shutterstock_511683898On May 11, 2017, a Northern District of Illinois federal court ruled that a Plaintiff properly alleged misappropriation under both the federal Defend Trade Secrets Act (DTSA) and the Illinois Trade Secrets Act (ITSA) in a case where the employee downloaded files onto a personal thumb drive and then went to a competitor.

Plaintiff  Molon Motor and Coil Corporation (“Molon”) contended that its former Head of Quality Control, Manish Desai, downloaded confidential data onto a portable data drive before leaving Molon for a competitor, Nidec Motor Corporation (“Nidec”). Molon further contended that Desai provided the confidential data to Nidec and Nidec then used (and continues to use) the confidential data to compete with Molon. Nidec filed a Motion to Dismiss Molon’s Complaint against Nidec (Molon did not sue Desai) on the basis that Molon could not state a claim under the DTSA or the ITSA because a) Desai downloaded the trade secrets while still employed by Molon, and b) Molon did not make a plausible allegation that Nidec used the trade secrets. Continue Reading Illinois Federal Court Allows Inevitable Disclosure Theory in Defend Trade Secrets Act Case

webinarTrade secret identification and protection is more critical than ever for employers. Technology is consuming the way we do business, and new laws concerning trade secrets and the content of employment agreements make trade secret identification and protection more critical than ever.
On Tuesday, July 18, 2017, Seyfarth attorneys Robert B. Milligan and D. Joshua Salinas, joined by Jim Vaughn, one of California’s leading computer forensics experts, will present Trade Secret Protection: What Every Employer Needs to Know. This is the fourth installment in our 2017 Trade Secrets Webinar Series.
This webinar is designed to help employers navigate the tricky trade secrets waters and to provide best practices for trade secret protection. The panel will cover a variety of topics, including:

  • How to best identify and protect trade secrets
  • What employers need to know about the DTSA
  • Effective use of restrictive covenants in employment agreements
  • How to catch a trade secret thief
  • Responses to potential trade secret theft
  • Choosing the right court to protect trade secrets
  • Consideration for suing under federal vs. state trade secret laws (or both)

Please join us for this informative webinar:

register

MassachusettsHearkening back to the rivalry between the Boston Celtics and Los Angeles Lakers in the 1980s, Massachusetts courts (as well as others around the country) have increasingly been asked to analyze the application of California law in litigation related to non-competition agreements. As many readers of this blog know, non-competition agreements are generally not enforceable under California law. Thus, even where the subject agreement contains a forum selection clause outside of California, or where the employee may have worked in another state, former employees are increasingly racing to file first in California courts or arguing that California law should be applied, thereby hoping to avoid any restrictions on mobility.

The Business Litigation Session of the Suffolk Superior Court in Massachusetts recently analyzed these issues in a pair of cases involving the application of California law to cases and agreements outside of the state. In FTI, LLC, et al. v. Duffy, et al., three of the plaintiffs’ former employees resigned and shortly thereafter filed suit in California seeking a declaration that the former employees’ non-competition agreements were unenforceable. Five months later, the plaintiffs filed a lawsuit in Massachusetts, alleging breach of the non-competition agreements, trade secret misappropriation, breach of fiduciary duty, unfair competition, and other business torts. The defendants moved to stay the case pending final resolution of the California case. One of the former employees also moved to dismiss the claims against him for lack of personal jurisdiction. Continue Reading The Latest East Coast/West Coast Conflict: Massachusetts Courts Consider the Application of California Law in Non-Compete Litigation

shutterstock_580430338Friends of our blog are conducting a survey of lawyers who work in-house at companies and who have some experience with trade secret law.

If that’s you, please click on this link and complete the questions:

Click Here To Take Trade Secret Survey

The survey, hosted by the survey company Qualtrics, is completely anonymous. The survey doesn’t ask for your name or your company, and the survey authors won’t even know if you’ve taken the survey or what your answers are. The survey results will be reported in aggregate form only, and nothing about you or your company can be identified individually. The survey takes less than 5 minutes to complete.

The reason for the survey is to collect information from lawyers on the front lines of trade secret work—those who work at companies on trade secret issues. The survey authors, David Almeling and Darin Snyder are conducting this survey for the upcoming third edition of their book on trade secret law. The goal is that while the first two editions focus on the experiences of outside counsel, this new edition will build on that view and add data from the in-house community.

If you work for a company and have any experience with trade secret law, thanks in advance for taking the survey.

shutterstock_494317324On May 19, 2017, Texas Governor Greg Abbott signed into law several amendments to the Texas Uniform Trade Secrets Act (“TUTSA”), located in Chapter 134A of the Texas Civil Practice & Remedies Code. The amendments go into effect on September 1, 2017.  In doing so, Texas has aligned its statute more closely with federal law and codified recent judicial interpretations of the law.

Two events precipitated the amendments, one legislative, one judicial.  In the first, Congress passed the Defend Trade Secrets Act (“DTSA”) in May 2017, which provides a federal cause of action for trade-secret misappropriation. In the second, the Texas Supreme Court announced in In re M-I L.L.C., 505 S.W.3d 569 (Tex. 2016) that a presumption exists that a party is authorized to participate and assist in the defense of a trade-secret misappropriation claim under TUTSA, which presumption cannot be surmounted unless the trial court considers a seven-factor balancing test.  These events resulted in the following key changes to the TUTSA: Continue Reading Texas Legislature Clarifies and Expands the Texas Uniform Trade Secrets Act

shutterstock_526002034This blog originally appeared in ALM Intellectual Property Strategist.

One year after its enactment, the Defend Trade Secrets Act (DTSA) continues to be one of the most significant and closely followed developments in trade secret law. The statute provides for a federal civil cause of action for trade secret theft, protections for whistleblowers, and new remedies (e.g., ex parte seizure of property), that were not previously available under state trade secret laws. The less than 70 reported DTSA cases to date provide an early glimpse into how courts may interpret the statute going forward and what early concerns about the statute may have been exaggerated.

Overstated Ex Parte Seizure Concerns

The ex parte seizure provision of the DTSA was one of the most controversial provisions of the statute during its drafting. The provision allows a trade secret holder to request, without notice to the alleged wrongdoer, that a district judge order federal law enforcement officials to seize property to prevent the propagation or dissemination of trade secrets. Opponents of the DTSA argued that the ex parte seizure provision would open the door to abuse by purported “trade secret litigation trolls” and increase litigation costs. The cases to date involving the seizure provision suggest that those early concerns may not materialize. Continue Reading Emerging Issues In the Defend Trade Secrets Act’s Second Year

shutterstock_486112282In a series of breakfast briefings, Seyfarth attorneys Robert Milligan, Joshua Salinas, and Scott Atkinson, joined by Jim Vaughn, one of California’s leading computer forensic experts, discussed how to navigate the tricky waters and provided best practices for trade secret protection. The briefings covered how to best identify and protect trade secrets, what employers need to know about the DTSA, the impact of new California Labor Code Section 925, how to catch a trade secret thief, and more. Click here to see the slides from the briefings.

As a conclusion to this well-received Breakfast Briefing Series, we compiled a summary of three takeaways that were discussed during the briefings:

  • Employers should continue to use caution when using non-California forum selection clauses and choice of law provisions in agreements that are “conditions of employment” with California employees. Attempting to enforce such provisions may not only result in litigation, but may also result in the employer being on the hook for the employee’s attorney’s fees under California Labor Code section 925.
  • Employers should update nondisclosure agreements and company policies to include language reference to the Defend Trade Secrets Act whistleblower provisions.
  • Employers should remember that mobile devices can be configured differently, and depending on how they allowed them to be configured, can be problematic post departure of the employee. Corporate partitions, company iTunes accounts, and mobile device management systems are all options to consider.

shutterstock_534162337A Northern District of California court recently held a plaintiff could amend its complaint to add a Defend Trade Secrets Act (“DTSA”) claim when discovery showed continued misappropriation after the enactment of the DTSA on May 11, 2016.

In VIA Technologies, Inc. v. ASUS Computer International, No. 14-CV-03586-BLF, 2017 WL 491172 (N.D. Cal. Feb. 7, 2017), VIA filed suit against ASUS, alleging infringement of VIA’s patent and trade secret misappropriation of VIA’s intellectual property related to its USB technology. VIA’s second amended complaint was filed in July 2015 prior to the enactment of the DTSA on May 11, 2016.

During discovery, ASUS produced data related to sales of products that allegedly incorporated VIA’s trade secrets. This data was produced in supplemental productions on November 16, 2016, and on December 22, 2016. VIA claims this data supports the alleged continuation of trade secret misappropriation after the enactment of the DTSA, and therefore, requests to add the claim. VIA claims it also inadvertently overlooked the sales data believing the November 16, 2016, production was merely a “re-production.” VIA filed the instant motion on January 4, 2017, after ASUS refused to stipulate to an amendment to add a claim under DTSA. Continue Reading Court Allows Plaintiff to Amend Complaint to Add Defend Trade Secrets Act Claim After Discovery Reveals Alleged Continued Misappropriation

shutterstock_393956815The Ninth Circuit recently held in United States v. Liew that it was not plain error for the district court not to instruct the jury that disclosure “‘to even a single recipient who is not legally bound to maintain [a trade secret’s] secrecy’ destroys trade secret protection.” As a result, the Ninth Circuit upheld criminal convictions under the (pre-Defend Trade Secrets Act) Economic Espionage Act (“EEA”) for trade secret misappropriation despite a third-party competitor (who was not bound by any confidentiality obligations) acquiring the trade secret.

The trade secret at issue in United States v. Liew concerned methods of producing titanium dioxide (TiO2), a white pigment found in anything from paint to Oreo creme, which makes its manufacture a (surprisingly) competitive industry. DuPont has been a leader in TiO2 production since the 1940s, when it became more efficient to produce TiO2 through a chloride-based process. DuPont opened chloride plants around the US, including one in Antioch, California and one in Ashtabula, Ohio. The Ashtabula plant was built for Sherwin-Williams, subject to a fifteen-year confidentiality agreement effective through the plant’s sale in the 1970s. The plant was sold multiple times thereafter and was ultimately acquired by a competitor of DuPont who was not bound by any nondisclosure or confidentiality obligations to the company.  Continue Reading Trade Secrets May Retain Protections Despite Disclosure to Single Competitor

Top_tier_firmsThe 2017 edition of The Legal 500 United States recommends Seyfarth Shaw’s Trade Secrets group as one of the best in the country. Nationally, for the second consecutive year, our Trade Secrets practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Michael D. Wexler was ranked in the editorial’s “Leading Lawyers,” and Katherine E. Perrelli, Robert B. Milligan, Daniel P. Hart, Erik W. Weibust, and J. Scott Humphrey were recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States Awards 2017 is a new concept in recognizing and rewarding the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the U.S. legal market.