Axiom Worldwide, Inc. v. HTRD Group H.K., Ltd.

Acquisition of trade secrets by mistake, misunderstanding, or negligence do not constitute misappropriation by improper means.

Opinion (Covington): Axiom Worldwide, Inc. manufactured and sold medical products. Axiom LLC ("Axiom") acquired Axiom Worldwide, Inc. assets. Axiom borrowed money from Progress Bank, N.A. The court transferred Axiom’s assets to Progress Bank. Progress Bank sold the assets it had acquired from Axiom to HTRD Group Hong Kong Limited ("HTRD"). As a result of the sale, Axiom's computers containing trade secrets were delivered to HTRD. Axiom sued HTRD claiming, among other things, misappropriation of trade secrets. In order to prove a trade secret misappropriation, Axiom would have to prove that (1) they posessed secret information and took reasonable care to protect its secrecy; and (2) the secret was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it. Neither party disagreed with the facts surrounding the scenario of the dispute. Axiom claimed that they agreed only to give physical possession of computers and did not intend to give away the contents on the computers. This claim failed to meet the “improper means” requirement. HRTD made a mistake, misunderstood, or through negligence obtained the trade secrets and as such the court found that it did not constitute a misappropriation. Accordingly, the court GRANTED summary judgment for HTRD.