A California appellate court recently upheld a permanent injunction in Robinson v. U-Haul Company of California barring U-Haul from enforcing its non-compete covenants in California. U-Haul also was required to pay over $800,000 in attorney’s fees to its former dealer. READ MORE
Companies get anxious when key employees leave to start new ventures. A company may try to shield itself from the risk of losing confidential information by seeking an injunction preventing its former employees and their new company from using or disclosing trade secrets. However, without sufficient evidence of actual misappropriation or threat of imminent harm, a company may face sanctions for bringing a misappropriation claim in bad faith, as Trade Secrets Watch has previously discussed. Filing or maintaining a premature misappropriation action carries other risks. Currently before the California Supreme Court is a malicious prosecution claim against a law firm for pursuing a meritless misappropriation suit. Parrish v. Latham & Watkins, LLP, No. S228277 (Cal. petition for review granted Oct. 14, 2015). READ MORE
The paradigmatic trade secret is something that is obviously technical, such as source code or the formula for Coke. Though trade secrets protection is not limited to technical trade secrets, it can sometimes be tricky to claim trade secrecy over non-technical trade secrets, such as customer or employee contact lists, that are commercially valuable yet may seem more accessible and therefore less secret. California Code of Civil Procedure Section 2019.210 compounds the issue by requiring a plaintiff to make a detailed disclosure of trade secrets as a precondition to frame the discovery to come. Section 2019.210 therefore immediately places an often-challenging decision upon the plaintiff—selecting what it should claim as trade secrets in litigation. READ MORE
Last week, New York attorney Douglas R. Dollinger asked the Honorable Vince Chhabria of the Northern District of California to reconsider an order sanctioning Dollinger and his client to the tune of $93,365.92 in monetary sanctions and dismissing all of the client’s claims with prejudice as terminating sanctions. The Court’s sanctions, and Dollinger’s request for reconsideration, are the result of a series of attempts by Plaintiff to manufacture standing for a company that didn’t exist. Plaintiff tried on numerous occasions to identify a company with standing, but was repeatedly countered by Defendants and eventually pounded with both monetary and terminating sanctions. READ MORE
Earlier this week, the Ninth Circuit approved a district court order from the Northern District of California imposing $5,000 in sanctions against a plaintiff’s attorney for factual misrepresentations made in an underlying trade secret case lawsuit brought by a toy inventor.
According to the complaint, California toy designer Jason Heller wanted to get a price quote for a prototype of a robotic hamster toy he had designed. He entered into NDAs with two Hong Kong toy companies and handed over information about his hamster toy idea. READ MORE
Employers know all too well that their own employees are often the most likely people to misappropriate their confidential and proprietary information and their valuable trade secrets. Employers have plenty of weapons at their disposal to combat such wrongdoing, including the assertion of claims for misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, unfair competition, and other common law or statutory claims. Another little-used but powerful weapon is the so-called “faithless servant doctrine.” READ MORE
On October 16, 2013, a federal judge in New Jersey ruled that Goldman Sachs must advance the legal fees of a former employee charged with stealing Goldman’s source code. The order is the latest twist in a case that previously gained notoriety for the Second Circuit decision reversing the ex-employee’s conviction, an unpopular decision that led to the passage of the Theft of Trade Secrets Clarification Act of 2012. READ MORE
In his classic song The Gambler, Kenny Rogers famously advised: “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run.” It’s good guidance for surviving a poker table, but also important to plaintiffs prosecuting trade secret claims. Understanding your evidence — or lack thereof — can mean the difference between winning or losing and having to pay your opponent’s attorneys’ fees.
In the recent case of All American Semiconductor LLC v. APX Technology Corp., a California appellate court affirmed a trial court’s award of $200,000 in attorneys’ fees against a plaintiff for prosecuting a trade secret case in bad faith. Though the case is not published, it is a good reminder that aggressively pursuing and maintaining trade secret claims based on speculation and suspicions, without strong evidence, can have serious consequences.
California’s Uniform Trade Secrets Act provides for attorneys’ fees when a plaintiff has brought a bad-faith trade secret claim. It states: “If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees and costs to the prevailing party.” READ MORE