Greenville Businessman Ordered To Pay $4.6 Million For Taking Trade Secrets, Breaching Fiduciary Duty

Nov 20, 2012, 15:42 ET from Uhlig LLC

GREENVILLE, S.C., Nov. 20, 2012 /PRNewswire/ -- A federal judge today ordered a Greenville-area businessman and his company to pay more than $4.6 million in damages and costs for misappropriation of trade secrets, breach of fiduciary duty, and other misconduct related to the sale of his former Greenville employer in 2008.

The order, against J. Adam Shirley and his company, Prism Content Solutions LLC, stems from the sale of the assets of Cox CustomMedia Inc., a Greenville publishing company that had employed him as a senior sales executive. Shortly after the sale, Shirley abruptly resigned from CustomMedia to form a competing company and was accused by CustomMedia's acquirer, Uhlig LLC, of taking trade secrets, customer lists, thousands of computer files and other CustomMedia intellectual property in breach of his employment agreement and South Carolina law. 

Uhlig welcomed today's damage award, emphasizing the critical value of intellectual property and electronic data in the Internet era. It also expressed hope that the size of the award, which includes punitive damages, would help deter misconduct in similar cases.  

"We believe it is essential for the courts to recognize the seriousness of trade-secret misappropriation, regardless of the form it takes," the company said in a statement. "The theft of critical business information in electronic form is often difficult to prove, but in economic terms it can be far more damaging and dangerous than the theft of physical property. Decades of work and millions of dollars in value can be stolen using digital devices no bigger than a pack of gum."

Today's order, by U.S. District Judge J. Michelle Childs, follows a jury trial late last year in U.S. District Court in Greenville. After hearing nearly three weeks of evidence, the 10-person jury returned a verdict in favor of Uhlig on all claims and awarded damages for misappropriation of trade secrets, breach of employment agreement, tortious interference with an employment agreement, breach of fiduciary duty and duty of loyalty, aiding and abetting a breach of fiduciary duty and/or a duty of loyalty and tortious interference with prospective contractual relationships. Several other defendants associated with Shirley were originally named in the case, but reached settlements with Uhlig or were dismissed from the case before trial.

Prior to today's order, the Court also enjoined Shirley and Prism from using trade secrets taken from CustomMedia, which was a major provider of custom publishing services to residential communities and senior living facilities throughout the United States.

The accusations against Shirley centered on electronic evidence obtained through forensic examination of computers and storage devices used by Shirley and his associates, including several high-volume USB drives that Uhlig's experts concluded had been used to download information from CustomMedia's computer systems at the time of Shirley's departure.

Uhlig's computer forensic team included Mark Johnson, a nationally-recognized expert in criminal computer investigations who gained fame for helping establish the identity of the BTK serial killer from a computer disk that was sent to police in 2005. Another key member of the Uhlig investigative team was Alfred L. Johnson, a South Carolina computer forensics expert and former senior FBI official who previously served as the head instructor of Computer Forensics and Computer Crimes at the FBI Academy, Quantico, VA.

"We were fortunate to have such a skilled team of experts, whose long experience in prosecuting serious computer crimes at the FBI and other major national agencies was invaluable in uncovering the facts in this case," the company said in its statement. "The advanced forensic techniques which our investigators helped to pioneer make it almost impossible to hide evidence of wrongdoing where computers are involved, no matter how hard a defendant works to hide his or her tracks."

Uhlig also underscored the value of South Carolina's trade secret statutes, which have some of the nation's strongest protections for trade-secret owners. "South Carolina trade secret law has been strengthened to close some of the legal loopholes that can be used by trade-secret misappropriators to avoid damages in other states," the company noted. "That trend is encouraging and, if it continues, will be a very positive factor for high-technology companies that are considering investment in the state."

Uhlig was represented in the case by Juliet A. Cox of Kutak Rock LLP of Kansas City, MO, and by Frank H. Gibbes III of Gibbes Burton, LLC in Spartanburg, SC. Cox CustomMedia Inc., which joined Uhlig in the case against Shirley and his co-defendants, was represented by Mark W. Bakker of Wyche, P.A. in Greenville. Under the terms of the 2008 acquisition, Uhlig acquired substantially all the assets of CustomMedia, but the corporate entity remained a subsidiary of Atlanta-based Cox Newspapers Inc.

About Uhlig LLC | Uhlig LLC is an advanced-technology publishing company that is a leader in Internet-based content-management and variable-content publishing services.

Katherine Smoak Davis
O) 1-864-235-8330