Courts Still Heavily Favor Rule 65 TROs Over DTSA Ex Parte Seizures

Temporary Restraining Order acronoym in front of gavel image Courts Still Heavily Favor Rule 65 TROs Over DTSA Ex Parte Seizures

The Defend Trade Secrets Act of 2016 was signed into law by President Obama on May 11, 2016. While the DTSA has been on the books for over a year, relatively few courts have addressed the ex parte seizure provision and even fewer have actually granted a seizure under the DTSA.  This is likely due to the DTSA’s requirement that courts order property seizures only in extraordinary circumstances.  In other words, courts are hesitant to grant DTSA ex parte seizure requests unless it is clear that the alleged misappropriator would disobey a TRO or preliminary injunction, or otherwise destroy, move, or hide trade secrets.  Courts continue to favor FRCP 65 TROs and preliminary injunctions to protect trade secrets from disclosure or destruction.  Under FRCP 65, courts can issue TROs and preliminary injunctions, but cannot order U.S. Marshalls to seize property from a defendant without notice.  The following cases are illustrative.

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A “Virtual” Home Is Not a Home: Court Sanctions Plaintiffs for “Reckless Disregard” in Deciding the Proper Forum for Their Litigation

Toy model house on pier by water A “Virtual” Home Is Not a Home: Court Sanctions Plaintiffs for “Reckless Disregard” in Deciding the Proper Forum for Their Litigation

The following blog post is courtesy of our sister blog, NorCal IP.

Usually, one benefit of being a plaintiff is deciding in what forum to pursue litigation.  Generally, even a foreign-based plaintiff may pursue litigation in a U.S. forum where a defendant may be found or in which there is a substantial connection to the litigation.  There are, however, limits on a plaintiff’s choice of forum, and a recent decision in Tapgerine LLC v. 50Mango, Inc. demonstrates that pushing those limits may result in sanctions.

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Pooley’s Corner: What Divorce Court Teaches About Trade Secret Litigation

I still remember the day I decided never to do another divorce case. My client called to tell me that her ex was taking the kids to his mother’s house where she would look for holes in their socks and then rip them with her fingers. This surely was grounds for a restraining order! No, it wasn’t, I insisted.

Back then we accepted any kind of case that involved a courtroom: accidents, real estate, criminal, contracts, and “domestic relations.” It was the divorces that often involved the worst behaviors, seeming to require more therapy than legal advice.

These were also the early days of Silicon Valley, and it wasn’t long before commercial litigation, and trade secret cases in particular, came to fill up my calendar. Hardly a week went by without a group leaving to do a start-up or join the competition, provoking a lawsuit. After 30 or 40 of these, a common theme emerged: somebody always had done something foolish, like overheating the photocopier or bragging about how they were going to destroy their old employer. So it seemed to me that if people just understood the rules, they would never get into these scrapes. But the same kinds of mistakes were made even by experienced, sophisticated actors, and the lawsuits kept coming. I was baffled.

Then I married Laura-Jean, who is a psychotherapist. When she learned about my trade secret cases, it was immediately clear to her what was going on. These people were distracted—and sometimes blinded—by their emotions. And that’s when it hit me: trade secret disputes were a lot like divorces, and if you could understand the emotional forces at work, you could do a better job for your clients. The analogy wasn’t perfect, because people choosing to end their marriages were often consumed by their feelings to a level that didn’t usually apply in a business context. But the parallels were striking, and illuminating. READ MORE

ECONOMIC ESPIONAGE AND PROTECTING TRADE SECRETS: Ninth Circuit Holds That Reasonable Measures to Guard Technology are Sufficient

How can you protect your trade secrets from a vast and well-concealed international effort to steal those secrets? What constitutes a “reasonable” effort to protect that information where at least one competitor may already have the information?  The Ninth Circuit recently opined on these matters in the ongoing saga of U.S. v. Liew.

In 2014, Walter Liew and his company, USA Performance Technology, Inc., were convicted of multiple offenses, including claims under the Economic Espionage Act and conveying misappropriated trade secrets to a third party. The trade secrets related to DuPont’s technology for producing titanium dioxide, which is used in a wide range of products such as paint and Oreo cookies. 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

USPTO’s Second Trade Secrets Symposium Looks Back on First Year of DTSA and Ahead Toward Challenges of International Trade Secrets Protection

On May 8, 2017, the United States Patent and Trademark Office hosted its second event on trade secrets. When we covered the USPTO’s inaugural trade secrets symposium held in January 2015, there was a palpable sense among DC insiders that, at long last, federal trade secrets legislation was imminent.

Readers of this blog of course know the rest of that story: obviously the biggest change in the landscape since the last event was the passage of the Defend Trade Secrets Act of 2016.  In fact, the USPTO intentionally timed this event to fall near the one-year anniversary of the DTSA’s passage.

What else had changed in the last two years? To answer that question, I once again traveled to USPTO headquarters in Alexandria, VA to attend the symposium and provide TSW readers with the following report. READ MORE

The Saga Continues: New York’s Highest Court Will Weigh in on Aleynikov’s Fate

On April 20, 2017, the New York Court of Appeals issued a brief order continuing former Goldman Sachs programmer Sergey Aleynikov’s eight-year voyage through the state’s and country’s legal systems.  Here’s the issue:  does making a digital copy of misappropriated source code instead of physical copy constitute a “tangible reproduction or representation” of the source code?   READ MORE

Nice Try: Federal Circuit Denies Uber Engineer’s Writ, Affirming the District Court

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

Pooley’s Corner: When Taking Trade Secrets Becomes a Crime

In the recent lawsuit filed against Uber by Waymo for hiring the head of its driverless car project, what would have been a normal discovery dispute over access to a report suddenly became a lot more complicated when the former Waymo executive asserted the fifth amendment, claiming that forcing disclosure of the document could incriminate him.

Trade secret litigation between companies is common, but criminal charges—or the threat of them—isn’t. So how is it that commercial disputes become criminal?

The answer usually is that the trade secret holder believes it has very strong evidence of theft and decides to approach the authorities. If you are located in a state with criminal trade secret laws, you have a choice of reporting to the county prosecutor or going to the FBI or Department of Justice, who operate under the authority of the Economic Espionage Act. In a number of states, and in each of the 93 federal districts, there will be prosecutors and investigators trained in handling technology cases. If yours seems sufficiently serious, they may agree to take it on.

But would you want them to? The answer may not be obvious. READ MORE

SOUR GRAPES: Fig Spread Verdict Under DTSA Doesn’t Stick, Argue Jam Company Defendants

In a dispute over ripped off recipes, counsel for victorious plaintiff Dalmatia Import Group hailed the jury verdict as the first of its kind under the Defend Trade Secrets Act, as we previously reported.  Not so fast, sulked the defendants, Dalmatia’s erstwhile manufacturer Lancaster Fine Foods and distributor FoodMatch, in a filing this month.  While acknowledging their defeat under the Pennsylvania Uniform Trade Secrets Act, the defendants nevertheless urged  the court not to enter judgment under the DTSA.

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