St. Jude Awarded $2.3B in Trade Secrets Case

A Los Angeles jury awarded the Little Canada-based medical device manufacturer $2.3 billion in conjunction with a lawsuit it filed against a former employee and the rival company that he founded.

Little Canada-based St. Jude Medical has been awarded a $2.3 billion judgment in a trade secrets lawsuit that it filed against a former employee and the rival medical device company he founded-Nervicon Company, Ltd.

According to St. Jude's complaint, which was filed in Los Angeles Superior Court in January 2010, Yongning Zou was previously employed as a hardware design engineer for St. Jude's cardiac rhythm management division, called Pacesetter, Inc.

While employed at St. Jude, Zou allegedly had access to a significant amount of confidential and proprietary information and signed a nondisclosure agreement in which he agreed not to divulge such information.

St. Jude claims that Zou violated that agreement when he stole proprietary information and documents from the company and used them to start Nervicon in China, which he registered 15 days before officially resigning from St. Jude in June 2009.

St. Jude found out that Zou stole the documents about a month later when its third-party parts manufacturer, Statek Corporation, notified the company that it received a document from Nervicon that was an exact copy of a St. Jude document that listed the specifications for the company's crystal oscillator part.

The document allegedly contained the words “SJM Part Number,” an apparent reference to St. Jude's initials, although St. Jude's name was deleted from the document heading and replaced with “Nervicon.”

On Friday, a jury supported St. Jude's claims and found that Zou stole trade secrets from the company in order to start Nervicon. Zou was ordered to pay $1.47 billion to St. Jude, and Nervicon was ordered to pay $868 million.

The judgment follows a November 2010 preliminary injunction that prevented Zou and Nervicon from using or disclosing any of St. Jude's trade secrets and confidential or proprietary information.

“We take the protection of proprietary intellectual property and trade secret misappropriation very seriously, and we are pleased with the jury's findings,” St. Jude said in an e-mailed statement.

St. Jude would not comment further on the case, but several media reports indicate that the $2.3 billion award is nearly double the $1.2 billion that the company had sought.

St. Jude is among Minnesota's 20-largest public companies based on its revenue, which totaled $5.17 billion in 2010.