It’s among an in-house counsel’s worst nightmares. A former business partner, ex-employee, consultant, or competitor has stolen your company’s trade secret information. Company management demands swift action. You hire outside counsel who, after reviewing your company policies and interviewing stakeholders, tells you that he or she is concerned about being able to establish that your company took “reasonable efforts” to protect the information. Listening to the feedback, you realize with a sinking feeling that these were steps that you, as in-house counsel, may have been able to implement if you had only thought about the issue sooner. READ MORE
Senate Judiciary Committee Creates IP Subcommittee to Combat IP Theft
Last week, the United States Senate Judiciary Committee announced the creation of a new subcommittee on intellectual property. The IP subcommittee will address a range of IP issues, including theft by state actors such as China. The announcement of the subcommittee comes in the wake of increasing tension over trade with China and shortly after the Department of Justice announced criminal charges against China’s Huawei Technologies for alleged trade secrets theft. READ MORE
Bad Artists Copy. Good Artists Steal: Trade Secrets in the Art World
“Bad Artists Copy. Good Artists Steal” – Pablo Picasso
In the small world of exclusive and upscale art sales, competing galleries inevitably form and maintain relationships with one another. This is the case for Lévy Gorvey gallery partner Dominque Lévy, and Lehmann Maupin Group co-founder Rachel Lehmann, who have known each other for over 20 years. Now, Lehmann Maupin is involved in a trade secrets fight with their former sales director, Bona Yoo, who is currently employed by Lévy Gorvey. In this tightknit artist’s community, the news of a trade secrets lawsuit against a former employee is admittedly more shocking than the typical Silicon Valley trade secret theft story, where employees leave for competitor companies as frequently as they come. But it should not be surprising that trade secrets in the art industry are just as valuable to their owners as they are to tech industry leaders—because in both worlds, client relationships are key. READ MORE
T-R-NO: Nevada District Court Denies Motion for TRO Despite Evidence of Mass Download of Company Files and Steps Taken to Cover Tracks
Our readers have seen enough of our blog posts to be familiar with the classic ex-employee trade secrets theft scenario: employee downloads confidential files to his personal computer; employee attempts to cover his tracks with deletions of those files; employee resigns from the company to work for a competitor. When such a classic case results in litigation, the plaintiff company typically succeeds in obtaining injunctive relief against the ex-employee. We posted about one successful preliminary injunction motion last year. A recent district court decision out of the District of Nevada, however, shows that a motion for TRO on seemingly slam-dunk facts is never guaranteed. This decision highlights two important takeaways for litigators: (1) if your client is facing imminent business harm, seek an injunction immediately; and (2) in the Ninth Circuit, there is no presumption of irreparable harm, even if the evidence shows trade secret misappropriation or a breach of the employee’s confidentiality agreement. READ MORE
Trade Secret Sparks Beer Brawl in the Ninth Circuit: When is Your Word Enough?
On September 13, the Ninth Circuit heard oral arguments on an issue of first impression in Anheuser-Busch Cos. v. James Clark, No. 17-15591 (9th Cir. 2015).
Anheuser-Busch filed a complaint in the Eastern District of California against former employee James Clark, alleging that he violated California’s Uniform Trade Secrets Act (CUTSA) by unlawfully disseminating a document containing its beer recipe for use in a separate class action suit. To support its allegations, the company submitted a declaration stating that the leaked document contained “confidential information related to Plaintiffs’ brewing processes, including but not limited to, information regarding a variety of analytical characteristics for each of [Plaintiffs’] products.” READ MORE
Engineering a DTSA Claim: District Court Allows Broad Allegations to Survive Motion to Dismiss
The strange contraption in this photo is at the heart of a recent decision regarding the pleading standard for DTSA claims. On June 15, Eastern District of Pennsylvania Judge Juan Sanchez denied a motion to dismiss counts of trade secret misappropriation against Joshua Andrew Adams, a former project engineer for PDC Machines, Inc. who left the company and later joined Nel Hydrogen A/S. PDC and Nel collaborated in 2008 to develop high-pressure hydrogen gas diaphragm compressors and signed a nondisclosure agreement (NDA) barring Nel from replicating or reverse engineering the technology. Adams was also subject to an NDA that prohibited him from using any of PDC’s confidential information and trade secrets without written permission. In the complaint, PDC asserts that Adams now works for Nel, and that Nel has filed at least one patent application listing Adams as the inventor for a high-pressure diaphragm hydrogen compressor that is nearly identical to PDC’s version. READ MORE
Federal Circuit Illuminates Right to Disgorgement as Remedy for Trade Secret Misappropriation
The Federal Circuit recently issued an opinion, Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., that addressed several interesting issues impacting the calculation of damages in trade secret actions. Perhaps the Court of Appeals’ ruling of greatest consequence involved its determination that there is no Seventh Amendment right to a jury decision on disgorgement of profits – a remedy also often commonly described as “unjust enrichment.” The Federal Circuit instead ruled that the calculation of disgorgement damages is for the trial court to decide after making findings of fact and conclusions of law. If the decision is extended by other federal courts, it could have wide-reaching implications for claims under the Defend Trade Secrets Act, which allows for unjust enrichment damages as a remedy for misappropriation of trade secrets. READ MORE
Upon Reflection, Some Trade Secrets May Be Less Secret Than They Appear
A recent case in Florida is a reminder that when dealing with government entities, trade secrets may be disclosed to the public, especially if that information has been aggregated. The District Court of Appeal of Florida affirmed a circuit court’s ruling ordering Broward County to produce information that Uber claimed were trade secrets. Uber and Broward County had entered into an agreement governing Uber’s services at the airport and Port Everglades. Part of the agreement required that Uber provide Broward County with monthly self-reports. These reports contained both aggregated data and granular data. The aggregated data was comprised of the total number of pickups and drop-offs at the airport and seaport, multiplied by the fee in each of those zones. The granular data included a time stamp, longitude and latitude of pick-ups or drop-offs, and the first three characters of the driver’s license plate. Per the agreement, Uber marked these monthly reports as containing trade secrets exempt from Florida’s Public Records Act, which Broward County was required to keep confidential. READ MORE
Trade Secrets and Start-Ups: What to Do When Secrets Walk Out the Front Door
Start-ups often face a complex relationship with their trade secrets. Many of the strengths of early stage start-ups, such as collaborative work among a small number of business partners and open access to proprietary information by all team members, can obfuscate clear ownership rights and confidentiality obligations concerning trade secrets. The first employees of a company will also often feel a strong sense of ownership over his work, which can sometimes lead to the employee considering work developed for the company as his property, rather than the company’s. While proprietary information is often the lifeblood of the business, it can be expensive for young companies to protect. However, there are a number of inexpensive and overlooked best practices that can safeguard trade secrets without slowing down productivity or altering the company’s culture. READ MORE
Juicing Up Your Policies: How To Protect Your Trade Secrets
Recently, popular Southern California juice and aguas frescas chain Green Crush filed suit against up-and-coming rival juice bar Paradise Splash and several individuals. The lawsuit, filed in the U.S. District Court for the Central District of California, alleges 16 claims including misappropriation of trade secrets, trademark infringement, and breach of contract.