Bro-Tech Corporation v. Thermax, Inc.
651 F.Supp.2d 378
In the United States District Court for the Eastern District of Pennsylvania
Civil Number 05-CV-2230
Before District Judge Rufe
Decided on September 03, 2009

Relevancy of the Case: Can stealing a former employer’s trade secrets be considered an offence under the Racketeer Influenced and Corrupt Organizations Act (RICO)?

Statutes and Provisions Involved

• The Pennsylvania Uniform Trade Secrets Act, 12 P.S. § 5302
• The Computer Fraud and Abuse Act, 18 U.S.C. § 1030
• The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961

Relevant Facts of the Case

• The plaintiff is a corporation engaged in the production of ion exchange resins. The defendants are employees of Thermax, out of which Gleasman, Gersham, Sabzali and Sachdev are former employees of the plaintiff. Thermax is a manufacturer of ion exchange resins.
• The plaintiff spent extensive time and resources in researching and testing its products. It claims a property interest in its specific product formulae and processes. Its customer information is also proprietary.
• The plaintiff claims that the defendants devised a scheme to steal its proprietary information for their own profit. The former employees of the plaintiff thereafter disclosed its stolen information to Thermax.

Prominent Arguments by the Counsels

• The plaintiff’s counsel argued that the defendants’ conduct constituted a pattern of racketeering. The former employees deleted emails and files on the plaintiff’s computers when they joined Thermax. The former employees have also violated PTSA by misappropriating and possessing the plaintiff’s information.
• The defendants’ counsel argued that the alleged conduct lasted for 8 months, which does not satisfy the durational requirement of a RICO claim. They had authorised access to the plaintiff’s resources; hence, they were not liable for any violation under CFAA. Further, the information they have taken does not qualify as trade secret under PTSA.

Opinion of the Bench

• The evidence does not support an interference that one of the defendant’s approach in early 2003 and Thermax’s subsequent job offer to him was about the alleged RICO scheme.
• There are genuine issues of material fact as to whether the information taken by the defendants qualifies as trade secrets.

Final Decision

• The court granted the defendants’ motion to dismiss the RICO claims. All other motions were granted in part and denied in part.

Anjali Agrawal and Srikari Ammanamanchi, undergraduate students at the NALSAR University of Law, prepared this case summary during their internship with The Cyber Blog India in May/June 2022.