Friday, February 18, 2011
ANSYS Suit Against CDNA Finally Ends With No Fee-Shifting (ANSYS, Inc. v. Computational Dynamics North Am.)
If the name of this case sounds familiar, it is because I have written about it on two other occasions, here and here.
In previous discussions about the ANSYS case, I have written about the district court's denial of a preliminary injunction motion concerning Dr. Doru Caraeni's non-competition agreement and the First Circuit's decision to affirm that ruling.
In the last installment of this case, Computational Dynamics unsuccessfully sought attorneys' fees under the New Hampshire Trade Secrets Act bad-faith fee-shifting provision, related to ANSYS' unsuccessful claim for misappropriation. Discovery in this case was staged, which often happens during trade secrets actions. Shortly before the defendants were about to produce their relevant discovery concerning source code, ANSYS decided to voluntarily dismiss the suit.
Computational Dynamics sought fees for the trade secrets claims of nearly $200,000. The district court had little trouble rejecting the argument that ANSYS pursued its claim in bad faith and denied the fee petition. The genesis of the lawsuit was Dr. Caraeni's decision to leave ANSYS and jump ship to CDNA. Just days before his departure, Dr. Caraeni accessed and downloaded highly secret documents related to a comparison of ANSYS' software to CDNA's.
In light of this, the court found it reasonable for ANSYS to pursue claims for breach of a non-compete agreement and trade secrets misappropriation. CDNA's claim for bad faith hinged on the timing of the dismissal (i.e., right before it was to produce documents ANSYS claimed it needed) and ANSYS' failure to identify any true secrets with specificity.
The court's discussion on the latter point was cryptic. It noted two factors. First, it discussed the "highly complicated and sophisticated" nature of the code underlying the software products. Although not really discussed, the court seemed willing to forgive the plaintiff's lack of specificity (at least by the time it decided to non-suit the case). It seems as though the opposite conclusion would make more sense, since plaintiffs with highly technical secrets should have more knowledge of their value.
Second, the court found ANSYS probably determined the cost of proceeding and pursuing its claims was simply too great. I am not sure how convincing this is either. From my vantage point, the court may have been more troubled if ANSYS decided to non-suit the case right after getting CDNA's techincal data, which would have been suggestive of using litigation solely for taking a peek under a competitor's hood.
Court: United States District Court for the District of New Hampshire
Opinion Date: 2/10/11
Cite: ANSYS, Inc. v. Computational Dynamics North Am., 2011 U.S. Dist. LEXIS 13993 (D.N.H. Feb. 10, 2011)
Law: New Hampshire