Olivier Lemarié. The plaintiffs asserted that Vade and Lemarié misappropriated their trade secrets and infringed their copyrights. They requested damages, injunctive relief, and an order requiring defendants to dispose of copies of the plaintiffs’ copyrighted works in their possession or control.

A jury found that most of the asserted trade secrets qualified as trade secrets and that Vade and Lemarié misappropriated some of them. The jury found that Vade’s misappropriation was willful and malicious, awarded $13,495,659 in unjust-enrichment damages against Vade, and found that Lemarié breached his employment contract with Cloudmark, awarding $480,000 in compensatory damages against him. The jury also found that Vade and Lemarié infringed one or more copyrights. The court had previously denied the plaintiffs’ request for exemplary damages.

The remaining requests were for a permanent injunction and a final disposition order concerning the copyrighted material.

Permanent Injunction

A permanent injunction is a court order intended to prevent future conduct. The court applied the required four factors: irreparable injury, inadequacy of monetary damages, the balance of hardships, and the public interest.

As to Vade, the plaintiffs argued that Vade continued to use their trade secrets in products and in a database used to improve product performance. The court found that the plaintiffs had not shown continuing use. In particular, the plaintiffs did not establish that Vade’s replacement module, developed by Zenika, used the plaintiffs’ trade secrets. The court also found that the plaintiffs had not shown that Vade’s database continued to use the trade secrets after Vade stopped incorporating Lemarié’s module into its products.

As to Lemarié, the plaintiffs argued that he posed a future risk because he might use or disclose the trade secrets in later employment. The court found that the plaintiffs offered no evidence that Lemarié still possessed the trade secrets or source code. The court noted that Lemarié testified that he had deleted the Cloudmark information in his possession, and the plaintiffs did not counter that testimony.

The court therefore denied the request for a permanent injunction as to both Vade and Lemarié.

Final Disposition Order

The Copyright Act allows a court to order the destruction or other reasonable disposition of copies made or used in violation of a copyright owner’s rights. The court found that the plaintiffs had not shown that Lemarié retained any copies of their copyrighted material, so it denied the requested disposition order as to him.

Vade acknowledged at the hearing that it had retained the plaintiffs’ source code and that Vade’s counsel possessed it. The court found no reason for Vade or its counsel to continue retaining the code after the case concluded. It therefore granted the request for a final disposition order as to Vade and directed the plaintiffs and Vade to meet and confer about the order’s language and submit a joint proposal for approval within 30 days of the order.

Disposition

The court stated that the plaintiffs’ motion was granted in part and denied in part. The request for a permanent injunction was denied. The request for a final disposition order was denied as to Lemarié and granted as to Vade.