Trade Secret

Step Aside! Trade Secret Preemption of Other Claims

Order Granting in Part and Denying in Part Motion to Dismiss, Henry Schein, Inc. v. Cook, et al., 16-cv-03166-JST (Judge Jon Tigar)

One purpose of the California Uniform Trade Secrets Act (“CUTSA”) is to preempt and displace many common law causes of action that could arguably apply in a trade secrets case, such as conversion. Nevertheless, it is still common for plaintiffs in trade secrets cases to plead a great variety of causes of action. A recent decision from Judge Tigar helps clarify when such causes of action are preempted and when they can coexist with a cause of action for trade secret misappropriation. READ MORE

When Strategy Backfires: A Plaintiff Pays the Price for Dumping Too Much Information Into a Trade Secret Disclosure

Order Regarding Discovery Dispute Joint Report #1, VIA Tech., Inc. v. ASUS Computer Int’l et al., Case No. 14-cv-3586 (Magistrate Judge Howard Lloyd)

There is a tension in many IP cases between disclosure rules that require a plaintiff to identify its liability theories early in the case, and the understandable desire of the plaintiff to keep open its options for seeking recovery. Some plaintiffs respond to these tensions by stating their allegations in highly general terms, often leading defendants to ask for more specifics. Other plaintiffs attempt to overwhelm their opponents with detail, triggering calls by their opponents to narrow the relevant claims.  Sometimes such obfuscatory tactics work, but they can backfire too. That was the recent result in VIA Tech., Inc. v. ASUS Computer Int’l et al., in which a plaintiff seeking recovery for misappropriation of trade secrets was ordered not only to trim its case, but also to disclose the alleged trade secrets to the defendant (rather than only to defense counsel). READ MORE

March 2015 Recap

March 2015—like January and February—saw decisions on a variety of fronts from ND Cal judges.  ND Cal judges demonstrated their willingness to apply the Supreme Court’s decisions in Nautilus and Alice to invalidate patents on summary judgment.  Nautilus held claims invalid if they “failed to inform, with reasonable certainty, those skilled in the art….”  Judge Alsup applied that reasoning in Aquatic AV, Inc. v. Magnadyne Corp. et al., Case No. C 14-01931, where he found Aquatic’s asserted claims invalid, in part, because the its definition of “hermetically seals” lacked sufficient fixed meeting: “taking our patentee at its word that ‘hermetically seals’ has no fixed meaning.”  READ MORE

Inside Job – Judge Labson Freeman Applies the CFAA Restrictively

Koninklijke Phillips N.V., et. al. v. Elec-Tech Int’l Co., Ltd., et al.,, Case No. 14-cv-02737 (BLF) (March 20, 2015)

Plaintiff Koninklijke Phillips N.V. (Phillips) and its subsidiary Phillips Lumileds Lighting Company LLC sued Elec-Tech, a Chinese company, and a number of its subsidiaries and employees for the alleged theft of Phillips’ LED lighting technology.  The claim arose from the alleged theft of Phillips’ proprietary “epitaxy” technology and confidential business information by a former Phillips principal development engineer that Elec-Tech had hired, Dr. Gangyi Chen.  Phillips alleged that Dr. Chen had received up front compensation while he was still employed by Phillips and shortly before his departure to Elec-Tech. READ MORE

October Recap

October 2014 began with an echo of September, with another patent invalidated under the Supreme Court’s Alice Corp. decision on software patent eligibility under section 101. As for cases that run their entire course, Judge Wilken issued findings in a trade secret bench trial. Other decisions provided some valuable lessons for patent practitioners: we learned that a patentee may be able to obtain an injunction against a competitor, even if it doesn’t practice the infringed patent; that ND Cal judges may favor a stay of more rather than fewer patents pending IPR, once a patentee concedes that a partial stay is warranted; that a plaintiff may not be able to amend infringement contentions if public documents had put it on notice of an infringement theory; and that motions to compel may be prerequisite to a dismissal for failure to prosecute based on a plaintiff’s deficient discovery responses and contentions. Over at Patently-O, you can see some bigger picture data on patent litigation (plus speculation about what we might see from a new ND Cal case filed by HP).

Don’t Touch! A Cautionary Tale in Which Court Awards Damages, Fees, and Injunction for Trade Secret Misappropriation by Ex-Employees

Findings of Fact and Conclusions of Law, PQ Labs, Inc. et al. v. Yang Qi et al., Case No. 12-0450 (Judge Claudia Wilken)

It is not uncommon for Silicon Valley employees to switch companies, and the temptation of bringing along materials such as customer lists, pricing information and technical documents to jumpstart their new employment can be strong. It is also not uncommon for such employees to get their new companies in hot water when they act on such temptation and use the materials. Judge Wilken reminded us all that when an employee’s switch in jobs includes misappropriation of his or her former employer’s confidential intellectual property, the consequences can be severe.

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Mid-Summer Recap

This blog had some more variety in July 2014 compared to our normal ND Cal patent fare.  In a change of venue (literally), we reported on an Eastern District of California opinion holding that delay led to waiver of an improper venue defense.  Back home, we took a look at how a complaint can be self-defeating in an unfair competition and false advertising case and learned from a trade secret case that “willful and malicious” conduct, and attendant punitive damages, are available only against individuals, not corporations.  An end-of-the-month order on the level of specificity required in patent infringement contentions was more familiar ground.  If this all leaves you craving more discussion of patents, try this updated study on Federal Circuit review of claim construction.

There’s No “Malice” in this Ruling, Alec — Corporations Cannot Be Malicious, At Least Under California Law

Order Granting Partial Motion to Dismiss and Motion to Strike, Taiwan Semiconductor Mfg. Co., LTD., v. Tela Innovations, Inc., Case No. 14-cv-00362-BLF (Judge Beth Labson Freeman)

In an appearance earlier this week in San Francisco, while commenting upon the recent Supreme Court Hobby Lobby decision and other developments in the law, the actor Alec Baldwin told a crowd at a sold-out Nourse Theater that he felt corporations in the United States have all the rights of individuals, but not all of their associated responsibilities. READ MORE

May Recap

In May, we saw examples of how ND Cal judges apply the stricter pleading requirements of Twombly/Iqbal both to causes of action (such as claims for alleged breach of the GNU General Public License) and, unlike their sister districts in California, to affirmative defenses.  A pair of decisions about patent local rule contentions (analyzed here and here) reminds us to keep an eye on how contentions fit into the overall progression of a case.  In the perpetual dance between the district court and the Federal Circuit, one judge applied the Kessler doctrine, recently ruled to be alive and well, to bar further litigation over a product once found not to infringe, while another judge allowed a case to proceed for now despite the appellate court’s seemingly conclusive statements about patent exhaustion.
Meanwhile, in state court, the California Court of Appeal made waves by holding that ideas can be entitled to trade secret protection.  And on Capitol Hill, dreams of further patent reform were put on ice by Sen. Leahy’s announcement that he was taking the patent bill off the Senate Judiciary Committee agenda.

It’s the Real Deal: California Court Finds Trade Secret Protection for Ideas

Here’s a small-time Silicon Valley inventor’s worst nightmare: he shops his technology to a large multi-national company, but the company declines to implement his idea as pitched.  Instead, the multi-national company turns around and slaps its own name on the inventor’s concept, and even files its own patents covering that idea.  Of course, the technology giant also fails to give our unfortunate inventor any credit or compensation. READ MORE