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Atlas Biologicals, Inc. v. Kutrubes

United States District Court, D. Colorado

March 3, 2015

ATLAS BIOLOGICALS, INC., Plaintiff,
v.
THOMAS JAMES KUTRUBES, an individual, PEAK SERUM, INC., a Colorado corporation, and PEAK SERUM, LLC., a dissolved Colorado limited liability company, Defendant(s)

ORDER GRANTING PLAINTIFF'S EX PARTE MOTION FOR A TEMPORARY RESTRAINING ORDER

CHRISTINE M. ARGUELLO, District Judge.

This matter is before the Court on Atlas Biological Inc.'s ("Atlas'") Ex Parte Motion for a Temporary Restraining Order and Preliminary Injunction. (Doc. # 5.) For the following reasons, the Court grants the Motion.

I. BACKGROUND

A. PROCEDURAL HISTORY

This case concerns whether a former employee of Atlas, Thomas Kutrubes, engaged in trademark infringement, misappropriation of trade secrets, and breached his fiduciary duties. (Doc. # 1.)

Atlas specializes in the production of bovine serum-based products[1] that are used for cell culture and research. (Id. at ¶ 2.) Fetal Bovine Serum (FBS) is a blood serum product manufactured from blood drawn from a bovine fetus; there is a high demand for FBS for research purposes, and it can be expensive (the price also fluctuates with changes in the market for beef products). (Id. at ¶ 4.) Atlas produces an FBS product under the registered mark of "EquaFETAL, " which is superior to other products in its collection, manufacture and quality control, and, unlike "pure" FBS, is traceable, has greater consistency and lower and more stable pricing. (Id. at ¶ 5.)[2] (Id. ) The only individuals who have complete knowledge regarding the formulation and methods of production of EquaFETAL, besides the manufacturers who contractually agree to keep production methods confidential, are Michelle Cheever, Atlas' Director of Qualify Assurance, and Rick Paniccia, Atlas' President. (Id. at ¶ 6.) Atlas estimates that it spent at least $500, 000 in developing EquaFETAL. (Id. at ¶ 5.)

Kutrubes began working for Atlas as an intern in 2004; in 2006, he was hired as a sales representative, and signed a confidentiality agreement specifically related to the EquaFETAL product. (Doc. ## 10-19, 11-7.) In January of 2010, he became an Atlas shareholder, acquiring 5% of the common stock. (Doc. # 11-7.) On November 9, 2012, he was promoted to "National Sales Manager, " whereby he was responsible for making sales contacts with new and existing major customers, maintaining sales records, doing business-to-business marketing, and analyzing sales volume and projections. (Doc. # 1-2.) On January 1, 2013, he was awarded 1% in additional common stock of Atlas. (Doc. # 11-7.)

In accepting his promotion in 2012, Kutrubes signed a "Job Description" indicating that he understood and agreed to adhere to company policies and procedures. (Doc. # 1-2.) These policies included a confidentiality and non-disclosure provision, which provided that:

In the course of employment, employees will be exposed to company confidential information. Confidential information is defined as confidential and proprietary information of the company to which the general public does not have access.
This will include customer lists and accounts, systems, procedures, policies, strategies, research, business plans, financial data, price lists, formulas, techniques, technology, confidential reports, computer software, contract forms, files and all other information, knowledge, or data of any kind or nature relating to the products, services, or business of the company. Confidential and proprietary information also includes work product of the employee during his or her employment with the company including emails, reports, memorandums, research and other similar documentation.
All information disclosed by Atlas Biologicals that is considered Confidential and/or Proprietary information, or is thereby created by Employee during the fulfillment of his/her duties and functions on behalf of Atlas, shall be considered to be Confidential and/or Proprietary in nature. Any disclosure of such information is prohibited without the prior written authorization and approval from Atlas Biologicals.

(Doc. # 10-20.)

Unbeknownst to Atlas, in the fall of 2014, Kutrubes had allegedly begun both to misappropriate Atlas' trade secrets and proprietary information, and to solicit Atlas' customers. Specifically, on October 31, 2014, Kutrubes registered "Peak Serum, LLC" with the Colorado Secretary of State; on December 9, 2014, this company was dissolved, and he registered Peak Serum, Inc. (Doc. # 11-7.) Ultimately Atlas discovered that Kutrubes had drafted an extensive business plan for Peak Serum Inc., including an intent to provide protocols, standard operating procedures, and quality control and assurance procedures and guidance to contract manufacturers. (Docs. ## 5-2 at ¶ 10; 10-2 at 2, 8.) The business plan explicitly stated that "prices will be more competitive and direct competition would be from Atlas to a certain extent due to Sereatech [sic] sourcing." (Doc. # 10-2 at 6.)

Beginning on November 3, 2014, Kutrubes surreptitiously emailed a large volume of Atlas' confidential, proprietary, and trade secret documents to his personal email address. These documents included customer lists from Atlas' customer database, [3] supplier agreements and surveys, the Atlas quality control manual, Atlas' organizational chart, Atlas' contract manufacturing statement, product analytical information, product certifications and registrations from the FDA and the European Directorate of the Quality of Medicines and health care, as well as forms of non-disclosure agreements, product brochures, and software login information. (Doc. ## 5-2 at ¶ 3; 7-7 to 7-13.) Also beginning in November of 2014, Kutrubes began emailing Atlas' existing and prospective customers, advising at least sixteen of them that he was starting a new business and soliciting sales. (Doc. ## 5-2 at ¶ 4; 7-14 to 7-27; 8-1 to 8-21; 9-1 to 9-14). In some cases, Kutrubes stated, falsely, that Atlas and Peak Serum were "sister companies, " and used Atlas' trademarks and trade names, including EquaFETAL, FETAL㲵, ATLAS and ATLAS BIOLOGICALS. (Id. ) He also stated, falsely, that Atlas was no longer conducting international business and that Peak Serum would be responsible for Atlas' international business going forward. (Id.; Doc. # 5-1 at ¶ 8.)

Kutrubes also made efforts to solicit business from Atlas' suppliers and business partners, including Seratec, Central Biomedia, and Rocky Mountain Biologicals. (Doc. ## 5-2 at ¶¶ 10-11; 10-12 to 10-17.) Further, he sought proprietary information from one of Atlas' contract manufacturers, Central Biomedia, regarding Atlas' proprietary blended serum products. (Doc. # 10-18.) Additionally, he approached Rocky Mountain Biologicals, another one of Atlas' contract manufacturers, to obtain contract manufacturing services and to obtain raw FBS. (Doc. #5-2 at ¶ 14; 10-5 through 10-9.)

On December 16, 2014, Kuturbes tendered his letter of resignation to the Atlas Board of Directors, stating that he was resigning from his position as an employee and Director and requesting a buyout of his ownership shares. (Doc. # 11-6.) At this time, Atlas was unaware of Kutrubes' other competitive business dealings. (Doc. # 5-1 at ¶ 15.) Shortly after Kutrubes departed, however, Atlas discovered that a large amount of data had been deleted from his computer; it also discovered the large volume of internal and confidential documents he had sent himself, the emails he had sent to Atlas' customers and suppliers and business partners, and that he had downloaded lists from Atlas' proprietary customer database. Consequently, Atlas informed him that it was refusing his resignation and terminating him for cause. (Doc. # 11-7.)

In late January of 2015, Atlas discovered that Kutrubes and Peak Serum had changed the company name on Atlas' "Google-plus" account to "Peak Serum, Inc." As a result, a Google search for "Atlas Biologicals" yielded a large advertisement for Peak Serum, Inc., including a large number of positive reviews for the EquaFETAL product and references to the ATLAS and ATLAS BIOLOGICALS trade names. (Doc. # 4-3 at ¶ 11-12). Atlas learned that the email address associated with the account had been ...


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