Don’t Friend My Friends: Nonsolicitation Agreements Should Account for Social Media Strategies

As social media becomes an important part of many companies’ sales and branding strategies, issues relating to companies’ ability to protect their investments in such strategies are emerging. Indeed, this blog has previously covered whether LinkedIn contacts can qualify as trade secrets (answer: maybe). Another such issue, recently addressed in a district court in Idaho, is whether and to what extent a nonsolicitation agreement can restrict a former employee’s Facebook interactions with the former employer’s customers. READ MORE

Misappropriation Versus the Copyright Act: Round 2 in the Fifth Circuit

A few months ago, Trade Secrets Watch covered the GlobeRanger Corp. case in which the Fifth Circuit joined 10 other circuits in determining that the Copyright Act does not preempt state trade secret misappropriation claims. The court used a two-prong test in its analysis, establishing that the Copyright Act could preempt a state law claim if two conditions are met: (1) if the work at issue fell within the subject matter of copyright; and (2) if the right that the litigant sought to protect was equivalent to any of the exclusive rights within the general scope of copyright. READ MORE

Causing a Brouhaha: Trade Secrets Disputes in the Craft Beer Industry

In recent years, the craft beer craze has taken ahold of the country and has resulted in an explosion of new microbreweries and enthusiasts. Several websites, like BeerSmith, allow users to share recipes with others; other websites, like BrewCraft, sell their recipes for home brewing.  In fact, some craft beer aficionados have even created beer trading exchanges to secure their hard-to-find favorites.  Even when a popular beer is discontinued, other microbrewers look to fill the void left on everyone’s taste buds with beers of their own.  For instance, when Russian River’s legendary craft brew Pliny the Elder was pulled from certain markets, craft brew fans raced to find similarly tasting alternatives to quench their thirst.

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Supreme Court Deflates Sino Legend Cert Petition

On Monday, January 9, the Supreme Court denied a petition for certiorari from Sino Legend Chemical Co., Ltd., concluding litigation that began with a Section 337 complaint filed more than four‑and‑a‑half years ago by SI Group, Inc. In January 2014, the International Trade Commission found that Sino Legend, a Chinese company, misappropriated SI Group’s rubber resin trade secrets and issued an exclusion order, barring the importation of Sino Legend products made using these trade secrets for 10 years.

The TSW has extensively covered this case with posts on the ITC Administrative Law Judge’s Initial Determination, the Commission’s decision, the Federal Circuit’s Rule 36 affirmance, and Sino Legend’s cert petition.

The case attracted the attention of the Chinese government, which filed an amicus brief in support of Sino Legend’s cert petition—the first amicus brief ever filed by the Chinese government in the U.S. Supreme Court, according to Sino Legend. The Chinese Trade Remedy and Investigation Bureau (“TRB”), a branch of the Ministry of Commerce, forcefully argued that the Supreme Court should grant Sino Legend’s petition and reverse the ITC’s decision:

The TRB is disappointed by recent actions of the ITC. In wrongly interpreting Section 337 of the Tariff Act to allow the ITC to bar imports into the United States based on alleged actions conducted, and adjudicated, wholly within the borders of China, the ITC has impugned the sovereignty of China and refused to accord the comity expected of a trade partner.

TRB Brief at 2.

The TRB criticized the ITC’s “expansion” of the Federal Circuit’s TianRui decision “to bar products from entering the United States for conduct that not only occurred completely within China’s borders by Chinese citizens working at Chinese companies, but also conduct that was adjudicated in China to have been lawful.” (Id. at 1.) Citing Judge Moore’s dissent, Sino Legend’s petition also criticized TianRui as incompatible with the presumption against extraterritorial application of federal statutes.

The Supreme Court’s denial of Sino Legend’s petition for certiorari is significant because it appears to cement the extraterritorial reach of Section 337 inasmuch as the offending conduct relates to products that are imported into the United States. Thus, the ITC remains a powerful forum for companies with significant operations in the United States to seek redress for misappropriation of trade secrets. Read more broadly, TianRui and its progeny may provide the ITC with the authority to investigate other types of “unfair acts” that occur outside the United States, provided—again—that those acts pertain to products that are imported into the United States.

 

The ITC Investigation was captioned Certain Rubber Resins and Processes for Manufacturing Same, Inv. No. 337-TA-849.

The Supreme Court docket was captioned Sino Legend (Zhangjiagang) Chem. Co. Ltd. et al. v. Int’l Trade Comm’n et al., No. 16-428.

“It’s a Free Country, Right?” Court Declines to Enjoin Ex-Free Country Ltd. Employees From Contacting Customers on Purloined Contact List

Within days of each other, your clothing company―Free Country Ltd.―loses two employees who decamp to a rival to set up a competing apparel line.  You discover that just before leaving, they transferred some 50,000 documents to a personal account—customer orders, your master contact list, and product design information.  Incensed, you file a trade secrets lawsuit and seek an injunction prohibiting the thieves from soliciting your customers.  Their defense amounts to, “so what if we took the documents―it’s a free country!”  Easy win, right?  Wrong.  These are the facts of a recent trade secrets lawsuit in the Southern District of New York, in which the court denied the plaintiff’s request that its former employee defendants be prohibited from soliciting plaintiff’s customers. READ MORE

DTSA Immunity: A Plaintiff’s Dream Or A Burdensome Nightmare?

If you are a regular reader of TSW, you know we have been monitoring developments relating to the Defend Trade Secrets Act of 2016 (DTSA). While the Northern District of California was the first court to enter a written opinion under the DTSA, case law is continuing to develop across the country, including in the First Circuit. READ MORE

Baring It All: Judge Orders Swingers’ Club to Produce Email Distribution List

A recent case in the Southern District of Florida serves as a reminder that even trade secrets may be subject to production to opposing counsel. Magistrate Judge Jonathan Goodman recently ordered a defendant “swingers’” club to produce its email distribution list to plaintiffs in Edmonson v. Velvet Lifestyles, LLC (S.D. Fla. Dec. 5, 2016). READ MORE

Wake Forest Leaks Scandal May Offer “Playbook” For Businesses Seeking Trade Secret Protection

After a long political season that took many twists and turns due in part to revelations from WikiLeaks, the holiday season finally arrived. For many, that meant family traditions, time away from work, and massive amounts of college football, thanks to the current litany of televised bowl games.

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Password Sharing Is Not a Crime, Ninth Circuit Reassures in Denial of Nosal’s Request for Rehearing

Since the early days of this blog, we’ve been covering the ongoing legal battle involving ex-Korn Ferry recruiter David Nosal as it winds its way through the courts. The latest chapter in this saga came on December 8, 2016, when a Ninth Circuit panel clarified that the Computer Fraud and Abuse Act (CFAA) does not criminalize innocent password sharing, in a published opinion denying Nosal’s request for a rehearing en banc. READ MORE

Diamonds Are Forever, but Joint Ventures Are Not: Court Finds Claims Preempted by CUTSA in Business Deal Gone Bad

The holiday season is officially upon us: peppermint mochas have popped up on coffee shop menus, carols ring from department store speakers, and you can’t turn on the television without seeing at least three diamond commercials. But it’s not all yuletide and merriment for those in the diamond business. As one diamond importer and wholesaler recently learned, sometimes instead of a gem you get a lump of coal—in this case, from the Northern District of California, which tossed out certain claims against a former business partner on the grounds those claims were preempted by the California Uniform Trade Secrets Act. READ MORE