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.
Running Interference: S.D.N.Y. Lays Out Standards for Tortious Interference in Dispute Between Watchmaker and Former Employees
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.
New Strings Attached: LinkedIn Contacts Are Now Trade Secrets?
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
FOURTH OF JULY EDITION [FROM THE ARCHIVES]: Family Fireworks: Plot to Steal Client Lists Goes Up in Smoke
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.
We wish all our readers and safe and happy holiday weekend. We’ll return to our regular blogging and tweeting schedules on Monday. READ MORE
Enforcing Non-Competes Against Telecommuters
The number of people working from home, or “telecommuting,” has increased over time, with Census data showing that 17 percent of American employees do their jobs remotely. When someone is working very far from the office, even out-of-state, to what extent can an employer enforce non-compete obligations against employees who leave their jobs? READ MORE
THANKSGIVING POST: Court Protects Quizno’s Franchise Turkey Trade Secrets
This Thanksgiving, Trade Secrets Watch is serving a delicious tale about protecting trade secrets in a franchising relationship.
In 1994, Quizno’s entered into a franchise agreement with Robert Kampendahl, an enterprising fellow who wanted to open up a Quizno’s sandwich shop in St. Charles, Illinois. Unfortunately, Kampendahl didn’t keep his food equipment clean, used unapproved foods, and had safety and sanitation problems, so Quizno’s terminated the franchise agreement. Upon termination, Kampendahl was subject to a covenant not to compete that prohibited him from opening a competing sandwich shop within five miles. READ MORE
FOURTH OF JULY EDITION: Family Fireworks: Plot to Steal Client Lists Goes up in Smoke
For many, Fourth of July festivities wouldn’t be complete without a baseball game, a family barbecue, and of course, fireworks. But for one family-operated fireworks company in California, its members had an unhappy reunion in court when a great-grandson’s decision to leave the family business exploded into a dazzling dispute over trade secrets.
According to court papers, Manuel de Sousa and his family immigrated to the San Francisco Bay Area from Portugal in the early 1900s and set up a fireworks business for local Portuguese community celebrations. Manuel eventually passed the family business to his son Alfred, who then passed it on to his grandson Bob.