In a verdict likely to factor into future cases involving intellectual property and concrete production, the jury hearing Eldorado Stone LLC v Renaissance
In a verdict likely to factor into future cases involving intellectual property and concrete production, the jury hearing Eldorado Stone LLC v Renaissance Stone Inc., et al. awarded the plaintiff more than $17 million. After a two-and-a-half-week trial in United States District Court for the Southern District of California, where details on concrete mix designs and coloring methods for precast faux stone veneer became prime evidence, jurors concluded the defendant had engaged in especially brazen corporate theft harmful to San Marcos, Calif.-based Eldorado Stone, a subsidiary of Headwaters Inc.
They found that San Bernardino-area Renaissance Stone, former Eldorado employee Alfonso Alvarez, and Renaissance investor Robert Hager misappropriated Eldorado’s trade secrets, infringed on Eldorado Stone trademarks and copyrights, and interfered in the economic relationships between Eldorado and its customers. The jury also found Renaissance President Joseph Smith liable for copyright infringement, awarding the plaintiff an additional $3.85 million in punitive damages.
Eldorado’s three-year-old suit charged that Alvarez, as engineering director in charge of quality assurance, downloaded all of Eldorado’s mix designs and specific manufacturing processes on a CD and took that data with him upon his departure in May 2004 Û just months before cofounding Renaissance. Not only were Eldorado-created computer files found on Renaissance’s seized computers, but expert testimony from an engineer who analyzed the color and production formulas of two sets of plaintiff and defendant products found them to be identical. In fact, every product offered by Renaissance was found to be identical to those of Eldorado.
This is a bittersweet victory, says Eldorado Stone President Mike Lewis. The time and effort to prosecute this case has been a huge distraction. However, the clear decision by the jury underscores the value of our trade secrets and proprietary information. This intellectual property has taken years and even decades to develop and is worthy of protection.
The men and women at Eldorado Stone have worked tirelessly over the years to help it become the leading, innovative stone manufacturer in this industry, Lewis continues. We have never hesitated, nor will we ever hesitate, to aggressively protect the intellectual property that represents the hard work of many individuals that has become the underpinning of our business.
A leader in the rapid growth faux-stone precast veneer market, Eldorado was represented by Callie Bjurstrom and co-counsel Andrea Kimball, both of San Diego-based Luce, Forward, Hamilton, and Scripps LLP. Eldorado lawyers were scheduled to return to the courtroom in late April to seek a permanent injunction against Renaissance, thus stopping it from using Eldorado trade secrets in any production Û effectively putting the company out of business.
Lead attorney Bjurstrom said to her knowledge the case was the first of its kind specifically tied to concrete mix design and manufacturing process. There has never been a case like this regarding manufactured process stone and trade secrets, she says. And, the feedback from the industry has been overwhelmingly positive.
She explains that not only did Renaissance take mix design details, but also effectively copied the look of Eldorado’s web site and published brochure, thus the copyright and trademark infringement components to the lawsuit. In some cases, Renaissance also branded its products almost identically. The example she frequently cites regards the Eldorado product Rustic Ledge, which Renaissance marketed as Rustic Ledgestone and eventually Rustic Stone.
According to Bjurstrom, for its first year and a half of business, Renaissance’s exclusive product distributor was Orco Construction of San Diego County. But in 2006, Orco dropped out of the agreement and Renaissance began selling its product directly. Orco was named as a defendant in the Eldorado lawsuit and settled separately out of court.