Groton firm wins judgment against company in theft of its Navy drone plans
For about eight years, Peter Legnos, president of LBI Inc., a Groton-based defense contractor that designs underwater drones for the Navy, has been fighting to prove that two former employees stole trade secrets from his company to the benefit of a competitor — Cambridge, Mass.-based Charles River Analytics.
A New London Superior Court jury on Nov. 6 found that CRA deliberately interfered with LBI’s employment agreements, and with the company’s contractual and business relationships with the Office of Naval Research. The jury ordered CRA to pay LBI $839,423 plus punitive damages that will be awarded at a later hearing.
CRA did not respond to requests for comment. The company is reportedly expected to appeal the ruling.
Legnos, in a recent interview, said the eight-year saga is something of a David versus Goliath story with LBI, which employs about 20 people, spending about $1.5 million in legal fees to make its case against CRA, a company of about 130 employees.
The case centered around two former LBI employees, Jared Sparks and Jay Williams, who worked for the company in 2010 and 2011. A grand jury in November 2016 charged Sparks and Williams with uploading confidential proprietary information from LBI, including electronic files, photos, drawings and diagrams, into Dropbox accounts before leaving the company to work for CRA.
The government said that while at LBI the men collaborated with CRA, which was developing software to be integrated into the underwater drones being developed by LBI. CRA had negotiated with the Office of Naval Research in late 2010 and early 2011 to develop the software and also test the integration of the software with the prototypes by LBI, a task the company had never done before and needed to hire new employees for. Sparks and Williams began working for CRA in January 2012.
Several months after Sparks left LBI, Legnos said another employee at LBI who was using the computer previously used by Sparks, “stumbled upon” the Dropbox Sparks used to upload the information. Legnos said that often evidence of cyber theft is not discovered until its too late to recover the information.
A jury in U.S. District Court in Hartford, in July 2018, found Sparks guilty of six counts of theft of trade secrets, six counts of upload of trade secrets, and one count of transmission of trade secrets. The jury found Williams not guilty on all counts.
Still, the legal battle against CRA waged on, Legnos said.
Legnos said the case illustrates the need to strengthen the Economic Espionage Act, which is still focused mostly on foreign espionage rather than on the domestic side, and the need for more strict ethical standards and enforcement by government agencies.
“Small companies just get devastated by this,” he said. For larger companies, it can be considered “a cost of doing business,” he said, explaining they can afford to rack up big legal bills and file motion upon motion so these cases drag on.
“Until the penalties are great enough to compensate victims, these companies are going to keep doing it,” Legnos said.
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