California Jury Sides With St. Jude in Trade Secrets Case

St. Jude Medical Inc. was awarded $2.3 billion after a California jury found that a former employee and the Chinese medical device firm he founded stole trade secrets.

“We did not expect such a high damages result and we were pleased with the outcome,” Rita Bojalian, senior counsel for St. Jude Medical, said about the case against former employee Yongning Zou and Suzhou, China-based Nervicon Co. Ltd. Pacesetter Inc., St. Jude’s cardiac rhythm management division, won $947 million for past damages against Zou and Nervicon in addition to $868.5 million for future economic loss and $500 million for punitive damages. The company initially had hoped for about $300 million excluding punitive damages. Pacesetter is located in Sylmar, Calif.

Zou, a former principal hardware designer, was accused of stealing a document relating to a crystal oscillator unique to St. Jude’s products.

Zou left St. Jude Medical in late June 2009 and became a shareholder in Nervicon, which was formed just weeks earlier. About one month later, Statek Corp., the manufacturer of the crystal oscillator, received a request from Nervicon to make a product using specifications that were identical to St. Jude’s—Nervicon also produced a document bearing the words, “SJM Part Number”.

Court documents show that Zou holds a 47.5 percent stake in Nervicon.

“Zou has and will continue to provide Nervicon with additional proprietary and confidential documents and information in effort to deceivingly and unfairly compete against St. Jude or its affiliates,” a statement from Pacesetter read in court documents.

“The jury told us they wanted to send a message: don’t steal trade secrets from your company and expect to profit from them for yourself,” Bojalin said.

St. Jude’s stock closed at $51.71 per share on April 25, down 90 cents since the prior week.

St. Jude Medical is headquartered in St. Paul, Minn.