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August 7, 2018

IDEXX sues Vets First Choice, two former employees, over alleged 'misappropriation' of trade secrets

Photo / Tim Greenway Benjamin Shaw, founder and CEO of Vets First Choice. The Portland-based company, founded in 2010, plans to merge with a spinoff of Henry Schein Inc., with the new company to be publicly traded and headquartered in Portland under the name of Vets First Corp. A lawsuit filed on Friday by IDEXX Laboratories alleges two former IDEXX employees and their current employer, Vets First Choice, misappropriated its "trade secrets."

Westbrook-based IDEXX Laboratories is suing two former employees and their current employer, Portland-based Vets First Choice, alleging “actual and/or threatened misappropriation of trade secrets” and seeking an unspecified amount of monetary damages, including punitive damages and legal fees.

The 32-page lawsuit, filed Friday in U.S. District Court for the District of Maine, seeks a jury trial in a case involving Maine’s largest publicly traded company and a world leader in veterinary diagnostic testing services and products (IDEXX) and the company co-founded by IDEXX founder David Shaw and his son, Benjamin, who serves as Vets First Choice’s CEO. Vets First Choice, founded in Portland in 2010, is one of Maine’s fastest-growing companies and has more than 750 employees in the United States and 5,100 veterinary practices on its prescription-management platform.

In April, Vets First Choice and Henry Schein Inc. (Nasdaq: HSIC) announced plans for Henry Schein to spin off its animal health business and merge it with Vets First Choice, creating an independent publicly traded company. That transaction has been unanimously approved by the boards of Henry Schein and Vets First Choice and is expected to close by year's end.

In the news release announcing that merger, the two companies said a new publicly traded company, which would be called Vets First Corp. and will have combined pro forma 2017 sales of approximately $3.6 billion.

High-stakes legal battle

The lawsuit alleges that two former IDEXX employees, Dan Leach and Agostino Scicchitano, resigned and hid the fact they were taking jobs with Vets First Choice. “Both apparently downloaded and misappropriated IDEXX’s trade secrets within the days leading up to their IDEXX resignation,” the lawsuit states.

The lawsuit alleges that the two defendants were among at least nine IDEXX employees hired by Vets First Choice since 2017.

“As a result of the aggressive hiring practices that Vets First Choice was utilizing, and given IDEXX’s particularized concern that its former employees possessed and would use its confidential and trade secret information against IDEXX, IDEXX sent various letters to Vets First Choice informing Vets First Choice about its former employees’ ongoing obligations owed to IDEXX,” the lawsuit stated.

The lawsuit details IDEXX’s investigation that led it to the conclusion that “both Leach and Scicchitano improperly accessed and downloaded and/or highly confidential IDEXX information, including proprietary planning documents and internal training manuals.”

“Such information is highly confidential to IDEXX, is not known generally within IDEXX — or by IDEXX’s outside competitors — and would give Leach, Scicchitano and Vets First Choice an unfair competitive advantage,” the lawsuit stated.

What the lawsuit seeks

The lawsuit asserts that “IDEXX stands to lose millions of dollars of intellectual property, and the loss of value of its trade secrets and confidential and proprietary information, which cannot be adequately addressed at law.”

IDEXX’s lawyers — Adrianne E. Fouts of the Portland law firm Drummond Woodsum, and Michael D. Wexler and Justin K. Beyer of the Chicago law firm Seyfarth Shaw LLP — ask the court to grant an injunction to block the defendants’ “actual or threatened disclosure or utilization of IDEXX’s trade secrets” as well as to grant IDEXX its "attorneys’ fees and exemplary damages.”

The lawsuit also asks for a jury trial and includes the following requests for “relief”:

  • Permanently block Leach, Scicchitano, Vets First Choice (identified as “Direct Vet Marketing Inc.” in the lawsuit) “and all parties in active concert or participation with them from using or disclosing any of IDEXX’s confidential and/or proprietary information.”
  • Block Leach and Scicchitano from “employment or activity competitive with IDEXX on Vets First Choice’s behalf.”
  • Order the return of all IDEXX originals and copies of files that contain confidential and proprietary information.
  • Award monetary and punitive damages, require payment of IDEXX’s legal fees and “award IDEXX such further relief as the court seems necessary and just.”

'Tough competition'

Mainebiz spoke with a representative of Vets First Choice this morning seeking comment and was told the request would be relayed to CEO Benjamin Shaw and/or the company’s attorney.

No return call had been made when this story first went online.

The Bangor Daily News, which broke the story Monday afternoon, reported that Vets First Choice and the other two defendants had not answered the complaint as of Monday afternoon. 

An IDEXX spokesman told the BDN in an email, “We safeguard our valuable intellectual property, and take action when we have strong reason to suspect it has or will be misused. We look forward to resolving this matter.”

An Aug. 1 report in the online digital newspaper Fairfield Current cited a recent Zacks Investment Research analysis of IDEXX that highlights the competitive challenge it faces from Vets First Choice as a result of the pending merger with Henry Schein Inc.’s spinoff animal health business.

The newspaper reported Zacks’ conclusion that “over the past three months, IDEXX has been outperforming its industry” but noted the investment research company’s caveat: “On the flip side, the news of Henry Schein’s decision to spin out its animal health business raises concern. This wing will merge with IDEXX’ peer Vet First Choice giving the company a tough competition.” 


IDEXX lawsuit

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Vets First Choice, co-defendants, granted more time to respond to IDEXX lawsuit

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