The Defend Trade Secrets Act (“DTSA”) went into effect in May 2016. Since then, federal courts have largely adhered to existing law in their respective states to determine whether the inevitable disclosure doctrine applies to DTSA claims. This article provides a sampling of existing opinions that have either permitted or rejected the inevitable disclosure doctrine under DTSA claims, broken down by state. 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
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
TOTAL ECLIPSE EDITION: Trade Secret Disputes That Are Out of This World
Take off your eclipse glasses, close that NASA photo gallery, and stop thinking about how “path of totality” would make an awesome band name: it’s time to get back to work. As the country recovers from Eclipse Mania 2017, we take a look at some space-related trade secrets cases.
Someone might be stealing your trade secrets behind your back! A federal court found that’s what happened to Pacific Aerospace & Electronic, Inc. (PAE), a company that designs components for electronic circuitry in the aerospace and space exploration industries and whose products are used on the Hubble Telescope and the International Space Shuttle. According to PAE, the specialized nature of its business makes the identity of its customers—who are relatively few in number—critical to its business success. That’s why it was a problem when two PAE employees who had access to proprietary information about PAE’s technologies and customers left for a rival company, RAAD Technologies, Inc. One of the former employees allegedly copied backup tapes of design information weeks before leaving, and both employees allegedly compiled a list of prospective customers after leaving which they gave to RAAD’s sales representative for use in soliciting business. PAE brought a claim for misappropriation of trade secrets (among others) against these former employees and RAAD in the Western District of Washington, and moved for a preliminary injunction. The court ruled that PAE’s detailed customer information was a protectable trade secret, and that PAE risked irreparable harm in the absence of an injunction and would likely prevail on the merits of its misappropriation claim. However, the court limited the scope of injunctive relief only to future misuse of the trade secret customer list, rather than ongoing misuse—i.e., continued sales to wrongfully-acquired customers—as PAE had requested. The court reasoned that given the importance of PAE’s (and later RAAD’s) customers, public interest concerns favored permitting these ongoing business relationships and remedying any harm by an award of monetary damages.
PILLOW TALK: A Threat to Trade Secrets?
It turns out that, even in romantic relationships, some things are best kept secret. On July 7, 2017, Teva Pharmaceuticals USA, Inc. filed a complaint in the Eastern District of Pennsylvania alleging that a former executive disclosed confidential information to a romantic partner who happens to be an executive of one of Teva’s direct competitors. READ MORE
ROADBLOCK IN PLACE: Court Grants Limited Preliminary Injunction in Waymo v. Uber
Imagine preparing for that big meeting on your way to work, while you ride along in your car—without the need for a driver. What sounds like it might be out of a sci-fi movie, may actually be the not-so-distant future. Such technology is at the center of the Waymo LLC v. Uber Technologies, Inc. litigation. The self-driving technology at issue hasn’t been the only intriguing part of this case–the litigation itself has been action packed, and we’ve been watching closely. As you’ll recall from previous posts, Waymo alleged that, while working at Waymo, its star engineer Anthony Levandowski downloaded over 14,000 confidential files before leaving the company to start his own competing business, Ottomoto, which was later acquired by Uber. The twists and turns of this fast-paced litigation have included Uber’s denied petition for arbitration, Fifth Amendment invocations by Levandowski and his failed appeal, a criminal referral by Judge William Alsup of the Northern District of California, and now an order granting a “limited” preliminary injunction blocking any participation of Levandowski in Uber’s self-driving car project. READ MORE
“It’s a Free Country, Right?” Court Declines to Enjoin Ex-Free Country Ltd. Employees From Contacting Customers on Purloined Contact List
Within days of each other, your clothing company―Free Country Ltd.―loses two employees who decamp to a rival to set up a competing apparel line. You discover that just before leaving, they transferred some 50,000 documents to a personal account—customer orders, your master contact list, and product design information. Incensed, you file a trade secrets lawsuit and seek an injunction prohibiting the thieves from soliciting your customers. Their defense amounts to, “so what if we took the documents―it’s a free country!” Easy win, right? Wrong. These are the facts of a recent trade secrets lawsuit in the Southern District of New York, in which the court denied the plaintiff’s request that its former employee defendants be prohibited from soliciting plaintiff’s customers. READ MORE
Court Order to U-Haul: Haul Your Non-Compete Clauses Out of California
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
PUT YOUR DOCS WHERE I CAN SEE THEM: Seattle Police Enjoined From Disclosing Software Secrets in Public Records Act Dispute
What happens when trade secret protections collide with laws granting public access to government records? This question took center stage in a recent case involving the Seattle Police Department (“SPD”). A federal district court enjoined the SPD from disclosing a software vendor’s allegedly trade secret information in response to a reporter’s public records act request. Besides serving as a reminder of the precautions that companies should take when disclosing intellectual property to public agencies, the case also raises interesting questions and strategic considerations. READ MORE