The Southern District of New York denied defendant Lionbridge Technologies, Inc.’s (Lionbridge) motion to dismiss, holding that TransPerfect Global, Inc. (TransPerfect), sufficiently pleaded that information disclosed to potential bidders in an online auction constituted trade secrets and that Lionbridge misappropriated these trade secrets. In 2014, the Delaware Chancery Court ordered the dissolution through modified auction of TransPerfect, a translation, website localization, and litigation support company. The auction had three phases. At each phase the bidding pool narrowed, and the bidders received increasingly detailed and sensitive information about TransPerfect. HIG, an investment firm that had just submitted a bid to purchase Lionbridge (TransPerfect’s largest competitor), participated in the auction. According to TransPerfect’s complaint, HIG participated in all three phases, even though it never intended to purchase TransPerfect because TransPerfect would not agree to require its former owner to enter into a noncompetition agreement. During the final stages of the auction, HIG gained access to thousands of competitively sensitive documents, including detailed pricing and cost information. TransPerfect alleged that after the sale, HIG shared this confidential information with Lionbridge, which then used the information to undercut TransPerfect’s pricing.

LionBridge moved to dismiss TransPerfect’s complaint, arguing that it failed to identify material that constituted trade secrets and that it did not sufficiently plead misappropriation of a trade secret. The court disagreed, finding that the sixteen types of information available through the auction and the measures taken to protect that information were clearly identified in the complaint. Additionally, because a competitor used the information to underbid TransPerfect, the information clearly had independent economic value. Further, the complaint sufficiently alleged misappropriation because HIG signed a confidentiality agreement prohibiting the use of TransPerfect’s information for anything other than a potential purchase of the company. Finally, the court held that TransPerfect’s common law claims for unfair competition, unjust enrichment, and fraud were not preempted because New York law applied, and New York had not adopted the Uniform Trade Secrets Act.

The case is TransPerfect Global, Inc., 19cv3283(DLC) (S.D.N.Y.).