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Lasen, Inc. v. Tadjikov

Court of Appeals of New Mexico

December 21, 2018

LASEN, INC., and LASEN ALPIS, LLC, Plaintiffs-Appellees,
v.
BORIS TADJIKOV, Defendant-Appellant.

          APPEAL FROM THE DISTRICT COURT OF DONA ANA COUNTY Manuel I. Arrieta, District Judge

          Lilley and O'Connell, P.A. Jerome O'Connell Erin O'Connell Las Cruces, NM Joel T. Newton, P.A. Joel T. Newton Las Cruces, NM for Appellees

          L. Helen Bennett, LLC L. Helen Bennett Albuquerque, NM E.F. Messett, LLC Edward F. Messett Albuquerque, NM for Appellant

          OPINION

          EMIL J. KIEHNE, JUDGE.

         {¶1} Defendant Boris Tadjikov, Ph.D. appeals from a judgment awarding damages to his former employer, Plaintiff Lasen, Inc. and its subsidiary, Lasen ALPIS, LLC (collectively, "Lasen"), arising out of their lawsuit against him for breach of contract, breach of the duty of good faith and fair dealing, misappropriation of trade secrets, and for injunctive relief. After a bench trial, the district court found that Tadjikov had not misappropriated Lasen's trade secrets, but that he had breached his employment agreement with, and his fiduciary duty to Lasen by wrongfully retaining intellectual property and trade secrets that belonged to Lasen (consisting of software source codes and related materials that Lasen used to operate its equipment), and also found that injunctive relief was proper. The district court entered a judgment awarding damages and a permanent injunction requiring Tadjikov to return any Lasen materials in his possession and preventing him from using or disclosing to others any of Lasen's trade secrets or confidential information.

         {¶2} On appeal, Tadjikov raises numerous claims, including legal challenges to the breach of fiduciary duty and breach of contract claims, challenges to the district court's findings of fact, and factual and legal challenges to the award of damages. He also claims that the grant of permanent injunctive relief was improper. Finally, he claims that Lasen is not entitled to attorney's fees.

         {¶3} We reverse the district court's entry of a permanent injunction against Tadjikov to the extent that it prevents him from disseminating Lasen's confidential information, because his employment contract only prohibited him from doing so for a five-year period that expired in April 2014. We affirm the rest of the permanent injunction. We affirm the remainder of the judgment due to Tadjikov's wholesale failure to establish that he preserved his claims for appeal.

         BACKGROUND

         {¶4} Lasen is engaged in the business of detecting methane gas leaks in natural gas pipelines, which it does using a well-known technology called "light detection and ranging" or "laser imaging detection and ranging" (LIDAR). Lasen asserts that its business is unique because it is able to mount the LIDAR equipment onto a helicopter, and, thanks to its own proprietary technology, it can inspect pipelines more quickly and accurately than its competitors.

         {¶5} Lasen employed Tadjikov in 2004 as a research scientist. Tadjikov signed an employment agreement with Lasen, in which he agreed that "he [would] not, both during the term of his employment with [Lasen] and afterwards for a period of five (5) years from the date of termination disclose . . . [Lasen's] confidential or proprietary information to anyone." The agreement also stated that "[a]ny intellectual property right that might accrue to ... Tadjikov during his employment with [Lasen], or which he might thereafter have a right to due to ideas developed or explored while he was so employed, are hereby assigned to [Lasen]. ... Tadjikov agrees that he will sign such documents as may be necessary to transfer such rights." During the course of his employment, Tadjikov became a minority shareholder in Lasen.

         {¶6} Though the parties disagree about whether Tadjikov's position officially included software engineering as part of his job, it is undisputed that Tadjikov wrote the source code needed to update and repair the three devices that Lasen uses to conduct its business (known as LIDAR 4, LIDAR 5 and LIDAR 6). Source code is defined as "[t]he non-machine language used by a computer programmer to create a program." Black's Law Dictionary 1610 (10th ed. 2014). It can be edited by a computer programmer. Tadjikov never received any formal training as a computer programmer, but taught himself how to code in the Delphi programming language, a language intended to be easy to use, but which is now essentially obsolete.

         {¶7} Once a programmer completes the source code for a program, the programmer will use two software components that work together, a "compiler" and one or more "libraries," to convert the source code into an "executable file" or "object code." The resulting executable file is expressed in binary code comprised entirely of ones and zeroes, which a computer then uses to run the program. Programmers generally cannot read or edit an executable file. Compilers and libraries are available from third-party vendors under a variety of licensing agreements. It is virtually impossible to "decompile" an executable file and turn it back into source code. Lasen therefore needed the source code to update or modify the LIDAR units.

         {¶8} The parties' dispute stems from Lasen's termination of Tadjikov's employment in April 2009. Lasen sued Tadjikov fifteen months later, alleging that he violated the New Mexico Uniform Trade Secrets Act (the Act), NMSA 1978, §§ 57-3 A-1 through -7 (1989), and that he breached his employment agreement, his duty of good faith and fair dealing to Lasen, and his fiduciary duty to Lasen by misappropriating the source codes he wrote for LIDARs 4, 5 and 6.

         {¶9} According to Lasen, Tadjikov returned to Lasen's office the day after his termination to retrieve his personal items. But Tadjikov instead took property and information that belonged to Lasen, including the source code that he had written for LIDARs 4, 5 and 6, and he failed to provide Lasen with a complete copy of the source code. Lasen presented evidence that during his employment, Tadjikov wrote the source code on his personal hard drive, but did not allow other employees or shareholders access to it. After his termination, Tadjikov refused to give Lasen the portable hard drive on which he wrote the source code, and that as he was leaving, he told shareholders and employees of Lasen that it would cost half a million dollars to get rid of him. Lasen presented evidence that Tadjikov deleted portions of the source code in Lasen's possession, and that he failed to leave any sort of documentation to allow subsequent software engineers to understand and modify his source code, making it impossible for Lasen to upgrade and update the LIDARs. Lasen also presented testimony that Tadjikov tied the source code to specific serial numbers in the hardware of the LIDARs, making it impossible to transfer the programs to another ...


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