Zylon Corp.v.Medtronic, Inc.

Appellate Division of the Supreme Court of the State of New YorkMar 3, 2016
26 N.Y.S.3d 279 (N.Y. App. Div. 2016)
26 N.Y.S.3d 279137 A.D.3d 4622016 N.Y. Slip Op. 1575

404 650523/08.

03-03-2016

ZYLON CORP., et al., Plaintiffs–Respondents, v. MEDTRONIC, INC., et al., Defendants–Appellants.

  Greenberg Traurig LLP, New York (Richard A. Edlin of counsel), for appellants. Williams Kherkher Hart Boundas, LLP, Houston, TX (Edwin Armistead “Armi” Easterby of the bar of the State of Texas, admitted pro hac vice, of counsel), for respondents.


Greenberg Traurig LLP, New York (Richard A. Edlin of counsel), for appellants.

Williams Kherkher Hart Boundas, LLP, Houston, TX (Edwin Armistead “Armi” Easterby of the bar of the State of Texas, admitted pro hac vice, of counsel), for respondents.

Opinion

Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered April 20, 2014, which, insofar as appealed from, denied defendants' motion for summary judgment dismissing the misappropriation of trade secrets and unfair competition claims, unanimously affirmed, without costs.

In 2005, the parties entered into an Evaluation Agreement, pursuant to which defendant Medtronic Vascular, Inc. (together with the other defendants, Medtronic) agreed to fund plaintiff Zylon Corp. to render services in attempting to create a “zero-fold” balloon, a component of a balloon angioplasty catheter, meeting Medtronic's specifications. “Information generated pursuant to the Project” was to be deemed “Confidential Information” owned by Medtronic.

Zylon and its president, Alan Zamore, allege that Medtronic, inter alia, misappropriated trade secrets and confidential information relating to a process for producing zero-fold balloons and improperly used these trade secrets to create the balloon component of a product known as the Sprinter® Legend Semicompliant Rapid Exchange Balloon Catheter (see Integrated Cash Mgt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 2d Cir.1990 [elements of misappropriation claim] [internal quotation marks omitted] ).

Medtronic failed to establish, as a matter of law, that the alleged trade secret process was “generated pursuant to the Project,” foreclosing the misappropriation claim. Plaintiffs raised a triable issue of fact as to the existence of a protectable trade secret via, inter alia, their pre-agreement provision of machine settings for making zero-fold balloons and defendants' internal references to “Zylon technology” and the “Zylon process,” which defendants attempted to replicate. The fact that plaintiffs were required to issue a final report summarizing the accumulated data does not, in and of itself, mean that the machine settings used to create the zero-fold balloons were also to be provided and considered part of Medtronic's Confidential Information.

Plaintiffs also raised a triable issue of fact as to whether the alleged trade secret process was provided to Medtronic under a duty of confidence with evidence of, inter alia, Zamore's expressed concern over the confidentiality of the alleged trade secret process and defendants' assurances that it was protected and would not be stolen (see Wiener v. Lazard Freres & Co., 241 A.D.2d 114, 122, 672 N.Y.S.2d 8 1st Dept.1998; see also Restatement [First] of Torts § 757, Comment b).

The unfair competition claim is not duplicative of the misappropriation of trade secrets claim (see e.g. Front, Inc. v. Khalil, 103 A.D.3d 481, 483, 960 N.Y.S.2d 79 1st Dept.2013, affd. 24 N.Y.3d 713, 4 N.Y.S.3d 581, 28 N.E.3d 15 2015; CBS Corp. v. Dumsday, 268 A.D.2d 350, 353, 702 N.Y.S.2d 248 1st Dept.2000 ).