Proceeding
`Party
`
`Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA91104
`ESTTA Tracking number:
`07/21/2006
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`91169233
`Defendant
`Eldorado Stone Operations LLC
`Eldorado Stone Operations LLC
`31610 NE 40th, Bldg. A
`Carnation, WA 98014
`
`Correspondence
`Address
`
`Gary R. Duvall
`Dorsey & Whitney LLP
`1420 Fifth Avenue, Suite 3400
`Seattle, WA 98101
`
`Submission
`Filer's Name
`Filer's e-mail
`Signature
`Date
`Attachments
`
`Motion to Suspend for Civil Action
`R. Stephen Hall
`hall.stephen@dorsey.com, johnson.marilyn@dorsey.com
`/R. Stephen Hall/
`07/21/2006
`Motion to Suspend.pdf ( 61 pages )(2935716 bytes )
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matters of Application Serial No. 78/119,003 and
`Registration Nos. 2,727,198 and 2,686,691
`Marks: CLIFFSTONE, RUSTIC LEDGE, and FIELDLEDGE
`
`
`
`RENAISSANCE STONE, INC.,
`
`Opposer/Petitioner,
`
`
`
`-against-
`
`Opposition No: 91/169,233
`
`Cancellation Nos.: 92/045,792 and 92/045,793
`
`ELDORADO STONE OPERATIONS LLC,
`
`
`Applicant/Respondent.
`
`MOTION TO SUSPEND
`
`Pursuant to Trademark Rule of Practice 2.117(a) and Trademark Trial and Appeal Board
`
`Manual of Procedure 510.02, Registrant Eldorado Stone Operations L.L.C. (“Eldorado”), hereby
`
`moves to suspend the above-captioned proceedings pending disposition of Eldorado Stone
`
`
`L.L.C. V. Renaissance Stone Inc. Civil Action No. 04-CV-2562, filed by Eldorado against
`
`Petitioner, Renaissance Stone, Inc. (“Renaissance”), in the U.S. District Court for the Southern
`
`District of California (San Diego) (the “Civil Action”). The parties have jointly moved to
`
`consolidate these proceedings, which motion is currently pending before the Board.
`
`The undersigned counsel conferred with counsel for Renaissance prior to filing this
`
`motion. Renaissance refused to agree to suspend these proceedings.
`
`INTRODUCTION
`
`The instant opposition and cancellation proceedings are duplicative and a waste of the
`
`Board’s time and resources, because the validity of Eldorado’s “FIELDLEDGE,” “RUSTIC
`
`LEDGE,” and “CLIFFSTONE” marks is currently being determined in a prior-filed, parallel
`
`Federal District Court proceeding based on identical factual allegations and questions of law. In
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`

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`fact, Renaissance did not file the instant cancellation proceedings until over two years after
`
`Eldorado initiated the Civil Action, and over one year after Renaissance filed counterclaims in the
`
`Civil Action challenging the validity of the same Eldorado marks. Renaissance’s counterclaims
`
`assert the same allegations against the exact same marks at issue here. Because disposition of the
`
`Civil Action will directly and necessarily affect the questions of validity before the Board and
`
`potentially determine whether Eldorado is entitled to maintain registration of its marks,
`
`suspension is appropriate to prevent duplicative proceedings, wasted resources, and potentially
`
`inconsistent results. For these reasons, set forth in more detail below, all further proceedings in
`
`Cancellation Nos. 92045792 and 92045793, and Opposition No. 91169233, should be suspended
`
`pending disposition of the Civil Action.
`
`FACTUAL BACKGROUND
`
`Eldorado is a specialty building materials siding company and a leading manufacturer of
`
`architectural stone veneer for residential and commercial use. Eldorado markets and sells certain
`
`of its stone products under distinctive trademarks, including FIELDLEDGE, RUSTIC LEDGE
`
`and CLIFF STONE. Eldorado owns all rights, title and interest in these trademarks.
`
`FIELDLEDGE, which is the subject of United States Trademark Registration No. 2,686,691, was
`
`first used in commerce by Eldorado at least as early as June 30, 1999; RUSTIC LEDGE, which is
`
`the subject of United States Trademark Registration No. 2,727,198, was first used in commerce
`
`by Eldorado at least as early as June 30, 1997; and CLIFF STONE, which is the subject of United
`
`States Trademark Application No. 78/119,003, was first used in commerce at least as early as
`
`June 30, 2001.
`
`Renaissance is a competing company which began, among other things, to unlawfully use
`
`marks on its competing products that are the same or confusingly similar to Eldorado’s above
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`marks. As a result, on December 23, 2004, Eldorado filed the Civil Action against Renaissance,
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`seeking relief for a number of violations of both federal and state law. In addition to trade dress
`
`infringement, trade secret misappropriation, intentional and negligent interference with economic
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`

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`relationships, and conversion claims, Eldorado claims that Renaissance infringed and diluted
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`Eldorado’s FIELDLEDGE, RUSTIC LEDGE, and CLIFFSTONE marks and engaged in unfair
`
`competition through its unauthorized use of the marks or marks confusingly similar thereto. A
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`copy of the operative complaint filed by Eldorado in the Civil Action is attached hereto as
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`Exhibit 1.
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`On March 5, 2005, Renaissance filed its first amended counterclaim in the Civil Action,
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`alleging, in part, that it is likely to be damaged by the continued registration of the FIELDLEDGE
`
`and RUSTIC LEDGE marks (among others), because such registrations impair its right to make
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`use of these (allegedly) descriptive terms. A copy of Renaissance’s counterclaim is attached
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`hereto as Exhibit 2. Renaissance’s counterclaim further alleges that it is likely to be damaged by
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`Eldorado’s assertions of ownership of the mark CLIFFSTONE. Id at p. 9. As with the
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`FIELDLEDGE and RUSTIC LEDGE marks, Renaissance alleges that the term CLIFFSTONE is
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`descriptive, and that Eldorado’s alleged ownership in this mark impairs Renaissance’s right to the
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`descriptive use of the term CLIFFSTONE. Id.
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`The Civil Action is progressing, and on June 15, 2006, both parties stipulated to a case
`
`schedule that will bring the case to trial less than 9 months from now. A copy of the Stipulation
`
`for Continuance of Pre-Trial Dates is attached hereto as Exhibit 3. The parties are in the process
`
`of conducting discovery which will close on November 24, 2006. Trial is set to commence on
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`March, 12, 2007.
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`After the commencement of the pending Civil Action, Renaissance pursued a notice of
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`opposition to Eldorado’s application to register the CLIFFSTONE mark. Several months later,
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`on May 12, 2006, Renaissance filed petitions for cancellation of Eldorado’s registrations for the
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`marks FIELDLEDGE and RUSTIC LEDGE, which petitions could have been filed long ago.
`
`Renaissance, having now asserted the same claims in two different forums, is clearly using this
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`Board as a means to further its litigation strategy in the Civil Action and force Eldorado to double
`
`it efforts to enforce its rights in the subject marks.
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`

`
`ARGUMENT
`
`I.
`
`The Common and Appropriate Practice is to Suspend TTAB Proceedings
`Pending the Outcome of a Related Federal Action.
`
`When it becomes apparent to the Trademark Trial and Appeal Board that parties to a
`
`proceeding before it are involved in a separate civil action which may be dispositive of or have a
`
`bearing on its case, the Board may suspend the proceedings before it pending the determination of
`
`the civil action. 37 CFR § 2.117(a); TBMP 510.02(a) (2d. Edition, Revision I, March 2004); The
`
`Other Telephone Company V. Connecticut National Telephone Company, Inc., 181 USPQ 125,
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`127 (TTAB 1974). Suspension prevents parties from litigating identical issues in two forums,
`
`thereby avoiding the undesirable result of potentially inconsistent determinations and wasted
`
`resources.
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`Although the Board’s decision regarding the validity of a trademark is not binding upon
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`the Federal district court in a civil action involving issues common to a proceeding before the
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`Board, a Federal district court’s decision is often binding on the Board. & TBMP 510.02(a)
`
`(citing Goya Foods Inc. v. Tropicana Products Inc., 846 F.2d 848, 852-53 (2d Cir. 1988)); see
`
`
`also, PHC Inc. V. Pioneer Healthcare Inc., 75 F.3d 75, 80 (C.A.1 Mass.1996). Consequently, it
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`is the policy of the Board and sound practice to suspend TTAB proceedings when parties are
`
`involved in a civil action which may influence the trademark issues before the Board. §§§ B(_)3rci_s
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`Collection, LTD V. Herrington & Company, 2003 WL 152427, *2 (TTAB) (citing TBMP §
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`5 10.02).
`
`In The Other Telephone Company, the Board held that suspension was appropriate,
`
`because the final determination of a civil case involving the respective trademark rights of the
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`parties currently before the Board would directly influence the resolution of the same trademark
`
`issue before the Board. The Other Telephone Company, 181 USPQ at 127. The Board was also
`
`persuaded that “a favorable ruling by the Board on the motion to suspend would obviate the
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`

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`expenditure of time and money required in [the proceedings.]” Li. at 126. That is exactly the case
`
`here.
`
`II.
`
`The Civil Action Will Be Dispositive of All Three of Renaissance’s TTAB
`Proceedings.
`
`As demonstrated by the pleadings attached hereto, Eldorado and Renaissance are
`
`currently involved in a trademark infringement action involving the same marks at issue in these
`
`consolidated cancellation and opposition proceedings. Eldorado filed suit seeking relief for
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`Renaissance’s willful infringement of its FIELDLEDGE, RUSTIC LEDGE, and CLIFFSTONE
`
`marks. Renaissance counterclaimed, alleging that the marks are generic and descriptive terms and
`
`registration of the marks unfairly prevents Renaissance from using the terms to describe its
`
`products. Subsequently, Renaissance filed these duplicative proceedings in a clear attempt to
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`waste Eldorado’s time and money as well as the Board’s valuable resources.
`
`The Civil Action and this proceeding involve common legal and factual issues. As is
`
`evident from the pleadings attached hereto, the Court in the Civil Action is being asked to resolve
`
`whether Eldorado’s subject marks are merely generic and descriptive, whether they are distinctive
`
`in identifying Eldorado’s goods and distinguishing them from goods offered by others, and
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`whether Eldorado has superior rights in the marks and may thereby exclude Renaissance from
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`using the marks on its competing products. These same issues will also necessarily be decided in
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`these consolidated proceedings which are all premised upon Renaissance’s assertions that
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`Eldorado’s marks are not valid. Therefore, it would benefit the Board and the parties to await the
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`outcome of the Civil Action before expending time and money in this forum. In fact, if the Board
`
`proceeds, it may unnecessarily spend time on these matters and ultimately be bound by the
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`Federal District Court’s decision on these issues in any event.
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`In short, therefore, it would be both wasteful and illogical to proceed with these
`
`consolidated actions at this time. Suspension will minimize the amount of time, money and
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`Board resources spent litigating the parties’ trademark dispute, and will obviate the troublesome
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`

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`problem resulting from potentially inconsistent decisions made by the Federal District Court and
`
`the Board.
`
`CONCLUSION
`
`For the reasons stated above, Registrant respectfully requests that all further proceedings
`
`in Cancellation Nos. 92045792 and 92045793, and Opposition No. 91169233 be suspended until
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`30 days following final disposition of the Civil Action.
`
`Dated: July 21, 2006
`
`
`
`Denver, CO 80202-5 647
`Phone: (303) 629-3400
`Email: hall.stephen@dorsey.com
`
`ATTORNEYS FOR REGISTRANT
`
`

`
`CERTIFICATE OF SERVICE
`
`I hereby certify that the foregoing MOTION TO SUSPEND is being deposited with the
`United States Postal Service with sufflcient postage as first class mail, on the date set forth below
`in an envelope addressed to:
`
`Claudia T. Bogdanos
`Quinn Emanuel Urquhart Oliver & Hedges, LLP
`51 Madison Avenue
`
`New York, New York 10017
`
`ATTORNEYS FOR OPPOSER RENAISS ‘
`
` Dated: July 21, 2006
`
`4825-0179-3025\3
`
`4825-0179-3025\3
`
`7
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`

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`
`
`Callie A. Bjurstrom, State Bar No. 137816
`Andrea M. Kimball, State Bar No. 196485
`Michelle A. Herrera, State Bar No. 209842
`LUCE, FORWARD, HAMILTON & SCRIPPS LLP
`600 West Broadway, Suite 2600
`San Diego, California 92101-3372
`Telephone No.: 619.236.1414
`Fax No.: 619.232.8311
`
`Attorneys for Plaintiffs Eldorado Stone, LLC and
`Eldorado Stone Operations, LLC
`
`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF CALIFORNIA
`
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`(LS?)
`
`ELDORADO STONE, LLC, a Utah limited
`liability company; ELDORADO STONE
`OPERATIONS, LLC, a Utah limited liability
`company,
`
`Plaintiffs,
`
`v.
`
`RENAISSANCE STONE, INC., an Arizona
`limited liability partnership; ALFONSO
`ALVAREZ, an individual; JOSE GALVEZ
`MARTINEZ, an individual; JOSEPH SMITH,
`an individual; ROB HAGER, an individual
`
`Defendants.
`
`Case No.
`
`COMPLAINT FOR (1) FEDERAL
`TRADEMARK INFRINGEMENT — 15
`
`U.S.C. § 1114; (2) FEDERAL COMMON
`LAW TRADEMARK INFRINGEMENT;
`(3) FALSE DESIGNATION OF
`ORIGIN/FEDERAL UNFAIR
`
`COMPETITION —- 15 U.S.C. § 1125(a); (4)
`FEDERAL TRADEMARK DILUTION;
`(5) FEDERAL TRADE DRESS
`INFRINGEMENT ; (6)
`MISAPPROPRIATION OF TRADE
`
`SECRETS - CAL. CIV. CODE § 3426.1, et
`seq.; (7) INTENTIONAL
`INTERFERENCE WITH ECONOMIC
`
`
`
`RELATIONSHIPS; (8) NEGLIGENT
`INTERFERENCE WITH ECONOMIC
`RELATIONSHIPS; (9) UNFAIR
`COMPETITION; (10) CONVERSION;
`AND (1 1) CONSTRUCTIVE TRUST;
`DEMAND FOR JURY TRIAL
`
`Plaintiffs, Eldorado Stone, LLC and Eldorado Stone Operations, LLC through their
`
`attorneys complain and allege as follows:
`
`// /
`
`/ //
`
`28
`
`///
`
`_
`
`EXHIBIT 1
`
`

`
`(-
`
`6
`
`THE PARTIES
`
`1.
`
`Plaintiff Eldorado Stone, LLC, (hereinafter “Eldorado”)
`
`is a limited liability
`
`company organized and existing under the laws of the State of Delaware, and qualified to conduct
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`business within the State of California and conducting business from its principal place of
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`business in San Marcos, California within the County of San Diego.
`
`2.
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`Plaintiff Eldorado Stone Operations, LLC, (“Eldorado Operations”) is a limited
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`liability company organized and existing under the laws of the State of Utah, having its principal
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`place of business at Carnation, Washington.
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`3.
`
`Plaintiffs are informed and believe, and on that basis allege,
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`that defendant
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`Renaissance Stone, Inc. is a corporation organized and existing under the laws of the State of
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`Nevada, having its principal place of business at Phoenix, Arizona and doing business within this
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`judicial district.
`
`4.
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`Plaintiffs are informed and believe, and on that basis allege, that defendant Alfonso
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`Alvarez (“Alvarez”) is an individual and a resident of Highland, California, and is the Executive
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`Vice President, Secretary, Treasurer and General Manager of Renaissance Stone.
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`5.
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`Plaintiffs are informed and believe, and on that basis allege, that defendant Jose
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`Galvez Martinez (“Martinez”) is an individual and a resident of San Bemardino, California, a
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`current employee of Renaissance Stone and a former employee of Eldorado Stone.
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`6.
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`Plaintiffs are informed and believe, and on that basis allege, that defendant Joseph
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`Smith is an individual residing in Mesa, Arizona, and is the President and CEO of Renaissance
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`Stone.
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`7.
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`Plaintiffs are informed and believe, and on that basis allege, that defendant Robert
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`I-lager is an individual residing in Wildomar, California,
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`is actively doing business within this
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`judicial district and is currently serving as an officer and director of Renaissance Stone.
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`8.
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`Plaintiffs are informed and believe, and that on basis allege, that at all
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`times
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`mentioned herein, each and every defendant was the agent, servant, employee, joint venturer,
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`partner, subsidiary, and/or co-conspirator of each other defendant, and that, in performing or
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`failing to perfonn the acts herein alleged, each was acting individually as well as through and in
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`the foregoing alleged capacity and within the course and scope of such agency, employment, joint
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`venture, partnership, subsidiary and/or conspiracy, and each other defendant ratified and affirmed
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`the acts and omissions of the other defendants. Plaintiffs are fiirther informed and believe that
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`each defendant, in taking the actions alleged herein and/or ratifying the actions alleged herein,
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`acted within the course and scope of such authority and, at the same time, for their own financial
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`and individual advantage, as well as in the course and scope of such employment, agency and as
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`an alter ego therein.
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`9.
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`Whenever, in this complaint, reference is made to any actions of Renaissance Stone
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`Inc., such allegations shall mean that the directors, officers, employees or agent of said entity did
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`perform or authorized the alleged acts or actively engaged in the management, direction and
`
`control of such entity and were acting within the course and scope of their employment.
`Whenever, in this complaint, reference is made to any actions of Mr. Alvarez, Mr. Martinez, Mr.
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`Smith, Mr. Hager or any other person who is an employee or agent of Renaissance Stone, such
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`allegations shall also mean Renaissance Stone, acting by and through said individual.
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`JURISDICTION AND VENUE
`
`10.
`
`This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C. §
`
`1121 and 28 U.S.C. § 1331. The Court has pendent jurisdiction over the claims alleged herein
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`arising under state law pursuant to 28 U.S.C. §§ 1338('b) and 1367(a).
`
`ll.
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`Venue is proper in this district under 28 U.S.C. § 1391 because a substantial part of
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`the acts of trademark infringement, trade dress infringement, trade secret misappropriation, unfair
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`competition and interference with economic relationships complained of herein have occurred and
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`are occurring in this judicial district.
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`GENERAL ALLEGATIONS
`
`12.
`
`Plaintiff Eldorado Stone, LLC (“Eldorado Stone”) is a specialty building materials
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`siding company and a leading manufacturer of architectural stone veneer, also known as
`
`manufactured stone, for residential and commercial use. Eldorado’s proprietary technologies
`
`allow it
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`to offer a variety of customized stone profiles designed to look like natural stone.
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`Eldorado sells its unique products in the United States, Canada, Europe and Asia through a
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`Ix.)
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`network of masomy, building materials,
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`traditional roofing and siding materials distributors,
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`fireplace suppliers, and independent franchisees. E1dorado’s focus on product quality, breadth and
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`innovation, combined with a geographically diversified manufacturing platform and a variety of
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`regional stone products, provides it with significant advantages in attracting customers, architects
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`and builders.
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`13.
`
`Plaintiff Eldorado Stone Operations, LLC (“Eldorado Stone Operations”) is a
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`wholly-owned subsidiary of Eldorado Stone LLC and the holder of all rights to the trademarks
`
`alleged herein.
`
`14.
`
`On or about January 14, 2002, defendant Alfonso Alvarez (“Alvarez") was hired by
`
`StoneCrafl Industries (“StoneCrafi”), Eldorado Stone’s predecessor in interest, as a process
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`engineer. Defendant Jose Galvez Martinez (“Martinez”) joined Stone Craft on or about June 18,
`
`2002.
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`15. '
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`In 2002, StoneCrafi presented Alvarez and Martinez with an Employee Handbook.
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`The StoneCralt Employee Handbook, at pages 17 and 18, contains very specific provisions
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`regarding an employee’s obligations with respect to confidential and proprietary information of
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`the company:
`
`5.8
`
`CONFIDENTIALITY
`
`Information about StoneCrafi Industries, its team members, customers, suppliers,
`and vendors is to be kept confidential and divulged only to individuals within
`StoneCrafl Industries with both a need to receive and authorization to receive the
`information. If in doubt as to whether information should be divulged, err in favor
`of not divulging infonnation and discuss the situation with your Manager.
`
`All records and files maintained by StoneCrafi Industries are confidential and
`remain the property of StoneCraft Industries. Records and files are not to be
`disclosed to any outside party without the express permission of the Manger.
`Confidential information includes, but is in no way limited to: financial records;
`business, marketing, and strategic plans; personnel and payroll records regarding
`current and former team members; the identity of, contract information for, and any
`other account
`information on customers, vendors, and suppliers;
`inventions,
`programs,
`trade secrets,
`formulas,
`techniques, and processes; and any other
`documents or information regarding StoneCrafi Industries’ operations, procedures,
`or practices. Confidential
`information may not be removed from Company
`premises without express authorization.
`
`Confidential infonnation obtained during or through employment with StoneCraft
`Industries may not be used by any Team member for the purpose of furthering
`current or future outside employment or activities or for obtaining personal gain or
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`
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`\D0O\lO’\ahtfltx)
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`legal or
`to avail itself of all
`StoneCrafi Industries reserves the right
`profit.
`equitable remedies to prevent impermissible use of confidential information or to
`recover damages incurred as a result of the impermissible use of confidential
`infonnation.
`
`16.
`
`In July of 2000, Stone Crafi
`
`Industries was acquired by Eldorado Stone.
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`Thereafter, all of the employees of Stone Craft, including Messrs. Alvarez and Martinez, became
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`employees of Eldorado.
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`17.
`
`On January 16, 2002, Mr. Alvarez signed an Acknowledgment and Agreement
`
`whereby he acknowledged receipt of the StoneCrafi Employee Handbook and agreed to abide by
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`the rules, policies and standards set forth in the Employee Handbook. A true and correct copy of
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`the Acknowledgment and Agreement signed by Mr. Alvarez on January 16, 2002 is attached
`
`hereto as Exhibit A. Mr. Martinez also acknowledged receipt and acceptance of the StoneCraft
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`Employee Handbook on June 19, 2002.
`
`18.
`
`On or about January 1, 2003, Eldorado Stone presented its Employee Handbook to
`
`its employees. Alvarez and Martinez were now Eldorado employees and received a copy of the
`
`Employee Handbook. The Eldorado Stone Employee Handbook contains very specific provisions
`
`regarding an employee’s obligations with respect to confidential and proprietary information of
`
`the company:
`
`CONFIDENTIALITY OF BUSINESS INFORMATION
`
`Employees will have access to and become acquainted with trade secrets,
`confidential
`information and a variety of private, sensitive and proprietary
`information which is confidential, owned by the Company and/or its customers and
`which are regularly used in the operation of the Company’s business.
`The
`protection of confidential business information and trade secrets is vital to the
`interest and the success of BLDORADO.
`
`Each employee of the Company is required to maintain the confidentiality of
`ELDORADO’s and its customers’ trade secrets and confidential, sensitive and
`proprietary infomration, to prohibit their disclosure to unauthorized third parties
`and to refiain from using such information for the benefit of the employee or
`anyone else. Specific information regarding this kind of information can be found
`in the “Proprietary Information” agreement mentioned above. Disclosure of
`confidential, proprietary, or sensitive information about
`the Company or its
`customers to third parties will be grounds for immediate disciplinary action,
`including but not
`limited to termination.
`To emphasize and reinforce these
`obligations, employees will be required to sign a non-disclosure agreement as a
`condition of employment.
`
`
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`,‘
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`19.
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`On February 3, 2003, Alvarez signed an Employee Acknowledgment and
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`Agreement whereby he acknowledged receipt of the Eldorado Employee Handbook and agreed to
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`comply with the provisions set forth therein. Mr. Martinez also acknowledged his receipt and
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`acceptance of this term. A true and correct copy of the Acknowledgment and Agreement signed
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`by Alvarez on January 16, 2002 is attached hereto as Exhibit B.
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`20.
`Throughout his employment with first StoneCraft and subsequently with Eldorado
`Stone, Alvarez was responsible for documenting the precise formulas and methodologies by which
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`StoneCrafi and Eldorado manufactured its stone veneer products. Alvarez was also responsible
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`for establishing the procedures and mechanisms to keep Eldorado’s trade secret information
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`secure.
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`21.
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`During the course of Alvarez’s employment with Eldorado, Alvarez was entrusted
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`with the trade secrets that took Eldorado years to develop so that these secrets and processes could
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`finally be documented into a highly confidential manual to be used for quality control purposes.
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`Alvarez was one of only three Eldorado personnel granted access to highly confidential
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`trade
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`secrets and certain computer files which describe in great detail Eldorado’s proprietary coloration
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`techniques, mix designs, molds and formulas.
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`22.
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`In preparing the manual for quality control uses, Alvarez was afforded access to
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`numerous formulas and compilations of information, which Eldorado uses as part of its unique
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`way of creating its realistic stone veneer products. These coloration processes and proprietary
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`formulas that Alvarez was documenting were in use by Eldorado long before Alvarez joined the
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`company.
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`23.
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`Alvarez was under an obligation and specifically advised to keep such information
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`secret. Mr. Martinez was also afforded access to certain Eldorado trade secrets and proprietary
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`formulas. He was likewise advised to keep such information secret.
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`24.
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`Eldorado has taken diligent steps to insure that its trade secret and proprietary
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`infonnation is kept confidential. Eldorado uses password-protected files to limit access to its
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`color, mix designs and other sensitive files. Eldorado never released its batch or mix designs
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`and/or its coloration formulas to anyone outside the company.
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`In fact, Eldorado kept certain
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`limited access documents such as the color formula books (which were even less informative than
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`the computer infonnation) behind locked plexiglass during normal business hours and then locked
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`up these books each night to ensure security. To ensure that its mold designs be kept confidential,
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`Eldorado does not allow any molds to leave company premises.
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`In fact, Eldorado even separates
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`its mold making facility from its stone manufacturing facilities to limit access to proprietary
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`information. At both facilities, Eldorado closely guards its proprietary information.
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`25.
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`Eldorado’s company policy forbade Alvarez and any other employee from
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`downloading sensitive proprietary information from the company’s computer network.
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`26.
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`In addition to the provisions in the StoneCrafi Employee Handbook, and the
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`Eldorado Employee Handbook,
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`in or about July 2002 Eldorado Stone presented all of its
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`employees, including Alvarez, with a Trade/Secrets Proprietary Information Agreement for their
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`review and signature. The Trade Secrets/Proprietary Information Agreement, a true and correct
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`copy of which is attached hereto as Exhibit C, contains a binding provision against the disclosure
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`of confidential trade secrets and other proprietary information of Eldorado Stone.
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`27.
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`Eldorado is
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`informed and believes,
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`and on that basis
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`alleges,
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`that on
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`February 3, 2003, while employed by Eldorado, Alvarez registered a fictitious business name
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`statement for the name “Pacific Coast Resources,” using his home address as his place of business.
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`28.
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`In or about March 2003, Eldorado discovered that Alvarez never signed the Trade
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`Secrets/Proprietary Infonnation Agreement. Eldorado requested that he do so, but Alvarez
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`refused, stating that he wanted to take it home to review and to show it to his attorney.
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`29.
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`Several months passed,
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`and Alvarez
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`had
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`still
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`not
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`signed
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`the Trade
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`Secrets/Proprietary Information Agreement.
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`In January 2004, Eldorado again requested that
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`Alvarez sign the document. Despite having had the document for nearly eighteen months, Alvarez
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`stated that he again needed additional time to review the one page document.
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`30.
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`Over the course of the subsequent five months, Eldorado management had several
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`conversations with Alvarez regarding his refusal to sign the Trade Secrets/Proprietary Infonnation
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`Agreement. At each instance, Alvarez delayed and stalled and offered excuse afier excuse as to
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`why he would not sign the agreement.
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`31.
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`In hopes of addressing A1varez’s concerns about signing the Agreement, and
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`although Eldorado believed that the purpose behind the Trade Secrets/Proprietary Information
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`Agreement is simply to prevent its employees from misappropriating trade secrets and other
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`confidential information, Eldorado revised the Trade Secrets/Proprietary Information Agreement
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`at Alvarez’s request
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`to narrow its scope. A true and correct copy of the revised Trade
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`Secrets/Proprietary Information Agreement is attached hereto as Exhibit D.
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`32.
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`Alvarez refused to sign the revised Trade Secrets/Proprietary Information
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`Agreement. On or about May 18, 2004 Alvarez resigned his employment with Eldorado. On May
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`29, 2004, Eldorado contacted Alvarez and asked him whether he would like to return to Eldorado.
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`Alvarez declined Eldorado’s offer, stating that he wished to pursue a career in the “bagging
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`business.”
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`33.
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`While still an employee of Eldorado, on May 14, 2004, Alvarez along with
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`defendant Rob Hager,
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`registered RBC Investments, LLC with the Arizona Corporation
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`Commission. Mr. Alvarez and Mr. Hager along with other individuals, are not only members of
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`RBC Investments, but are also officers and directors of Renaissance Stone.
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`34.
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`Eldorado has come to learn and on that basis alleges that while Alvarez was still an
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`employee of Eldorado, on or about March 22, 2004, Alvarez downloaded significant amounts of
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`Eldorado’s trade secret information. Despite the company policy against downloading sensitive
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`proprietary information from the company computer network, a user logged in as “A Alvarez”
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`using Mr. Alvarez’s laptop computer caused over 644 megabytes worth of information to be
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`burned onto an external CD. The files that were copied comprise the heart of Eldorado’s
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`proprietary information and show the exact way that Eldorado makes each of its products. These
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`files copied are essentially a “how to” for making Eldorado’s batch and mix designs, including the
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`precise formulas and application techniques for each of Eldorado’s colors, and consist of the
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`recipes for several custom colors manufactured by Eldorado.
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`35.
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`Alvarez did not have authorization to burn this sensitive information onto a CD;
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`Likewise, Alvarez did not have authority to take this CD or any other proprietary information with
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`him afler his separation from Eldorado. A1varez’s download of information onto a CD was in
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`direct violation of company policy which states, in pertinent part:
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`DUPLICATION OF COMPANY RECORDS
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`including
`Employees are strictly prohibited from duplicating by any means,
`electronically, any company records, unless required to do so during the course of
`their
`regular
`job duties.
`Illegal duplication of software and its
`related
`documentation is strictly prohibited. Moreover, such records should not be
`removed from the Company premises without prior approval from your supervisor.
`An employee is expected to use all reasonable precautions in handling confidential
`information, such as not leaving it in plain sight for others to see. Violation of this
`policy, along with the confidentiality policy, may result in immediate termination.
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`36.
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`Despite numerous requests, Alvarez and Defendants refuse to return either the CD
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`and/or any other trade secret information in their possession rightfully belonging to Eldorado.
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`37.
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`Plaintiffs are informed and believe, and on that basis allege, that Defendants are
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`using Eldorado’s confidential, proprietary and trade secret information described in paragraph 34
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`above in the development and manufacture of Renaissance Stone products.
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`38.
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`Plaintiffs are informed and believe, and on that bas