James McQuade, a partner in the New York office, is a member of the employment law and litigation group.
Jim represents employers on a broad range of employment matters, including whistleblowing, discrimination, retaliation and wrongful termination matters. He has extensive experience handling matters involving misappropriation of trade secrets and the enforcement of non-competition and non-solicitation agreements. He also regularly defends financial services firms in employment-related arbitrations before the AAA, JAMS and FINRA. Jim is routinely engaged by public and private companies to conduct internal investigations.
A $700 million jury award for trade secrets misappropriation and fraud is the product of a collusive scheme to deceive the jury, claims title insurance and valuations provider Amrock, formerly known as Title Source, in its recent bid for a new trial.
The blockbuster award to technology start-up HouseCanary arose out of its 2015 contract to provide Amrock with access to its proprietary app designed to generate real estate valuations for house appraisers based on a proprietary automated valuation model. Several months later, Amrock accused HouseCanary of breaching the contract by failing to provide any usable products. Amrock terminated the agreement and sought a declaratory judgment in Texas state court that it need not pay HouseCanary the contracted $5 million in annual access fees. HouseCanary countersued, claiming that Amrock used HouseCanary’s products and offerings without paying for them, collected a “critical mass” of HouseCanary’s proprietary data, and ultimately used that information to “secretly replicate” HouseCanary’s protected technology and intellectual property. HouseCanary ultimately convinced the San Antonio jury that Amrock lied about its intended purpose in entering the contract and that Amrock misappropriated HouseCanary’s data and technology to develop competing property analytics and software. In March 2018, the jury awarded HouseCanary $200 million for trade secrets misappropriation, $400 million in punitive damages for the misappropriation, $34 million for fraud relating to the contract, and $68 million in punitive damages for the fraud. In October 2018, the judge upheld the award and ordered Amrock to also pay $29 million in prejudgment interest and $4.5 million in attorneys’ fees. READ MORE
Just two days after TSW’s inaugural post, we brought you news of Texas becoming the 48th state to enact some form of the Uniform Trade Secrets Act (UTSA).
Now, roughly five years and one federal trade secrets statute later, Massachusetts has become the 49th state, leaving New York as the lone holdout. The new law, which takes effect on October 1, 2018, is part of an amendment to a $1.1 billion economic development bill that Massachusetts Governor Charlie Baker signed into law on August 10, 2018. With the enactment of the UTSA, Massachusetts courts will have newfound power to enter injunctions against actual or threatened misappropriation of trade secrets.
In July 2018, a federal judge in Wisconsin imposed a $1.5 million penalty—the maximum statutory fine—against Chinese wind turbine manufacturer, Sinovel Wind Group Co. Ltd., for stealing trade secrets from Massachusetts-based technology company, AMSC Inc. In addition to the fine, Sinovel was sentenced to 1 year probation and ordered to pay $57.5 million in restitution to AMSC, an amount the companies had settled on prior to the ruling. Sinovel also agreed to pay $850,000 to Massachusetts wind turbine operators. READ MORE
On May 3, 2018, the New York Court of Appeals held that data copied onto a server constitutes a tangible reproduction for purposes of liability under the New York Penal Code, marking the end of Sergey Aleynikov’s nine year battle with federal and state prosecutors. Trade Secrets Watch has kept you up to date with the seemingly never-ending saga – most recently here, here, and here.
As a refresher, Programmer Sergey Aleynikov was accused of copying thousands of lines of code from his former employer, Goldman Sachs Group Inc. in July 2009. The Second Circuit upheld Aleynikov’s conviction under the National Stolen Property Act (NSPA) and the Economic Espionage Act (EEA), but later prompted legislative changes when it reversed, finding that Aleynikov had not stolen a “good” as defined by the NSPA, nor a trade secret intended for use in interstate or international commerce, as required by the EEA. READ MORE
Christopher Hughes worked for Age Industries, Ltd. (“AI”) for nearly 20 years. He was the general manager of one of AI’s branch facilities and a limited partner of the company. In this role, Hughes had access to much of AI’s proprietary and trade secret information, including specialized customer pricing information, financial reports, and business strategies. After leaving AI, Hughes became the operations manager of a new competitor in the corrugated packing materials market—Diamondback Corrugated Container, LLC. READ MORE
Non-compete agreements have long been used by employers as an effective tool to protect their valuable trade secrets and confidential information. However, employers’ overuse of non-compete agreements and employers’ practice of requiring all of their employees to sign non-compete agreements recently has come under significant attack by federal and state governments. In July, Trade Secrets Watch discussed some of those recent attacks. Since July, there have been a number of additional efforts by government to prohibit the overuse of non-compete agreements. READ MORE
It is no secret that the European Union’s (“EU”) Directive on Trade Secrets was a long time in the making. The Directive was first proposed in November 2013. After roughly two years of debate and revision, the revised Directive was published in December 2015. On April 14, 2016, the debate ended, and the European Parliament voted to adopt the Directive with no further amendments. The resolution approving the Directive passed by 503 votes to 131 votes with 18 abstentions. This morning, the EU Council unanimously adopted the Directive on Trade Secrets. READ MORE
Companies seeking protection under the California Uniform Trade Secrets Act (“CUTSA”) should consider the effects of CUTSA preemption on their litigation strategy. Under the well-known Silvaco Data System v. Intel Corporation case and its progeny, CUTSA provides the exclusive civil remedy for trade secret misappropriation and supersedes other tort claims based on the same nucleus of facts as any trade secret claims that are or could be pled. READ MORE
It is one of those magical times during the year when sports fanatics can enjoy three major American sports all at the same time: the MLB playoffs are in full swing; the NFL season has finally kicked off; and the NHL saw the puck drop for the first regular season game a couple weeks ago. But between the throngs of fans cheering (or booing) their teams, we at TSW wanted to take a moment to reflect on the sophisticated trade secrets disputes that are at the heart of the sports and entertainment industry. READ MORE
The United States Court of Appeals for the Fifth Circuit recently revisited the issue of the Copyright Law preemption of trade secrets claims in Spear Marketing, Inc. v. Bancorpsouth Bank. The decision not only resolved the scope of Copyright Law preemption in the Fifth Circuit, but also made clear that the Fifth Circuit “join[s] the majority position” to hold that state law claims based on ideas fixed in tangible media are preempted by §301(a). The decision creates greater clarity and uniformity in Copyright Law preemption and should help litigants avoid wasting resources by filing actions based on state law claims that are preempted. READ MORE