United States District Court, E.D. Texas, Sherman Division
SPARK CONNECTED, LLC, KEN MOORE, EMANUEL STINGU, And RUWANGA DASSANAYAKE, Plaintiffs and Counter-Defendants,
SEMTECH CORPORATION, Defendant and Counter-Plaintiff.
MEMORANDUM OPINION AND ORDER
KIMBERLY C. PRIES'/JOHNSON UNITED STATES MAGISTRATE
the Court is Defendant and Counter-Plaintiff Semtech
Corporation's (“Semtech”) Motion for
Preliminary Injunction (the “Motion”) (Dkt. 14),
to which Plaintiffs and Counter-Defendants Spark Connected,
LLC (“Spark”), Ken Moore (“Moore”),
Emanuel Stingu (“Stingu”), and Ruwanga
Dassanayake (“Dassanayake”) (collectively,
“Counter-Defendants”) filed a response (Dkt. 34),
and Semtech filed a reply (Dkt. 92). In accordance with the
provisions of 28 U.S.C. § 636(c), the parties consented
to proceed before the undersigned “for the limited
purpose of deciding Semtech's Motion for Preliminary
Injunction.” See Dkt. 162.
reasons explained below, Semtech's Motion (Dkt. 14) is
Moore, Stingu, and Dassanayake's Employment at
Systems, L.L.C. (“Triune”) was a startup company
operating in the wireless power technology industry.
See Dkt. 101 at 1. Moore held an ownership interest
in Triune and was employed as Vice President of Marketing and
Applications. See Dkt. 77 at 2; Dkt. 97 at 3; Dkt.
101 at 2. Stingu was employed at Triune in a programming and
engineering role. See Id. On March 4, 2015, Semtech
acquired Triune through a Purchase Agreement. See
Dkt. 97 at 3; Dkt. 49-05. Under the terms of the Purchase
Agreement, Moore received a portion of the sale proceeds.
Id. Additionally, the Purchase Agreement included a
provision that “owners” and “seller
parties” would not compete with Semtech for five-years,
beginning on the closing date, March 4, 2015. See
Dkt. 49-05. After the acquisition, Moore and Stingu continued
working on the development of wireless power technology for
Semtech. See Dkt. 97 at 3; Dkt. 101 at 2. In August
2015, Semtech hired Dassanayake as a Senior Product Marketing
Specialist, working on Semtech's wireless power projects.
See Dkt. 79 at 2; Dkt. 99 at 2. As a condition of
employment with Semtech, Moore, Stingu, and Dassanayake each
signed an Employee Confidentiality Agreement and Proprietary
Rights Assignment (together, the “Confidentiality
Agreements”), in which they agreed not to use or
disclose Semtech's “Confidential
Information.” See Dkt. 97 at 3; Dkt. 49-06;
Dkt. 49-07; Dkt. 49-08.
2017, Semtech terminated Moore's employment. See
Dkt. 97 at 4. Upon termination, Moore signed a Separation and
General Release Agreement (the “Moore Separation
Agreement”), in which Moore received severance and, in
exchange, agreed to, inter alia, “continue to
comply with the terms and conditions of employee
confidentiality, trade secret, inventions assignment, or
similar agreements. . . .” See Dkt. 49-11.
29, 2019, without giving prior notice to his supervisors,
Stingu took time off work, allegedly to marry his long-time
partner. Dkt. 101 at 3-4. Stingu asserts entitlement to the
time off, in part, because he had accrued twenty-two vacation
days. See Dkt. 101 at 3-4. On May 30, 2017, Semtech
contacted Stingu to inquire when Stingu planned to return,
see Dkt. 94-6; Dkt. 94-7, to which Stingu stated he
was uncertain. See Dkt. 94-2. On June 12, 2017,
before Stingu returned to work, Stingu's employment with
Semtech was terminated. Dkt. 101 at 6. After
Stingu's termination, Stingu returned several devices
containing Semtech's information, including a laptop,
hard drive, flash drive, and smartphone. See Dkt.
101 at 7. Stingu did not, however, give Semtech his personal
solid-state drive, which Stingu had used in his Semtech
laptop. See Id. Counsel for Stingu and Semtech
“engaged in months of back-and-forth communications
about a protocol for inspecting” the solid-state drive
without reaching an agreement. See id. Thereafter,
Stingu refused to provide the drive for Semtech's
inspection. See Id. Due to the dispute over the
solid-state drive, no post-termination agreements were
reached between Semtech and Stingu. See Id. After
Stingu's termination, Stingu contacted Moore regarding
employment. See Dkt. 101 at 8.
2017, other Semtech employees who worked in Semtech's
wireless power department were terminated or resigned, and
over time, the department shrank. See Dkt. 208. For
example, after Moore and Stingu were terminated, Semtech did
not hire employees to replace them. See, for
example, Dkt. 99 at 3. Dassanayake, on behalf of
Semtech, cancelled a customer contract to provide wireless
power technology because Semtech's current staff could
not complete Semtech's obligations under the contract.
See id.; see also Dkt. 99 at 6-9
(Dassanayake alleges he was informed Semtech was exiting the
wireless power business).
September 28, 2017, and January 2018, Dassanayake sent emails
containing Semtech customer contact information and
PowerPoint presentations to his personal Hotmail account.
See Dkt. 99 at 6; Dkt. 14 at 15-16; Dkt. 50-1; Dkt.
50-3; Dkt. 95-12. On January 23, 2018, Semtech terminated
Dassanayake. See Dkt. 99 at 8. After
Dassanayake's termination, he entered into a Separation
and General Release Agreement (the “Dassanayake
Separation Agreement”) in which he accepted severance
in exchange for, inter alia, ongoing confidentiality
obligations. See Dkt. 51-06.
Formation of Spark
2017, Moore began working with a business partner to develop
a connected smartwatch company under the business name of
“Spark.” See Dkt. 97 at 7-8. Moore also
explored working with Infineon Technologies AG
(“Infineon”), a wireless charging company.
See id. After Stingu's termination, Stingu began
working with Moore at Spark. See Dkt. 101 at 8.
Ultimately, Moore and Stingu decided not to enter the
connected smartwatch industry; thereafter, Spark's owners
and employees split the company. See Dkt. 97 at
11-12. Moore and Stingu retained the “Spark”
company name and began working on wireless power in earnest,
while the remaining partners exited the business. See
id. Spark officially formed as an LLC in September 2017.
See Dkt. 97 at 11.
to Dassanayake's termination from Semtech,
Dassanayake's name was listed as a member of Spark on
Spark's LLC registration, as well as certain marketing
materials. See Dkt. 97 at 11; Dkt. 99 at 5.
Although the parties dispute when Dassanayake began working
with Spark, Dassanayake admits to joining Spark after his
termination from Semtech. See Dkt. 99 at 1.
learned of Spark's work in wireless power as early as
November or December of 2017, from a Semtech customer who was
working with Spark. See Dkt. 97 at 14; Dkt. 95-8 at
11. Around the same time, Semtech warned another wireless
power company about the “legal risk” in working
with Spark. See id.
March 2018, approximately nine (9) months prior to requesting
an injunction in this case, Spark and Semtech both attended
the Applied Power Electronic Conference (“APEC”),
at which Moore demonstrated wireless power prototypes.
See Dkt. 97 at 13; see also Dkt. 184 at 57.
Moore's demonstration was witnessed by Semtech employees.
See id.; see also Dkt. 184 at 130 (photos
taken by Semtech employees of the demonstration led Semtech
employees to conclude Spark had a fully functional product at
APEC). Moore testified that Spark's wireless power
prototypes at APEC were still in the testing phase and were
not yet ready for use by customers. See also Dkt. 97
at 13 (“At the time of this demonstration, the only
code for wireless charging that Stingu had written at Spark
was very rudimentary.”). Semtech alleges that Moore
“used the exact same demonstration as Semtech” to
demonstrate Spark's wireless charging products at APEC.
See Dkt. 16 at 11; Dkt. 14 at 18.
APEC, on May 31, 2018, Semtech internally discussed warning a
key Semtech customer “not to engage with Spark
Connected” because of “IP infringement.”
See Dkt. 95-19; Dkt. 95-20. Thereafter, on August 8,
2018, Spark sent a cease-and-desist letter to Semtech,
demanding Semtech cease from making false statements
regarding Spark and/or Moore. See Dkt. 94-6; Dkt. 97
at 14-15. On September 4, 2018, Semtech sent a
cease-and-desist letter to Spark, alleging that Moore was
prohibited from working in the wireless power industry.
See Dkt. 95-21.
filed suit on October 17, 2018, “seeking a declaratory
judgment that [Spark, Moore, Stingu, and Dassanayake] have
not breached any agreements with [Semtech] and/or
misappropriated trade secrets belonging to [Semtech].”
See Dkt. 1. Semtech filed an Answer, which included
affirmative defenses and counterclaims. See Dkt. 7.
Semtech subsequently filed an Amended Answer, Affirmative
Defenses, and Counterclaims (Dkt. 131). Semtech asserts
counterclaims for: (1) violation of Federal Defend Trade
Secrets Act, 18 U.S.C. § 1835, against all
Counter-Defendants; (2) violation of the Texas Uniform Trade
Secrets Act, Tex. Civ. Prac. & Rem. Code § 134A,
against all Counter-Defendants; (3) breach of contract
against Moore, pursuant to the Purchase Agreement; (4) breach
of contract against Dassanayake, pursuant to “at least
two separate agreements with clauses relating to the Trade
Secrets and confidential information;” (5) breach of
contract against Stingu, pursuant to an agreement signed
“[d]uring the course of his employment with Semtech . .
. relating to the Trade Secrets and confidential
information;” and (6) breach of fiduciary duty under
Texas common law against Dassanayake and
Stingu. See Dkt. 131.
November 21, 2018, Semtech filed the instant Motion for
Preliminary Injunction. See Dkt. 14. Semtech asserts
the Motion for Preliminary Injunction is warranted pursuant
to its claims for: (1) breach of contract against Moore; (2)
breach of contract under the Confidentiality Agreements
against Moore, Stingu, and Dassanayake; and (3)
misappropriation of trade secrets by all
Counter-Defendants. See Dkt. 14. The parties
subsequently filed an agreed proposed briefing schedule,
which the Court adopted (the “Briefing
Schedule”). See Dkts. 30, 31. In accordance
with the Briefing Schedule, Counter-Defendants filed a
response on April 4, 2019 (Dkt. 92) and Semtech filed a reply
on April 18, 2019 (Dkt. 122). The Court held a two-day
evidentiary hearing on May 29 and 30, 2019 (the
“Hearing”). See Dkts. 157, 158. After
the Hearing, the parties submitted additional evidence for
the Court's consideration. See, for example,
Dkts. 168, 170, 206, 208, 210, 229, 231.
seeking a preliminary injunction must establish the following
elements: (1) a substantial likelihood of success on the
merits; (2) a substantial threat that plaintiffs will suffer
irreparable harm if the injunction is not granted; (3) that
the threatened injury outweighs any damage that the
injunction might cause the defendant; and (4) that the
injunction will not disserve the public interest. Nichols
v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008).
“The party seeking such relief must satisfy a
cumulative burden of proving each of the four elements
enumerated before a temporary restraining order or
preliminary injunction can be granted.” Gonannies,
Inc. v. GoAuPair.com, Inc., 464 F.Supp.2d 603, 607 (N.D.
Tex. 2006) (citing Mississippi Power and Light Co. v.
United Gas Pipe Line, 760 F.2d 618, 621 (5th Cir. 1985);
Clark v. Prichard, 812 F.2d 991, 993 (5th Cir.
1987)). Thus, “if a party fails to meet any of
the four requirements, the court cannot grant the temporary
restraining order or preliminary injunction.”
Id. “A preliminary injunction is an
extraordinary remedy and should only be granted if the
plaintiffs have clearly carried the burden of persuasion on
all four requirements.” Id. Nevertheless, a
movant “is not required to prove its case in full at a
preliminary injunction hearing.” Fed. Sav. &
Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir.
1985) (quoting Univ. of Tex. v. Camenisch, 451 U.S.
390, 395 (1981)). The decision whether to grant a preliminary
injunction lies within the sound discretion of the district
court. Weinberger v. Romero-Barcelo, 456 U.S. 305,
argues it is entitled to injunctive relief on the basis of:
(1) Semtech's claim for breach of the Purchase Agreement
against Moore; (2) Semtech's claim for misappropriation
of the Trade Secrets; and (3) Semtech's claim for breach
of contract against all Counter-Defendants premised on breach
of the Confidentiality Agreements. See generally
Dkt. 14. Because Semtech has ...