Thursday, September 03, 2015

The saga of Grail (little company) and Mitsubishi (big company): a problem with enforcing trade secrets (instead of patents) AND the hazards of untranslated emails

From the Recorder:

Grail Semiconductors was founded around a memory chip design that combined features of the three types of chips already on the market. But the company failed to recruit investors and had run out of money by April 2001, when its founders met with representatives of Mitsubishi to discuss investment or product-development opportunities. The meeting didn't lead to a deal. In 2003, Mitsubishi and Hitachi formed a joint venture called Renesas Technology and released a memory chip similar to Grail's. Grail sued Mitsubishi in 2007, claiming the larger company misappropriated its trade secrets in violation of a nondisclosure agreement.

During trial, Mitsubishi's lawyers with Squire Patton (then Squire Sanders) argued Grail's memory chip technology wasn't new or valuable when the two companies met in 2001. The meeting was so useless that Mitsubishi's representatives didn't even take notes or write up a memo, the lawyers claimed. Mitsubishi's Kazutoshi Hirayama testified that there was no nondisclosure agreement. And counsel argued there was no evidence of disclosure of trade secrets.

"[Mitsubishi's] counsel could only make this argument because the contrary evidence was being concealed," Grail's team wrote.

A recent document dump provided by Mitsubishi's Japanese arm revealed an email sent the day after the meeting, which Grail's counsel hadn't received during the first trial's discovery period. The email, on which Hirayama was copied, acknowledged there was a nondisclosure agreement in effect, described the meeting in detail and called Grail's memory chip design "amazing" and "too good to be true," according to the motion for sanctions.

Grail's lawyers claim the email was deleted by Mitsubishi Electric & Electronics USA, the defendant in the case, but kept by the company's Japanese arm.


If the Grail work was so innovative, one would have thought the trade secret case would have been easy to demonstrate.

If nothing else, the case illustrates the need to crystallize "what are" trade secrets for purposes of later litigation.


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