Federal court resolves Augusta trade-secret case

A federal judge has ruled in favor of Augusta-based Hagler Systems Inc. in an intellectual property case in which a member of the family-owned business attempted to use stolen trade secrets to start a rival pumping and dredging company.

Chief Judge J. Randal Hall of the U.S. District Court for the Southern District of Georgia on July 21 issued a consent order in the lawsuit that permanently enjoins Hagler Group Global LLC from using Hagler Systems' intellectual property.

“This is a victory for our company," Hagler Systems CEO Bob Hagler said in a statement issued Tuesday. "The consent order follows a critical ruling that protects the expertise we’ve spent almost a quarter of a century building.”

The company designs and builds massive pump systems at its North Augusta facility that are used by companies in the dredging, phosphate mining and oil industries. High research-and-development costs to design the equipment – such as a 180-foot dredge capable of shredding trees while pumping 25,000 gallons of debris-filled fluid – make their engineering files valuable trade secrets.

"They spend a considerable amount of money, man hours and time designing things that are intellectual property," said attorney Robert C. Hagler, a partner in Fulcher Hagler LLP, the Augusta firm that represented Hagler Systems in the case. "You can try to reverse-engineer things, but you can't easily duplicate something without the intellectual property, and it's valuable for that reason."

Hagler said he is unaware of any other case in Augusta involving the Defense of Trade Secrets Act of 2016, a law designed to enhance federal economic espionage protections.

Bob Hagler and his brother David filed the suit on Feb. 19 against Hagler Group Global and its principal – their brother, Benjamin Hagler Sr. – after discovering the sibling had taken Hagler Systems' proprietary design files while a separation agreement was being negotiated in 2019.

"For some time there had been disagreements between Bob Hagler, David Hagler, and Ben Hagler, Sr. about the management and strategic direction of the company," according to court filings. "Ultimately, Bob Hagler and David Hagler came to the conclusion in the summer of 2019 that it would be best for (Hagler Systems) to part ways with Ben Hagler, Sr."

Benjamin Hagler Sr. was terminated June 14, 2019. His nearly $2.5 million buyout agreement was reached on Sept. 30, 2019, with the understanding the only proprietary information he possessed was "a small amount of information on a personal laptop."

The lawsuit contends Benjamin Hagler recruited his son, Benjamin Jr., and another former Hagler Systems employee to download 58,430 confidential plans, designs, drawings, specifications and manufacturing instructions from the company's project-management server.

The data removal was undetected until January 2020 when a third-party vendor for Canadian oil company Suncor Energy – one of Hagler Systems' biggest customers – contacted the company regarding a bank account discrepancy.

Hagler Systems in February obtained a temporary restraining order in the case that led to Judge Hall's consent order in July, which permanently bars Hagler Group's possession, use, review or dissemination of any Hagler Systems trade secrets.

Monetary damages in the case were settled out of court and were not disclosed.

"We are proud of our work and services we provide to customers all over the world," Bob Hagler said in a statement. "We are excited to move forward, knowing that our (intellectual property) is protected and that we can focus on doing the work we love.”