Facts

Dr. Michael Linford of plaintiff TPE Associates LLC developed an environmentally friendly, non-chemical method of eradicating insects from a structure by using only heat (the "TPE Method"). TPE licensed the TPE Method to defendants Team Termite and Pest Control Inc. and William Houtchens. Defendants used the TPE Method for eight years. In 2006, defendants stopped paying fees and royalties. Alleging that defendants continued to use the TPE Method, TPE sued for breach of contract, trade secret misappropriation, fraud, concealment, and non-disclosure.

The neutral dismissed the fraud, concealment, and non-disclosure claims prior to the hearing, with leave to amend. TPE thereafter elected not to pursue these claims.

PLAINTIFF'S CONTENTIONS:
TPE contended that Linford was a pioneer in the industry and spent years developing the TPE Method. TPE argued that it owned a trade secret in the TPE Method; that the defendants illegally misappropriated the TPE Method; that Team Termite and Houtchens breached their confidentiality and license agreement with TPE by continuing to use the TPE Method; and that defendants fraudulently under-reported their use of the TPE Method.

DEFENDANT'S CONTENTIONS:
Team Termite and Houtchens contended that they developed their own different method of using heat to kill insects after they had signed the confidentiality agreement and that TPE never trained them on the TPE Method.

Damages

TPE sought $839,894 in compensatory damages and an unspecified amount of punitive damages and attorney fees. Defendants, contending that the suit was frivolous, sought attorney fees.

Result

The arbitrator found that the TPE Method was entitled to trade secret protection; that Team Termite and Houtchens had misappropriated the TPE Method and breached the contract with TPE; that Team termite and Houtchens has under-reported royalties; and, that TPE had been damaged in the amount of $253,523. TPE was awarded $253,523 in compensatory damages and Team Termite and Houtchens were enjoined from using heat until 2025.

Other Information

The arbitration award was converted to a final judgment and permanent injunction by the Hon. David Minning of the Los Angeles County Superior Court. FILING DATE: April 2, 2007.