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Drone trade secrets lawsuit settles

ROCKVILLE — A Riverdale drone distributor has settled a lawsuit against a former employee it alleged started his own, rival company while still an employee.

IntelligentUAS LLC fired Daniel Tran the same day last June that it filed a lawsuit against Tran and his Gaithersburg-based company, HY Innovations Inc., according to the Riverdale company’s lawyer.

The two sides reached a settlement last month and jointly requested the case be dismissed from Montgomery County Circuit Court, according to online court records. One reason IntelligentUAS settled the case was because Tran’s actions were an isolated incident and he had not stolen as much as initially feared, according to the plaintiff’s attorney.

“Both sides are happy to have the case behind them,” said Daniel J. Wright, a Rockville solo practitioner, who declined to discuss the specifics of the settlement other than to call it “amicable.”

Both companies run e-commerce sites that sell unmanned aerial vehicles as well as parts and accessories. IntelligentUAS was founded in 2012 in the garage of Toan Ngo, then a post-doctoral fellow at the University of Maryland, College Park, according to the complaint. The company now has 20 employees and annual revenue between $5 million and $6 million, according to the complaint.

Tran was one of IntelligentUAS’s first employees, the lawsuit states. He allegedly used IntelligantUAS’s name in October 2013 to purchase equipment from an IntelligentUAS vendor that alerted IntelligentUAS to the transaction, the lawsuit states. Tran also advertised and sold products IntelligentUAS sold on his personal Facebook page as well as to a Washington, D.C.-area drone group sponsored by IntelligentUAS, the lawsuit states.

Tran’s wife formed HY Innovations in March 2014, and its website had the same format and client interaction software as IntelligentUAS’, with photos Tran took at the office, according to the complaint.

“He basically set up a competing business doing the exact same thing with the same business model,” said Wright.

Tran and HY Innovations, in a counterclaim, argued that IntelligentUAS is “essentially an online hobby shop” and that assembly instructions are publicly available online.

“Virtually all material that IntelligentUAS provides to potential customers regarding assembly of its products are … not protected ‘secrets’ of IntelligentUAS,” the counterclaim states.

Tran claimed he was paid as if were an independent contractor for IntelligentUAS even though he was legally an employee so the company did not have to pay payroll taxes. Wright acknowledged that Tran started off as an independent contractor but then became an employee.

Tran started HY Innovations based on his family’s interest in his hobby of assembling model planes, according to the counterclaim. IntelligentUAS also knew Tran was purchasing parts from the company to build model planes that he then sold to individuals who contacted him through social media, according to the counterclaim.

The counterclaim also alleged IntelligentUAS cost HY Innovations a vendor the company both used after IntelligentUAS “falsely stated” HY Innovations was stealing clients from IntelligentUAS and made other defamatory comments on social media.

Daniel S. Willard, a Bethesda solo practitioner representing HY Innovations and Tran, did not respond to a request for comment.

IntelligentUAS’ lawsuit sought $100,000 in compensatory damages and unspecified punitive damages for breach of fiduciary duty and misappropriation of trade secrets. HY Innovations’ counterclaim sought more than $75,000 in compensatory damages and $500,000 in punitive damages for tortious interference, defamation and failure to pay payroll taxes and compensation.

IntelligentUAS LLC v. Hy Innovations Inc., et al.

Court: Montgomery County Circuit Court

Case No.: 392359V

Outcome: Confidential settlement

Dates:

Incident: 2012 to 2014

Suit filed: June 30, 2014

Case dismissed: April 16, 2015

Plaintiff’s Attorney: Daniel J. Wright, Rockville solo practitioner

Defendant’s Attorney: Daniels S. Willard, Bethesda solo practitioner

Counts: Breach of fiduciary duty and misappropriation of trade secrets (lawsuit); Tortious interference, defamation, failure to pay payroll taxes and compensation