{"id":72,"date":"2017-12-04T12:46:39","date_gmt":"2017-12-04T16:46:39","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/greenip\/?p=72"},"modified":"2017-12-04T12:46:39","modified_gmt":"2017-12-04T16:46:39","slug":"dispute-over-solar-inverter-technology-heads-to-federal-court","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/greenip\/2017\/12\/04\/dispute-over-solar-inverter-technology-heads-to-federal-court\/","title":{"rendered":"Dispute Over Solar Inverter Technology Heads to Federal Court"},"content":{"rendered":"<ul>\n<li>A manufacturer of solar inverter components, MAGicALL, has accused its former customer Advanced Energy Industries of stealing trade secrets and violating non-disclosure agreements relating to MAGicALL\u2019s product designs.<\/li>\n<li>Trade secret law protects companies against the misappropriation of valuable business information that has been subject to reasonable efforts to maintain secrecy.<\/li>\n<\/ul>\n<p>California\u2019s MAGicALL, Inc. has filed a lawsuit against Advanced Energy Industries, Inc. (\u201cAEI\u201d) and several affiliated companies alleging breach of non-disclosure agreements and theft of trade secrets relating to MAGicALL\u2019s solar inverter technology. In a Complaint filed in federal court in Colorado this month, MAGicALL requested that the court issue an injunction preventing AEI from continuing to sell any products containing MAGicALL\u2019s proprietary technology, and award monetary damages in an amount yet to be determined.<!--more-->MAGicALL is a manufacturer of \u201chigh performance magnetic and electronic systems.\u201d (http:\/\/www.magicall.biz\/). AEI is a NASDAQ-listed manufacturer of power and control technologies headquartered in Fort Collins, Colorado. (https:\/\/www.advanced-energy.com\/). The named defendants in the lawsuit include AEI and a pair of companies presumed to be AEI subsidiaries (AE Solar Energy, Inc.; Advanced Energy (Shenzhen) Co., Ltd.), which this post refers to collectively as \u201cthe AEI Defendants.\u201d Four additional defendants are named, which appear to be suppliers to AEI of components for solar inverters (Eaglerise Electric and Electronic Co., Ltd.; Eaglerise E &amp; E USA, Inc. (CA); Eaglerise E &amp; E USA, Inc. (PA); Eaglerise Power Systems, Inc.). This post refers to these four defendants as \u201cthe Eaglerise Defendants.\u201d<\/p>\n<p>Solar inverters are a critical component in any photovoltaic system. Solar panels output power in direct current, which is incompatible with the commercial electric grid and the vast majority of electric consumption in the United States. For solar panels to have a useful output, their power must be converted from direct current to alternating current. A solar inverter performs this conversion.<\/p>\n<p>MAGicALL claims to have developed \u201ca highly efficient inductor\u201d \u2013 a key piece of a solar inverter \u2013 that resulted in \u201cdramatically improved inverter efficiency.\u201d MAGicALL allegedly shared details of its inductor design with the AEI Defendants under a series of non-disclosure agreements and then began selling inductors to the AEI Defendants in 2010. After four years, MAGicALL alleges that AEI abruptly stopped purchasing the components and began to use \u201cknock-off copies of MAGicALL\u2019s proprietary inductors\u201d manufactured by the Eaglerise Defendants.<\/p>\n<p>A trade secret is valuable business information that is not publically known and is subject to reasonable efforts to preserve confidentiality. [Note 1]. To prevail on a claim of misappropriation of a trade secret, a party must show that it has a trade secret, and that another party \u201cmisappropriated\u201d the trade secret by one of: (1) non-consensual disclosure, (2) acquisition from a person with a duty to maintain the trade secret, or (3) acquisition by improper means (i.e. theft, bribery, misrepresentation, or breach of secrecy).<\/p>\n<p>MAGicALL specifically alleges in its Complaint that the AEI Defendants violated a pair of non-disclosure agreements and misappropriated trade secrets by copying technical drawings of MAGicALL\u2019s inductors as their own. AEI allegedly used those copied drawings when directing Eaglerise in China to manufacture knock-off inductors that supplanted MAGicALL\u2019s inductors.<\/p>\n<p>If MAGicALL\u2019s allegations are proven in court, the AEI Defendants could be found to have misappropriated trade secrets by sharing MAGicALL\u2019s confidential inductor design without MAGicALL\u2019s consent. The Eaglerise Defendants could be found to have misappropriated trade secrets by acquiring the secrets from another party (the AEI Defendants) with a duty to maintain the trade secrets.<\/p>\n<p>One key issue for the court to resolve in this case is whether MAGicALL took reasonable efforts to preserve the secrecy of its inductor design. Because trade secret law does not prevent reverse engineering a product, the validity of MAGicALL\u2019s alleged trade secret may hinge on the manner in which MAGicALL sold the inductors to AEI and how AEI then sold the inductors for public use. If MAGicALL did not include sufficient restrictions on the sale and use of the solar inverters containing its inductors, then the court may find that MAGicALL failed to take appropriate measures to protect its asserted trade secrets and therefore there can be no liability for misappropriation.<\/p>\n<p>The defendants in this lawsuit will now have an opportunity to respond to MAGicALL\u2019s allegations.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>Note 1: This definition of a trade secret comes from the Defend Trade Secrets Act of 2016, which for the first time created a federal cause of action to trade secret theft. Prior to 2016, trade secret lawsuits were brought under state law.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A manufacturer of solar inverter components, MAGicALL, has accused its former customer Advanced Energy Industries of stealing trade secrets and violating non-disclosure agreements relating to MAGicALL\u2019s product designs. Trade secret law protects companies against the misappropriation of valuable business information that has been subject to reasonable efforts to maintain secrecy. California\u2019s MAGicALL, Inc. has filed &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/blogs.duanemorris.com\/greenip\/2017\/12\/04\/dispute-over-solar-inverter-technology-heads-to-federal-court\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Dispute Over Solar Inverter Technology Heads to Federal Court&#8221;<\/span><\/a><\/p>\n","protected":false},"author":226,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[35,36,22,34,32,5,33,31],"ppma_author":[122],"class_list":["post-72","post","type-post","status-publish","format-standard","hentry","category-general","tag-advanced-energy-industries","tag-eaglerise","tag-justus-getty","tag-magicall","tag-misappropriation","tag-solar","tag-solar-inverter","tag-trade-secret"],"authors":[{"term_id":122,"user_id":226,"is_guest":0,"slug":"jlgetty","display_name":"Justus Getty","avatar_url":"https:\/\/blogs.duanemorris.com\/greenip\/wp-content\/uploads\/sites\/36\/2017\/11\/gettyjustus-125x150.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/posts\/72","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/users\/226"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/comments?post=72"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/posts\/72\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/media?parent=72"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/categories?post=72"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/tags?post=72"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/greenip\/wp-json\/wp\/v2\/ppma_author?post=72"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}