France-based email security company Vade Secure has been ordered to pay Proofpoint nearly $14 million as a result of a trade secret misappropriation and copyright infringement lawsuit filed in July 2019.
The lawsuit alleged that Olivier Lemarié, former VP of gateway technology at Cloudmark, unlawfully took source code and other proprietary information from Cloudmark and provided it to Vade Secure, which hired him as CTO in 2017.
Cloudmark, which specializes in messaging security, became a subsidiary of Proofpoint after it was acquired by the company in 2017 for $110 million.
Proofpoint accused Vade and Lemarié of copying Cloudmark trade secrets and source code and using it in their email security products.
A jury in California decided last week that Vade and/or Lemarié did unlawfully misappropriate 15 of the 20 trade secrets cited by Proofpoint in its lawsuit. However, the jury determined that the misappropriation was not willful and malicious in Lemarié’s case.
The jury also found that Vade and its CTO did infringe on Proofpoint’s copyrights, and that there was a breach of contract.
Proofpoint has been awarded nearly $14 million in compensatory damages, which includes almost half a million for breach of contract, but the company hasn’t received anything for actual losses.
“While we welcome fair competition and collaboration within the cybersecurity community, the misappropriation, copying, and theft of our intellectual property required us to vigorously enforce our rights. We appreciate the jury sending a strong message that the theft of source code and misappropriation of trade secrets is unacceptable,” said Gary Steele, CEO and chairman of Proofpoint.
Responding to the verdict, Vade told SecurityWeek in an emailed statement, “While we were hopeful we would be successful on all claims, we are pleased that the jury saw that Proofpoint/Cloudmark’s claims were an overreach as evidenced by their decision on damages. As a company whose core values are integrity and innovation, we don’t believe this outcome accurately reflects who we are. We will be evaluating our next steps in the coming days in light of this verdict.”