Ex-Employee Misappropriation

This Trade Secret Suit Doesn’t Infringe on Free Speech

Can defendants use anti-SLAPP statutes to dismiss meritorious trade secrets misappropriation lawsuits?  A recent decision by the Fifth District Court of Appeals in Dallas suggests not.

Numerous states have passed some form of anti-SLAPP legislation to prevent parties from using litigation as a tool to silence individuals from exercising their First Amendment rights.  Texas, in particular, enacted the Texas Citizens Participation Act (“TCPA”) back in 2011 to “protect citizens from retaliatory lawsuits that seek to silence or intimidate them for exercising their rights in connection with matters of public concern.”  The TCPA provides an avenue for individuals to summarily dispose of such lawsuits designed to chill their First Amendment rights. READ MORE

Protecting IP in a COVID-19 Remote-Work-World

Even before the COVID-19 pandemic, many employers offered remote work options. Now employers all over the world are encouraging or requiring their employees to work remote from home. This means employees are accessing, maintaining, and sharing proprietary information outside of the office more frequently than ever before, thereby increasing the risk of employee and third-party IP theft. READ MORE

Pleading “Sufficient Particularity”: Technical Trade Secrets Require More

It’s common sense that, to protect a trade secret, the information must remain secret. However, when trade secret misappropriation claims arise and litigation ensues, the court and the parties involved need to understand at least the broad confines of the alleged trade secret. While the Federal pleading standard for a plaintiff’s complaint is the same regardless of what the trade secret may be—namely, that the plaintiff include sufficient particularity of the trade secret’s subject matter—what constitutes “sufficient particularity” will depend on the type of information alleged to be a trade secret. AlterG, Inc. v. Boost Treadmills LLC, a recent decision in the Northern District of California, highlighted this fact when the court found the plaintiff had adequately pleaded facts to describe one trade secret, but failed to do so for another. READ MORE

Intent to Use is Sticking “Pointe” In Denial of Preliminary Injunction

On October 25, the U.S. District Court for the District of Massachusetts denied motions for injunctive relief in a case involving trade secrets allegedly stolen by a departing consultant using his personal computer to sync with the company’s Dropbox.  This case established (1) Massachusetts’ newly enacted Uniform Trade Secrets Act (“UTSA”) does not apply retroactively even if the violation is continuing; and (2) intent to use a trade secret is a hurdle which Plaintiffs can struggle to show where there is not evidence of actual use and the defendant takes steps at remediation. 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

Don’t Rock the Boat: Eleventh Circuit Sinks Boatmaker’s Trade Secrets Claims Against Rival

On August 7, 2018, the Eleventh Circuit affirmed summary judgment in favor of defendant in Yellowfin Yachts v. Barker Boatworks, LLC. Sending the rival high-end boatmakers back to shore after a two-year dispute, the Eleventh Circuit concluded, among other things, that plaintiff had not done enough to maintain the secrecy of its alleged trade secret information. READ MORE

In Hawaii, “Aloha” May Mean Both Hello and Goodbye, But When Employees Leave, Who Owns the Customer Relationships?

As we’ve observed over the years, when addressing trade secrets claims based on customer lists, courts have landed all over the place. These cases involve difficult questions such as when an employee develops relationships on behalf of Company A but then leaves for Company B, who “owns” those relationships?

A recent federal district court decision from the District of Hawaii, WHIC LLC dba Aloha Toxicology v. Nextgen Labs, Inc., offers an example of how the severity of the alleged misconduct may enable the employer to prevail, even if it can make only a marginal showing on the existence of a trade secret. On September 17, 2018, the court granted the plaintiff drug testing company’s request for a preliminary injunction, requiring, among other things, its competitor to stop servicing certain former clients of the plaintiff. READ MORE

Defining Trade Secrets: Texas Supreme Court May Soon Decide How Particular Trade Secrets Owners Must Be in Court

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

David Nosal Raises Unusual Fairness Argument in Yet Another Attempt to Avoid 366-Day Prison Sentence

Just over four years ago, in January 2014, a court sentenced former Korn/Ferry regional director David Nosal to one year and one day in prison for violations of the federal Computer Fraud and Abuse Act and the Espionage Act.  Nosal appealed the sentence, but his appeals ultimately failed: the U.S. Court of Appeals for the Ninth Circuit upheld Nosal’s sentence, and the U.S. Supreme Court denied review of the case.  Luckily for Nosal, his 2014 motion for release pending appeal was granted, so he has not served any time during the four years of appeals. READ MORE