Update: UFC suing MMA agent Ken Pavia and promotion Bellator for "theft of trade secrets"

UFC holding company Zuffa Inc. filed suit in Clark County against noted MMA agent Ken Pavia and small-time promotion Bellator for sharing of confidential UFC contracts and theft of business practices.

Pavia is the oft-embroiled in scandal agent of such big name MMA stars as Brett "The Grim" Rogers, Anthony "Rumble" Johnson, War Machine and Phil "NYBA" Baroni while Bellator is a young, upstart MMA organization that focuses of weekly episodes and tournaments that is now available on Fox Sports Net.

Kevin Iole has details:

According to the suit, filed Wednesday in Clark County District Court, Pavia delivered confidential contracts, including fighter agreements, to Bellator after being asked to do so in a July 4 email to him from Bellator founder Bjorn Rebney...

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An email which Zuffa’s lawsuit alleges is from Rebney to Pavia on July 4 was attached as an exhibit to the 16-page suit. In it, Rebney writes, " … You’ve been great about sending us ‘All’ of the seminal docs from the UFC, so that we can re-do them and implement them for Bellator."

Later, the email Zuffa alleges to have been written by Rebney continues, "Please list each in terms of what it is for and how the UFC uses them/implements them. … Then I’m going to have our team Monday re-type them and we will sufficiently alter them such that they will appear to be ours and noAst theirs."

The response that is purported to have come from Pavia is brief and says, in its entirety, "Still I (sic) vegas. May take 24 hours to organize as some forms go to the guys in my office."

Pavia was in Las Vegas for UFC 116 on July 3 and the alleged email is dated July 4. The email addresses that are in the emails Zuffa included are the email addresses for Rebney and Pavia.

Also according to Iole, there are other persons and corporations named in the suit by Zuffa as also engaging in breach of contract. Specifically "The improper disclosure of Zuffa’s operations documents and confidential information by Pavia, MMA Agents, and the Doe [unnamed persons] and Roe [unnamed corporations]  Defendants constitutes a distinct act of dominion wrongfully exerted over Zuffa’s personal property."

An "act of dominion" is part of conversion which is one of the basic legal torts. For those unfamiliar with torts, they are mainly in regards to civil matters rather than criminal matters as many do not involve actual criminal acts (breaking of society's rules), Conversion in layman terms is the act infringing upon the possession rights of others. Conversion differs from theft/larceny as it doesn't require malicious aforethought (intent willfully to act in callous and wanton disregard of the consequences). For example, your mechanic giving your car to the wrong person can be an act of conversion.

Contracts and other documents can be covered under the conversion tort as they are confidential and not publicly available and may contain language that is pertinent to how Zuffa runs its business. Zuffa's case rests on their belief that the sharing of their confidential contracts and the language therein is a violation of their rights and property. Bellator is a co-defendant as they were the recipients of the documents and, according to Zuffa, the emails sent to Pavia show that Bellator had a "proprietary interest" in obtaining those documents making them liable.

The key element in this case in my opinion is the strength of the "confidentiality agreement" pertained in the contract and to whom it applies to. A second key element will be in differences between the Zuffa contract and the Bellator contract, as well as between a Zuffa contract and a standard MMA contract. If Pavia and Bellator can prove that their contract is not enough of an infringement of Zuffa's rights as Zuffa states, then it will be hard to obtain substantial damages as the infringement of the property does not exist. Alternatively, if the defendants can prove that the Zuffa contract is not much different a standard MMA contract, they can then argue that the Zuffa contract does not qualify as a infringable intellectual property.

As for damages, it will be hard for Zuffa to calculate the actual losses occured to them as a business as a result of this conversion. In addition, the contract is an nonreturnable good (unlike the mechanic example from earlier) as once it has been seen, the knowledge contained inside the document cannot be forgotten. What Zuffa will lok to prove are the damages obtained by the adaptation of their business practices in a competitive market. The amount of damages will be greatly decreased by the fact that Zuffa has a controlling interest in the MMA market and it will be difficult to prove and quantify the amount of damages incurred.

Zuffa, while probably not feeling Bellator is a direct competitor, has to file this lawsuit upon notice of a perceived infringement as a failure to do so could prove to be harmful in a future conversion case regarding the same properties against a larger competitor like Strikeforce. My question is, how did Zuffa obtain these emails in the first place? Anything obtained through illegal means will severely hurt their case.

Ken Pavia responds via Twitter: