In Ainstein AI, Inc. v. ADAC Plastics, Inc., No. 23-2166-DDC-TJJ (D. Kan. May 19, 2023), Kansas Magistrate Judge Teresa J. James granted plaintiff’s Emergency Motion for Expedited Discovery in part, where forensic imaging was ordered for computers and storage devices used by key defendant personnel, but not for their personal cell phones.
In this case, Plaintiff alleged Defendant misappropriated trade secrets under state and federal law, engaged in unfair competition, and breached contractual non-compete and confidentiality agreements (among other things) after a business relationship between the two parties soured. During that period, Plaintiff directed its engineers to suspend their development work on the joint entity and removed Defendant’s ability to access the Google Drive containing its intellectual property that had been previously shared.
However, unbeknownst to Plaintiff, three Defendant employees downloaded a total of 79,467 files containing Plaintiff’s intellectual property from the Google Drive before Plaintiff had a chance to remove access. In response to Plaintiff’s allegations, Defendant contended Plaintiff gave Defendant’s employees unfettered access with no restrictions to the share drive and claimed that it uploaded numerous of its own confidential and proprietary files to the same share drive. Defendant also claimed that what Plaintiff complained of in its Verified Complaint was permitted by the LLC Agreement and by Plaintiff’s own conduct.
Plaintiff moved for expedited discovery in connection with Plaintiff’s Emergency Motion for Preliminary Injunction, requesting that forensic imaging be ordered the for computers, storage devices, and cellphones of three Defendant employees and the Defendant individual responsible for its relationship with D3, the subcontractor that assisted with research and development for the project.
Noting that “Good cause for early discovery frequently exists in cases involving claims of infringement and unfair competition”, Judge James stated: “the Court finds Plaintiff has demonstrated good cause for expedited discovery. First, Plaintiff’s motion for preliminary injunction is currently pending…Second…, the Court finds the expedited discovery requested, as further limited by this Order, is reasonable and proportional to the needs of this case.”
Continuing, Judge James stated: “Third, the purpose of the expedited discovery is clear…Plaintiff alleges that on October 31, 2022, November 4, 2022, and November 8, 2022, three of Defendant’s employees…downloaded 79,467 files containing Plaintiff’s intellectual property from the Google Drive. These downloads are not ‘mere conclusory allegations,’ as argued by Defendant. Defendant itself does not deny the employees downloaded the files, but maintains Defendant had the right to the downloaded files. However, Plaintiff contends Defendant is using mass-downloaded trade secrets in violation of the parties’ LLC Agreement and requests imaging to preserve what files were downloaded and how they were used. To get the most out of forensic investigation, it is important to examine the devices at issue as soon as possible or to disallow use of the devices until the imaging can be completed. Unallocated space can be overwritten quickly when files are deleted, which then makes forensic analysis futile.”
Judge James also rejected Defendant’s objection as to the timing of Plaintiff’s request, stating: “Defendant argues Plaintiff waited nearly six months to initiate litigation, undercutting its argument that the drastic, emergency relief sought in this motion is necessary. Plaintiff counters that it had no knowledge of the downloads in October and November, and its President Wang only discovered the downloads when he inspected the server log of the Google Drive on March 27, 2023…This lawsuit was filed approximately three weeks later, on April 18, 2023.”
In finding that “expedited discovery allowed by this Order is reasonable and proportional to the needs of this case”, Judge James reiterated: “’Good cause frequently exists in cases involving claims of infringement and unfair competition,’ and Plaintiff has sufficiently pled infringement and need for expedited discovery given the risks involved in delaying forensic imaging.”
Regarding computers and storage devices, forensic imaging was ordered for computers and storage devices by Judge James who said: “The Court finds Plaintiff has shown good cause for forensic imaging of the work computers and storage devices utilized by Defendant’s three employees allegedly responsible for downloading the files from the Google Drive, and the work computer and storage devices utilized by the individual at ADAC responsible for its relationship with D3.”
However, Judge James did not rule the same regarding personal cell phones, stating: “While these employees’ personal cell phones may have been used for some work purposes, it is unclear whether and to what extent they were actually used for work purposes…Plaintiff provides no legal authority for its request to examine the personal cell phones of the three individuals, and it does not explain why it is necessary to conduct an inspection of their cell phones in addition to the computers and storage devices that those employees utilized.”
She added: “The Court finds Plaintiff’s request to image these employees’ personal cell phones overly broad, unduly burdensome, and unduly intrusive given the disproportionate amount of personal information totally irrelevant to this lawsuit that is likely on these individuals’ personal cell phones. Further, given the heavy reliance many cell phone users place upon their devices, the Court finds the request that these individuals produce their personal cell phones to a third-party for an unspecified amount of time overly burdensome at this stage in the case. Additionally, the Court questions whether Defendant’s employees’ personal cell phones are within the possession, custody, or control of Defendant such that it could be compelled to produce them for imaging.”
So, what do you think? Are you surprised that forensic imaging was ordered for computers and storage devices, but not cell phones? Please share any comments you might have or if you’d like to know more about a particular topic.
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