Top Plaintiffs' Verdicts by Impact: America Chung Nam LLC v. Cycle Link (USA) Inc.

China's alleged misappropriation of trade secrets served as a backdrop to a three-week jury trial in Los Angeles County Superior Court.

A U.S. subsidiary of a large Chinese company, recycled materials exporter America Chung Nam Inc., claimed competitor Cycle Link (USA) Inc., the offshoot of another big Chinese firm, hired former senior Chung Nam employees and took Chung Nam customer lists.

"A lot of courts have said that there are really no trade secrets involved in this kind of situation, where an employee leaves and solicits former customers," said Perry J. Viscounty, the Latham & Watkins LLP partner who headed Chung Nam's legal team. "So many companies have felt free to do it."

But that may be changing after a jury in January slapped Cycle Link with a $13.1 million damages verdict and Los Angeles County Superior Court Judge Victor E. Chavez added $5 million in punitives.

Viscounty then moved for several million dollars in fees and costs and Cycle Link settled that claim for an undisclosed amount. America Chung Nam LLC v. Cycle Link (USA) Inc., BC462000 (L.A. County Sup. Ct., filed May 20, 2011).

"This sent an extremely strong message," Viscounty said. "It was a disaster for the employees who left and for the company who hired them and used their information. I've had numerous calls from companies telling me they're worried about liability for similar behavior."

Viscounty said the adrenaline flowed strongly during the trial. "So much lawyering is sitting behind a computer. I'd much rather be in the courtroom," he said. "And when our team was up until 2 a.m. prepping, our great client had people sitting right there with us."

- JOHN ROEMER

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