East West Bank v. Shanker

Civil Action To Protect Trade Secrets

Northern District

U.S. District Judge William H. Orrick

Defense Attorneys: Paul Hastings Llp, Yar R. Chaikovsky, James M. "Bo" Pearl, Andrew M. Legolvan, Boris S. Lubarsky And David M. Fox

Plaintiffs Attorneys: Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow P.C., Ekwan E. Rhow, Paul S. Chan, Grace W. Kang, Jonathan M. Jackson, Aharon B. Kaslow

Yar R. Chaikovsky

There is a fine balance between a trade secret and what is patented and in the public domain. Paul Hastings LLP, led by partners James M. Pearl and Yar R. Chaikovsky, had to go against East West Bank to argue what that constituted.

The lawyers persuaded U.S. District Judge William H. Orrick of San Francisco to reverse a preliminary injunction against client Sukeert Shanker, CEO of the start-up Aeldra Financial Inc., in a suit brought by his former employer East West Bank.

In the complaint, East West Bank claimed misappropriation of trade secrets related to their mobile banking platform, Velo. Orrick issued a preliminary injunction against Shanker. "We took the case over from another firm after the injunction issued," Chaikovsky said. "More and more, our firm has been the go-to get better results than prior counsel. When taking over a case, we never assume what we would necessarily do has been done, and we reanalyze the case to find the quickest, successful resolution for our client, knowing that others may not have had the same effective resolution in mind. As such, we're thrilled with the result for our client, and that they can continue to grow their business unencumbered."

Pearl added: "Shanker is an entrepreneur who brought a first of its kind business to India, signing up non-resident aliens to be able to open accounts in the U.S. The product is potentially available to a great number of people who want the stability of a US banking account but are abroad."

"The first thing we did was to dig into the concepts our adversary was claiming were trade secrets," he continued. "We found they had published a patent and basically put into the public domain concepts they were claiming were secrets. Once we discovered that patent, that undercut the trust of their trade secrets."

Further, the attorneys argued the dispute should be decided in arbitration. "Besides the location of the patent with its pubic disclosures, the team also worked together to uncover multiple employment agreements that contained arbitration clauses that had not been brought to the court's attention. This case should not have been brought in district court, and as a result, we were entitled to attorney's fees. " Chaikovsky said.

Added Pearl: "We also uncovered arbitration agreements that had not been brought to the court's attention. "Our adversary had mandatory agreements that had not been disclosed but compelled the case to be in arbitration rather than federal court," he added. "The judge expressed some frustration that the proceedings had been brought without ever knowing about these before."

Orrick, reversing his preliminary injunction, granted the defense motion to compel arbitration and stayed the lawsuit. East West Bank v. Shanker et al., 20-CV-07364 (N.D. Cal., filed October 20, 2020).

"Defendants' litigation conduct is not inconsistent with its right to compel arbitration because it did not know about the agreement then, and [East West Bank] does not argue that it was prejudiced by Defendants' actions," the judge wrote in an October ruling.

After dissolving the preliminary injunction, Orrick awarded the Paul Hastings lawyers $467,000 in attorney fees two months later.

Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow PC, the firm representing East West Bank, declined to comment on the case, which is in arbitration.

- Federico Lo Giudice

James M. "Bo" Pearl