Medspring Group, Inc. v. Feng

368 F. Supp. 2d 1270, 2005 U.S. Dist. LEXIS 12461, 2005 WL 984236
CourtDistrict Court, D. Utah
DecidedApril 25, 2005
Docket1:05 CV 00042 DAK
StatusPublished
Cited by3 cases

This text of 368 F. Supp. 2d 1270 (Medspring Group, Inc. v. Feng) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Medspring Group, Inc. v. Feng, 368 F. Supp. 2d 1270, 2005 U.S. Dist. LEXIS 12461, 2005 WL 984236 (D. Utah 2005).

Opinion

MEMORANDUM DECISION AND ORDER

KIMBALL, District Judge.

This matter is before the court on Plaintiffs Motion for Preliminary Injunction. A hearing on the motion was held on April 19, 2005 at 10:30 a.m. At the hearing, Plaintiff was represented by Peter W. Guyon and Defendants were represented by L. David Griffin and Robyn L. Phillips. Before the hearing, the court carefully considered the memoranda and other materials submitted by the parties. Since taking the motion under advisement, the court has considered all additional materials submitted by the parties since the hearing and has further considered the law and facts relating to the motion. Now being fully advised, the court renders the following Memorandum Decision and Order.

BACKGROUND

Plaintiff Medspring Group, Inc. (“Medspring”) is a corporation located in Bountiful, Utah, which researches, develops and markets medical devices. Medspring’s products include a Hemostatic Biodegradable Gauze (the “S-99 Gauze”) and Hemostatic Satin Gauze (the “S-100 Gauze”), a medical device made out of a gauze material which speeds up bleeding coagulation and then dissolves at the bleeding wound. In the spring of 2002, Plaintiff hired Defendant Vicky Feng (“Feng”) as a consultant. Medspring claims that in this capacity, Feng was exposed to confidential information and trade secrets relating to Medspring’s medical devices, including the S-99 and S-100 Gauze. In order to protect its confidential information and trade secrets, Medspring had Feng execute a Mutual Non-Disclosure Agreement (“Agreement”) by which Feng agreed not to disclose Plaintiffs “Confidential Information,” including trade secrets. Plaintiff claims that Feng executed the Agreement on May 31, 2002, in both her individual capacity and as the C.E.O. for Defendant Gate International, a California corporation.

Feng terminated her employment with Medspring on August 1, 2002. In early 2005, Medspring became aware that Feng had started her own company, Regional Medical Solutions, Inc., through which she has been marketing a medical device identical to that of the S-99 and S-100 Gauze under the name of “BloodSTOP.” Medspring believes that Feng is illegally and wrongfully using trade secrets belonging to MedSpring in order to market her “BloodSTOP” products. Medspring has *1273 accordingly brought suit against the Defendants alleging a cause of action for injunctive relief based on Defendants’ breach of the Agreement as well as causes of action for Violation of the Uniform Trade Secrets Act, Tortious Interference with Business Relationships and Civil Conspiracy.

PROCEDURAL HISTORY

On March 24, 2005, Medspring filed a Verified Complaint for Injunctive and Other Relief (the “Complaint”) and a Motion for Temporary Restraining Order and for Order to Show Cause (the “Motion”) in the Second District Court of Davis County, State of Utah. On the same day, the Second District Court held a hearing on the Motion and issued a Temporary Restraining Order (“TRO”) which was to remain in place until April 3, 2005. The TRO essentially prohibits the Defendants from “using, referring to, disclosing and appropriating” or “encouraging, helping, aiding or abetting others to use, refer to, disclose and appropriate” any number of listed items relating to MedSpring’s products, including the S-99 and S-100 Gauze. It also orders Defendants to immediately deliver to MedSpring all “Confidential Information” in Defendants possession or control.

On April 1, 2005, before the scheduled preliminary injunction hearing had occurred, the Defendants removed this action to federal court based on diversity jurisdiction. Upon removal, this court issued an Order construing Medspring’s Motion as a Motion for Preliminary Injunction. This court additionally ordered that the state court issued TRO was to stay in effect until the court could hear argument on the Motion and enter an order either granting or denying the Motion.

FINDINGS OF FACT

The court finds that the following facts have been proven by a preponderance of the evidence: _

Feng’s Employment with MedSpring

1. .MedSpring is a Utah corporation which researches, develops and markets a number of medical devices, including a product known as the Hemostatic Biodegradable Gauze (the “S-99 Gauze”) and a product known as the Hemostatic Satin Gauze (the “S-100 Gauze”).

2. On or around May 22, 2002, MedSpring hired Defendant Vicky Feng (“Feng”), a native of China who speaks fluent Mandarin Chinese, as a consultant. At the time Feng was hired, she had no experience in the medical industry.

3. At the time MedSpring hired Feng, it was a startup company in need of operating capital to further its business activities, especially its business activities in China. Feng was hired to qualify and introduce investors to Plaintiff. In return for her services, Feng was to receive 10% of all investment capital she brought into the company.

4. In her position as a consultant with MedSpring, Feng had access to confidential information regarding MedSpring’s products, including the S-99 and S-100 Gauze. Accordingly, MedSpring requested that she execute a Mutual Non-Disclosure Agreement.

5. On May 31, 2002, Feng executed a Mutual Non-Disclosure Agreement (“Non-Disclosure Agreement”). Under this agreement, Feng agreed not to disclose MedSpring’s “Confidential Information,” including trade secrets, for a period of three years from the date of the NonDisclosure Agreement.

6. During the Spring and Summer of 2002, Feng raised approximately $50,000 in capital for MedSpring.

*1274 7. During her fund raising efforts, Feng researched hemostatic gauze on the internet and learned that there were numerous manufacturers of hemostatic gauze in China. Her research further discovered that one of these manufacturers, Beijing Textile Research Institute (“Bejing Textile”), owns Chinese patents for the S-99 and S-100 Gauze and has filed patent applications for the S-99 and S-100 Gauze in Europe and with the Patent Cooperation Treaty.

8. In or around June of 2002, Feng traveled to China and met with Beijing Textile to obtain information regarding their S-99 and S-100 hemostatic gauze products.

9. Feng disclosed the results of her research and the information she obtained from Beijing Textile to Richard Baggett and Ralph Thomson, officers of MedSpr-ing.

10. On July 20, 2002, Feng and Ralph Thompson met with Beijing Textile regarding its manufacturing of hemostatic gauze.

11. During this meeting, Beijing Textile made it clear to MedSpring that it was the patent holder in China for hemostatic gauze, including the S-99 and S-100 gauze.

12. On August 1, 2002, MedSpring’s Board of Directors sent Feng a Confidential Memorandum regarding “Protocols-Negotiating with Beijing Textile Research Institute.” This memorandum set forth MedSpring’s' decision to pursue entering into a deal with Beijing Textile regarding the hemostatic gauze project and made clear that Feng was to have no future contact with Beijing Textile. The Board requested that Feng sign the memorandum indicating her understanding and complete acceptance of the policies set forth therein.

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368 F. Supp. 2d 1270, 2005 U.S. Dist. LEXIS 12461, 2005 WL 984236, Counsel Stack Legal Research, https://law.counselstack.com/opinion/medspring-group-inc-v-feng-utd-2005.