Prophase settles suit over use of proprietary information


ProPhase, the maker of zinc lozenges Cold-Eeze, has finally settled a lawsuit that has been ongoing since 2004. The lawsuit involved John C. Godfrey, a chemist who developed the unique lozenges that were proven to shorten the common cold. His contract gave the rights to the lozenges to ProPhase, but the company claimed that Godfrey threatened to give proprietary information about the company's trademark and trade secrets to other company.

Godfrey countersued, claiming that under his agreement, the company owed him more than $5 million. A settlement was reached, with ProPhase agreeing to pay $2.1 million and four yearly payments of $100,000 plus interest. In exchange, Godfrey transferred his rights and interest in the Cold-Eeze trademark to ProPhase.

ProPhase was able to remove $3.5 million from their balance sheet because of the settlement. The company made $17.5 million in 2011 and $13.3 million during the first nine months of 2012.

Almost all companies owe their success to some sort of trade secret. It could be a secret ingredient, a special part in a product or even a tried and true way of doing things that has ultimately made the company successful. In order to stay competitive, companies need to take measures to protect their trade secrets and keep them out of the hands of competitors.

There are many ways in which companies can protect trade secrets. This includes identifying them, labeling them, monitoring them and providing sufficient security. This may include password-protected computers and limited public access. Employees should also be trained on proper security measures so they know how to handle information.

Source: Philadelphia Business Journal, " Cold-Eeze maker ProPhase settles litigation," John George, Dec. 21, 2012