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It is sufficient to refer to categories of confidential information in a statement of claim for misappropriation of confidential information

2 Apr 2020 3:04 PM | CAN-TECH Law (Administrator)

Defendant attempted to strike claim for failing to particularize the specific confidential information at issue

In an action alleging, among other things, misappropriation of confidential information, the defendants moved, in Evertz v. Lawo AG, 2020 ONSC 413, to strike the plaintiffs’ amended statement of claim. In a previous motion, reported at 2019 ONSC 1355, the plaintiffs’ statement of claim had been struck but with leave to file an amended claim within thirty days. It had been found to be defective due to the vagueness of the categories of confidential information and because the allegations of misuse of the confidential information was not sufficiently particular to inform each defendant of the acts alleged by the plaintiffs to constitute misuse of the confidential information at issue.

The issue was whether the plaintiffs’ amended statement of claim had the same deficiencies. In the amended claim, the plaintiffs referred to categories of information:

[10] In the amended statement of claim, at paragraph 92, the plaintiffs plead the confidential information that the defendants allegedly misappropriated and misused. This paragraph describes 23 categories of information such as “preliminary manuals”, “customer databases”, “parts and product databases”, “source code, binary files, and decompilable forms of confidential product software”, and “mechanical specifications and drawings”. Each such category, as pleaded, has a short description.

[11] In paragraphs 94 through 99 of the amended statement of claim, the plaintiffs plead the confidential information that each defendant is alleged to have taken by listing specific categories of alleged confidential information.

The defendants argued that this categorization was insufficient, but the court disagreed:

[17] The defendants submit that by basing their claims on “categories” or “types” of information, rather than particular pieces of information, the amended statement of claim is defective for the same reason that the statement of claim was defective. The defendants submit that the plaintiffs have still failed to meet the minimum level of material fact disclosure that is sufficient to properly plead causes of action based upon alleged misappropriation and misuse of confidential information.

[18] I disagree with the defendants’ submissions in this regard. In paragraph 91 of the amended statement of claim, the plaintiffs identified the particular products to which the confidential information they allege was stolen and misused related. In paragraph 92, the plaintiffs described with particularity the types of confidential information they allege the defendants stole and misused. The descriptions of the types of alleged confidential are much more specific than the descriptions in paragraph 91 of the original statement of claim. The plaintiffs are not required to plead the evidence by which they intend to prove their pleaded allegations, and they are entitled to plead facts they hope to be able to prove after discovery. The defendants would know from the amended statement of claim the information they are alleged to have misappropriated and misused.

The court also found that the previous deficiencies regarding the manner of alleged misappropriation of confidential information was similarly remedied in the amended claim:

[20] I disagree that the amended statement of claim is deficient in this respect. With respect to each defendant, the plaintiffs have pleaded the types of confidential information each defendant is alleged to have misappropriated and misused. These categories are repeated with respect to each defendant. The categories and types of confidential information which each defendants is alleged to have misappropriated and misused are particular. They not too vague or general that each defendant would not know what is alleged. The plaintiffs are not required to plead evidence upon which they rely. They are entitled to plead facts which they hope to be able to prove after discovery, provided the facts pleaded meet the minimum level of disclosure with respect to each defendant.

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