Businesses that compete globally are once again reminded of the need to avoid overreaching when requiring employees to sign non-compete agreements. Earlier this year, the Court of Appeals for the Eighth Circuit affirmed a ruling that a non-compete agreement was unreasonable on its face and thus enforceable because it imposed a blanket prohibition on the employee’s ability to seek employment of any kind with a competitor worldwide. While the Eighth Circuit recognized that non-compete agreements had been upheld in the past despite containing no geographic limitations, the court distinguished those agreements on the basis that they contained narrowly circumscribed prohibitions. The Eighth Circuit’s analysis provides a valuable “lesson learned” for businesses crafting or considering an effective non-compete. READ MORE
President Obama wants to go where the Supreme Court refused to tread. As part of his cybersecurity and privacy initiatives, which we discussed last week, the President would strengthen the federal anti-hacking provisions of the Computer Fraud and Abuse Act (CFAA), including an expansion of activity covered by the statutory phrase “exceeds authorized access.” In so doing, the President would resolve a circuit split between the First, Fifth, Eighth, Seventh, and Eleventh Circuits, on the one hand, and the Ninth and Fourth Circuits, on the other. His reason? “No foreign nation, no hacker, should be able to shut down our networks, steal our trade secrets, or invade the privacy of American families.” READ MORE
Orrick’s Chris Ottenweller and Derek Knerr recently took to Law360 to review recent cases involving theories of third-party liability for trade secret misappropriation. New employees are one obvious source of potential liability if they bring to the job information obtained from their prior employer. But in recent years companies have also increasingly faced suits based on relationships with contractors and vendors. Chris and Derek offer some practical considerations to help companies mitigate potential liability in the first place.
The start of a new year is a perfect opportunity to set lofty goals of self-improvement. While the odds of completing a New Year’s resolution aren’t exactly inspiring (over half are expected to fail within six months) studies still show that people who make specific resolutions are more likely to achieve their goals than those who don’t. The payout for making a specific plan (particularly when it comes to protecting trade secrets) can be quite rewarding. READ MORE
The U.S. District Court for the Southern District of New York recently cleared the way for a Michigan watchmaker to pursue claims for trade secret misappropriation, among other things, against two former employees who left to work with a competitor, but not without first dismissing claims based on tortious interference with contract.
For companies whose business model depends on a key contract (e.g., with a licensor, vendor, or supplier), the biggest worry with departing employees might not be the theft of intellectual property or trade secrets—but rather the loss of the contract or business relationship.
The European Union appears poised to enact a sweeping new legal regime that would harmonize trade secrets law across all member states.
It’s been a year since we wrote about a new EU proposal to regulate trade secret protection. Then, at the end of November 2013, the EU published its first draft proposal for a Directive on the protection of trade secrets.In May of this year, the Council of the European Union agreed on a revised draft Directive. (In contrast to European Regulations, European Directives do not apply directly as member states’ law, but only give objectives that the Member States must achieve within a specified time limit in order to harmonize their various national rules. This means that, in fact, trade secrets rules will not be “unified” but rather “similar” across the Continent.)
From a birds-eye view, Cellular Accessories For Less, Inc. v. Trinitas, LLC appears to be a typical dispute between an employer and its former employee. However, a closer look reveals an issue new to the world of trade secrets—specifically, do LinkedIn contacts qualify as trade secrets? For now, they may: a federal judge in the Central District of California denied defendants’ motion for summary judgment last month, finding there were triable issues of material fact surrounding the question whether LinkedIn contacts were protectable trade secrets. READ MORE
On August 22, 2014, the Texas Supreme Court ordered oral argument in In re: Magnum Hunter Resources Corp., a case concerning the discoverability of third-party trade secrets documents in civil cases. When should such documents be produced? And who gets to see them?
A simple summary of the facts of Magnum Hunter are as follows:
Party A hires Law Firm to help it negotiate a contract with Party B regarding an oil and natural gas venture. Party A and Party B ultimately reach an agreement on the venture and enter into a contract that says that Party B will provide to Party A all reports related to the venture upon request, provided that Party A agrees to treat such reports as confidential information.
Confidentiality agreements can be useful to a company. For example, they can ensure that employees are aware of their company’s valuable trade secrets and can establish requirements to safeguard those assets. But when do these non-disclosure agreements go too far? READ MORE
You wake on a Tuesday morning expecting to have an average day at work. You are skimming through the emails that came in while you were asleep, when you notice an email from one of your employees. He is not only giving his resignation, but is also, more importantly, demanding a ransom in exchange for not disclosing company trade secrets and other highly confidential information. What do you do?