In rare trade secrets trial, jury awards $66M to San Jose LED manufacturer

A Santa Clara County jury has awarded a $66 million verdict to a San Jose LED manufacturer in a trade secrets case involving a high-ranking internal scientist who decamped from his employer to join a Chinese competitor.

On Friday, the jury found in favor of Lumileds LLC, concluding Elec-Tech International Co. Ltd. and its corporate leadership lured Gangyi Chen -- a Lumileds scientist who had inside knowledge of some of company's most sensitive manufacturing designs -- to steal those plans and bring them to China in exchange for a lucrative career with Elec-Tech.

"As one of the preeminent companies in the LED lighting industry, Lumileds is committed to protecting its technology from trade secret theft," the company's lead litigator, Brian D. Roche, told the Daily Journal in a phone interview Monday.

"This verdict is a testament to that commitment, and we're pleased the Silicon Valley jury with this $66 million verdict sent a clear signal in support of protecting innovation," said Roche, a partner at Reed Smith LLP in Chicago.

Elec-Tech said Monday it was planning to appeal the verdict and noted the jury did not find willful or malicious action.

Lumileds was also represented by senior vice president and general counsel Cheree McAlpine, along with Gina Flynn and Kevin Simons.

"We are pleased that the jurors recognized the clear intellectual property theft . . . and the extent of the damages caused by the misconduct," McAlpine said in a company press release. "The precedent set by today's verdict sends a clear message to industry that intellectual property will be guarded and enforced to safeguard the health of our business."

Lumileds has long been in the LED industry and is considered a leader in the field. Elec-Tech for many years focused primarily on small home appliance production, according to court documents.

However, in 2009, the company's leadership decided to go into the LED business.

According to Lumileds' complaint, Elec-Tech offered Chen a million-dollar salary in an attempt to poach the scientist and began making payments to him while he still worked for Lumileds.

The jury said Chen took five of Lumileds' unique trade designs used for making LEDs, which Elec-Tech used to develop competing products.

"We are obviously disappointed by today's outcome, but as we asserted during the trial Elec-Tech independently developed its own process for LEDs and never took, nor used any of Lumileds' technology," said an Elec-Tech statement.

"Further, the technology they asserted in this case is all generally known and cannot be claimed to be proprietary in any way," the defendant company added.

Trade secrets trials are few and far between. Complex and often filled with testimony shrouded in industry-specific jargon, plaintiff companies and their attorneys must feel confident that a jury will be able to grapple with the nuances of such technical information.

The Lumileds trial lasted four weeks and included lengthy testimony on both sides from experts in LED technology.

Santa Clara County Superior Court Judge Brian C. Walsh presided over the case. Lumileds LLC v. Elect-Tech International Co. Ltd., 115-CV-278566 (Santa Clara Super. Ct., filed March 24, 2015).

Stanley M. Gibson, a partner with Jeffer Mangels Butler & Mitchell LLP, represented Elec-Tech.