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
When National Fish and Seafood’s (NFS) head of research left for a new opportunity at Tampa Bay Fisheries, she may not have taken just her talents to the competition. According to NFS’ lawsuit, the former employee transferred thousands of files containing confidential and proprietary information prior to her departure from the company. NFS also alleges that the CEO of Tampa Bay Fisheries conspired with NFS’s former employee to steal trade secrets involving its proprietary clam production process.
In some cases, there may be a severe cost – even a monetary cost – for plaintiffs who seek to materially amend their trade secrets disclosure following discovery. This is what happened to the plaintiff, Swarmify, in its lawsuit against Cloudflare, now pending in the U.S. District Court for the Northern District of California.
As we reported previously, on February 27, 2018, the court in this case denied Swarmify’s motion for a preliminary injunction for failure to show irreparable harm. At that time, the court commented that Swarmify’s trade secrets disclosure, produced pursuant to California Code of Civil Procedure Section 2019.210, was severely overbroad and “ever-shifting,” which the court characterized as a “blatant abuse of the system.” READ MORE
Judge Vince Chhabria of the Northern District of California handed down a strongly worded order denying a motion to seal alleged trade secret information, and sanctioning counsel for defendant for the frivolous request. The order is a stern reminder to the sanctioned attorneys and to trade secret litigants in federal court generally that federal litigation is traditionally a public process, and that parties seeking to remove documents from the public’s access often face an uphill battle in order to do so. READ MORE
Last week, multinational mining giant Rio Tinto asked a federal court in Manhattan to shield its document disclosures to the Securities and Exchange Commission (SEC) from the public eye. Unlike the typical cases we discuss involving former employees working for competitors, Rio Tinto is defending against fraud claims brought by the SEC that implicated the company and two of its former top executives. READ MORE
In every trade secrets case, the plaintiff faces the same fundamental dilemma: In order to enforce their rights in court, they must identify (at least to some degree) the trade secrets at issue. Although California has adopted a reasonable particularity requirement by statute, how much detail plaintiffs must provide when identifying their trade secrets in litigation continues to vary state-by-state. The answer is no clearer under federal law, as the Defend Trade Secrets Act is silent as to this issue.
Notwithstanding, the level of particularity required is an ongoing issue that courts continue to grapple with. For example, Texas’s highest court may weigh in for the first time on the degree of specificity plaintiffs must provide when identifying trade secrets allegedly misappropriated under the Texas Uniform Trade Secrets Act (TUTSA). READ MORE
Whenever a trade secret owner asserts its rights in court against a party alleged to have misappropriated the trade secret, there is always a risk that the trade secret will be publicly disclosed during discovery or during trial, thereby resulting in a further uncontrollable dissemination of the trade secret. The owner also faces a risk that information not included in the originally misappropriated information, will be disclosed during discovery, thereby possibly giving the adversary a free peak at new information. One way to guard against the risk of such disclosure is the use of “AEO” or Attorneys’ Eyes Only designations in litigation protective orders for highly confidential materials, which limits the parties who can review such highly confidential information to attorneys only. But as a recent case reminded us, the right to designate documents as AEO is not automatic; this protection of the plaintiff’s trade secrets and other highly confidential materials must also be balanced against the right of defendants to assist in their own defense. READ MORE
In trade secret cases, it is often the case that a defendant company and employee accused of trade secret misappropriation enter into a joint defense agreement. Often under such JDAs, facts, strategies and documents are shared with the understanding that they will remain confidential. READ MORE
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
Virgin Galactic expanded and continued its attack on its former VP of Propulsion, Thomas Markusic, and his new company, Firefly Space Systems, this month. Markusic co-founded Firefly around the time he left Virgin Galactic, and the two companies compete in the market for rockets capable of launching small and medium sized satellites into lower earth orbit. As the demand for services from such satellites increases steadily; the race to provide a more cost effective method for delivering those satellites into space is also growing and becoming more competitive. READ MORE