Innovative Technologies Corp. v. Kenton Trace Technologies LLC et al., case number 03-cv-3674

Innovative Technologies Corp. (ITC) has won nearly $23 million in a trade secret suit against three former employees who competed against ITC while still employed by the Ohio-based defense contractor. The state jury awarded $17 million in punitive damages, in addition to $5.7 million in compensatory damages. The employees also were ordered to return the salary earned in their final year working for ITC, close to $300,000.

According to the lawsuit, filed in May 2003, now-former ITC employees David P. Nicholas, James R. Silcott and Sheila K. Silcott set up Kenton Trace Technologies (KTT) in April 2000 to bid for defense contracts, despite the fact that they were still employed at ITC, had signed confidentially agreements, and were bound by contractual agreements not to compete with ITC.

The suit also alleged that the three enlisted the help of Virginia-based competitor Advanced Management Technology Inc. to lure away ITC customers using trade secrets. Testimony in the trial established that the three former employees won a share of a major services contract in 2001 while still working for ITC. At the time, ITC was under contract with the federal government to provide support services for the Wright-Patterson Air Force Base; the contract had been ITC’s since 1995. ITC did not learn of KTT’s existence until a competitor, Modern Technologies Corp., alerted ITC in May 2001 that KTT was trying to win the contract.

The Montgomery County Common Pleas Court issued a temporary restraining order in 2002 to keep KTT from competing with ITC, and a month later issued a preliminary injunction against the employees. Nevertheless, KTT conspired with Advanced Management to get around the injunction and acquired the Wright-Patterson contract.