Legal Question in Intellectual Property in Georgia
Source code stolen, delivered to competitor
Over the past 9 years, our corporation has developed a web database system which, to date, has completed client transactions in excess of $170 Million.
A client requested bids for such a system. We submitted the winning bid, and agreed to license & install an instance of the software.
Before commencement, we sent non-disclosure & licensing agreements (moderately technical in scope). One member of the client�s board of directors claimed not to understand the technical documents and expressed reservations about signing.
The client requested we simply present an invoice, pay 50% down, and skip signing. We sent a single-line invoice stating �(CORP NAME, SOFTWARE TRADE NAME) Software License Quantity: 1�.
Client loves the system, but has not paid the remaining balance.
We installed system in a source code form that has never before left our company�s possession. This is our most valuable asset & closely guarded trade secret.
Recently, we learned that an employee of the client emailed the entire source code of our system to one of the competitors that had also submitted a bid for this project! Competitor requested code to reverse engineer for another project!
Without a signed agreement, what recourse do we have?
2 Answers from Attorneys
Re: Source code stolen, delivered to competitor
You need to see a qualified lawyer (experienced in trade secret litigation) now - meaning start making calls tomorrow morning. In order to get a restraining order against the employee and competitor (IF you are entitled), you must seek one immediately and the time limit is normally measured in days, not weeks or months. If you wait too long, the court and law presume it is not an emergency and a TRO will be denied on that basis. Otherwise, your issue is still beyond the usual scope of this forum.
Re: Source code stolen, delivered to competitor
I agree with Scott. The time to act is immediately, if not sooner. When you have trade secrets or other intellectual property stolen or threatened, it may become impossible to "put the genie back in the bottle." In addition, what you probably need now is an injunction that prohibits the client from using your proprietary information, and judges are reluctant to issue an emergency injunction (Temporary Restraining Order, or TRO) if you wait too long after a theft or threatened wrongful disclosure is discovered.
As to whether or not you can enforce legal rights without a signed contract, that depends on the circumstances, but in most cases, you still have protections. Under the Georgia Trade Secrets Act, if your product rises to the level of a trade secret, you can get an injunction even without a signed contract in some situations. For that to be the case, you must have a system that derives economic value from not being generally known (most proprietary software meets this requirement) and for which you have made reasonable attempts to maintain secrecy. In most cases, this simply means that the developer has appropriate security measures and nondisclosure agreements in place. Although you do not have a nondisclosure with this client, you may still be able to show that your efforts at secrecy are sufficient. I have had good success obtaining trade secret injunctions even in the absence of signed contracts, so it certainly can be done.
Feel free to contact me to discuss this issue further. You can check out our firm at www.bcklegal.com.
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