Law360, Washington (July 18, 2013, 7:33 PM ET) — A medical device subsidiary of Johnson & Johnson slammed two former sales representatives and their new employer with a $3 million lawsuit in Virginia federal court on Tuesday, alleging the ex-employees violated the terms of their noncompete agreements by taking jobs to distribute.DePuy Synthes Sales Inc. claimed the two former sales representatives have shared trade secrets and undermined the company’s ability to compete in eastern Virginia’s spinal device market after they resigned their DePuy positions and joined Sky Surgical Inc. to sell a competitor’s products. Both Michael Jones and Jacob Schools had signed confidentiality and noncompete agreements as part of their employment with DePuy.
“The market for spinal implant and related products is highly competitive,” the complaint said. “To succeed in the spinal device industry, DePuy Synthes makes substantial investments in the education, training and development of its sales representatives, some of whom are DePuy Synthes employees and some of whom are employees of independent sales organizations that act as sales representatives for DePuy Synthes.”
As sales representatives, Jones and Schools had access to confidential information about DePuy, its products and its clients, including product pricing, sales strategies, individual surgeons’ design preferences and product strengths and weaknesses. Because of their extensive knowledge of the spinal implant products, DePuy required Jones and Schools sign noncompete agreements in addition to their employment agreements, according to the complaint. The two initially started as independent sales representatives of DePuy products, but signed contracts in February 2012 to become DePuy employees.Their contracts stated that in the event either of them left DePuy, they would be prohibited from contacting or working with their former clients or selling competing products for 18 months.
“The surgeons and staff in the hospital accounts in which Jones and Schools worked have come to associate them with DePuy Synthes’ products such that Jones and Schools can do considerable damage to DePuy Synthes by undertaking representation of competitive spinal products,” the complaint said.
But Jones and Schools resigned in November and December of 2012, respectively, and have been seen at several hospitals where they formally sold DePuy devices. Both are now employed by Sky Surgical, a distributor of Globus Medical Inc. products, which are direct competitors of DePuy’s.
“Sky Surgical, Jones and Schools have acted willfully, wantonly and in conscious disregard of DePuy Synthes’ rights,” the complaint said. “The actions of Sky Surgical, Jones and Schools already have caused irreparable damage to DePuy Synthes’ business. Absent injunctive relief, DePuy Synthes will suffer irreparable harm from the activities of Sky Surgical, Jones and Schools.”
DePuy has requested $1 million in compensatory damages each from Jones, Schools and Sky Surgical, as well as an additional $350,000 in punitive damages from the company and treble damages, the complaint said.
The company seeks to prevent Jones, Schools and Sky Surgical from contacting DePuy clients they knew during their employment with the devicemaker and selling competitive products to them through at least May 2014. DePuy also asked the federal court to enjoin Sky Surgical from directly or indirectly employing the two former sales representatives through that time and prevent Jones and Schools from contacting their former DePuy colleagues.
DePuy is represented by David E. Constine III, Rebecca E. Ivey and Elizabeth S. Flowers of Troutman Sanders LLP.The case is DePuy Synthes Sales Inc. v. Michael Jones et al., case number 2:13-cv-00392, in the U.S. District Court for the Eastern District of Virginia.
DePuy Hits Ex-Sales Reps With Trade Secrets Suit
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