Key Tronic hit with $16.5 million penalty

Key Tronic Corp., Spokane, WA, announced today that a jury in Seattle federal court rendered a verdict yesterday afternoon finding that Key Tronic misappropriated trade secrets.

The jury also found that the company breached a confidentiality agreement with plaintiffs Fernando Falcon, Federico Gilligan and their company, F&G Scrolling Mouse LLC.

The jury awarded damages of $16.5 million. The jury also found that the misappropriation was not willful, Key Tronic said.

The suit alleged that secret information owned by Falcon, Gilligan and F&G was improperly disclosed by Key Tronic to Microsoft Corp., a former defendant in the suit, and thereafter used by Microsoft in the Microsoft IntelliMouse products.

Key Tronic said it intends to vigorously pursue post-trial motions seeking to overturn the verdict, and an appeal if necessary. Key Tronic is evaluating all options, including possible pursuit of a claim against Microsoft, it said.

As a result of the verdict, the company said it expects that, as of December 29, it will be in default of certain financial covenants in its credit facility maintained with a lender to the company. The company expects to seek a waiver of the default from the lender.