First rule of thumb in trade secrets litigation? A trade secret must be kept secret. It is painfully obvious, but modern practitioners must not grow complacent due to the convenience of electronic filing. Although trade secrets law does not command absolute secrecy, a recent e-filing snafu in HMS Holdings Corp. v. Arendt offers a cautionary tale from New York on how one botched upload could jeopardize a client’s most prized possession. READ MORE
Congress is getting into the non-compete business. Citing the use of non-compete agreements by companies such as Jimmy John’s sandwich shops, Senate Democrats recently introduced a bill—called the Mobility and Opportunity for Vulnerable Employees (MOVE) Act—that would amend the Fair Labor Standards Act (FLSA) to prohibit the use of non-compete agreements for low-wage employees. READ MORE
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
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
As Americans head for the beach or the barbecue to celebrate the Fourth of July (many with a bolstered sense of patriotism following the United States’ valiant World Cup efforts), Trade Secrets Watch marks this Independence Day by pulling an explosive story from its archives.
Pyro Spectaculars North, Inc. v. Souza is a case that’s full of fireworks—literal and figurative—as a family pyrotechnics business broke apart, with one member starting a rival company, apparently armed with a USB and a hard drive of purloined client lists and other company files. You can read our full post below the jump.
TSW editor Mike Weil takes to The New York Times to explain how non-compete agreements protect the legitimate business interests of employers but must also balance the rights of former employees and the public.
On April 10, 2014, Massachusetts Governor Deval Patrick proposed a bill entitled “An Act to Promote Growth and Opportunity.” Under this lengthy bill, Massachusetts would finally adopt the Uniform Trade Secrets Act, to which only it and New York currently do not adhere. But the provisions of the bill relating to non-competition agreements are what have received the most attention from the businesses community.
Under the proposed legislation, with the aim of increasing mobility of labor, non-competition agreements between Massachusetts employers and employees or independent contractors would be impermissible and void: READ MORE