On November 1, 2023, a jury in the U.S. District Court for the Central District of California awarded damages to Skye Orthobiologics, LLC (“Skye”) and Human Regenerative Technologies, LLC (“HRT”) for breach of contract, breach of fiduciary duty, and breach of duty of loyalty by Skye’s former employee (“Defendant”). While Plaintiffs Skye and HRT did not succeed on their claim of trade secret misappropriation, they were able to succeed in showing Defendant misappropriated confidential information in breach of his employment agreements.

HRT manufactures tissue biologic products under various trade names, which are used in both surgical and non-surgical contexts for wound care, plastics, cosmetics, and other medical care. HRT manufactures exclusively for Skye, which sells the products through independent contractors. In 2012, Defendant began working for Skye as an independent contractor, during which time he worked closely with HRT products and signed a consulting contract with HRT in 2014 that included confidentiality clauses. In April 2018, Defendant was promoted to Vice President of Business Development, at which time he signed an employment agreement stating that Skye was his “sole job and focus,” and another confidentiality agreement that contained a covenant not to solicit or compete.

Skye and HRT alleged that Defendant started a competing business in June 2018, just a month before he resigned from Skye. He allegedly used Plaintiffs’ resources and equipment to form the CTM entities, (collectively “CTM”), naming these corporate entities after the phrase “connective tissue matrix,” which Skye’s salespersons used exclusively to describe HRT’s products. Defendant, through CTM, began distributing competing products and, according to Plaintiffs, used promotional materials referring to “connective tissue matrix” to capitalize on Plaintiffs’ goodwill and recognition in the marketplace.

Skye and HRT filed suit against Defendant and his CTM entities with multiple claims, including trade secret misappropriation under the Defending Trade Secrets Act (“DTSA”). HRT had identified as trade secrets parts of its product development and manufacturing process, including its “unique product formulas.” Though Plaintiffs pleaded safeguards to prove existence of their trade secrets—such as confidentiality agreements for their employees, control of physical access to offices and information, network firewalls, password protection, security credentials, and revocation of authorization at the end of employment—the court found that HRT did not plead its trade secrets with sufficient particularity. Thus, the court dismissed it from the DTSA claim on summary judgment.

However, during trial, Plaintiffs filed a brief arguing that HRT’s manufacturing process should still be allowed as evidence on its claims of breach of fiduciary duty and breach of duty of loyalty. Plaintiffs argued that the process was still confidential information that Defendant agreed to keep confidential while he was employed there, so they should be allowed to show evidence of him disclosing or using the process as support for breaching his fiduciary duties. The court agreed, and allowed the jury to hear evidence of Defendant using or disclosing HRT’s manufacturing process while employed at Skye, as support for these claims.

After trial, the jury returned its special verdict finding that Defendant had breached his contracts (with respect to the confidentiality provisions) with Skye and HRT, and he had breached both his fiduciary duties to Skye and his duty of loyalty to Skye. The court entered judgment for the case, declaring that Defendant owes Skye $29,195,796 in lost profits and $25,560,000 in punitive damages, and owes HRT $7,298,949—totaling over $62 million.

This verdict serves as a vivid example of legal protections for confidential and proprietary information beyond trade secret misappropriation.

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Photo of Isaiah D. Anderson Isaiah D. Anderson

Isaiah Anderson is an associate in the Litigation Department. He is a member of the firm’s nationally recognized Appellate Practice Group, which has been named to the National Law Journal’s Appellate Hot List. Isaiah has drafted briefs to several federal appellate courts, including…

Isaiah Anderson is an associate in the Litigation Department. He is a member of the firm’s nationally recognized Appellate Practice Group, which has been named to the National Law Journal’s Appellate Hot List. Isaiah has drafted briefs to several federal appellate courts, including the First and Second Circuits.

As a member of the Intellectual Property Litigation Group, Isaiah handles false-advertising and copyright disputes, as well as trademark, trade secret, and patent litigation. He has represented clients in a variety of industries, including medical-device companies, consumer-products companies, food and beverage companies, and art foundations.

Finally, Isaiah is a member of the firm’s Commercial Litigation Practice, and has successfully represented clients in high-stakes contractual disputes involving life sciences, real estate, transportation services, and other industries in trial courts and arbitration in a number of jurisdictions.

Isaiah also maintains a diverse pro bono practice, as he has represented indigent clients in district and appellate courts and drafted amicus briefs in support of equal voting rights. He has also advised clients on a range of matters, including a record label contract negotiation and healthcare information campaign. In addition to his active practice, Isaiah is an author of Proskauer’s advertising law blog, Proskauer on Advertising, and commercial litigation blog, Minding Your Business.

Isaiah earned his J.D. from New York University, where he was a Senior Executive Editor of the New York University Law Review and worked with the Center on Race, Inequality, and the Law in advocating for racial and economic justice.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice.

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. He is a Fellow of the College of Labor and Employment Lawyers. Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC, and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.