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Category Archives: Practice & Procedure

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Pennsylvania Supreme Court Rules That Continued Employment Is Not Sufficient Consideration for Non-Competes Entered Into After the Employment Relationship Has Begun

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

In a landmark ruling of first impression, the Pennsylvania Supreme Court recently held that an employer’s non-competition covenant, which included the employee’s pledge not to challenge the covenant for inadequate consideration, is unenforceable unless it is accompanied by a change in job status or some other significant benefit.  Socko v. Mid-Atlantic Systems of CPA, Inc., Case No. 3-40-2015 (Nov. 18, Continue Reading

Trend In The Courts: It’s Getting Harder To Obtain Preliminary Injunctions In Restrictive Covenant Cases

Posted in Non-Compete Enforceability, Practice & Procedure

In recent weeks, courts almost routinely have been denying preliminary injunctive relief in cases alleging violation of non-compete and similar employment agreements.  Three examples: Burleigh v. Center Point Contractors, 2015 Ark. App. 615 (Oct. 28, 2015); Evans v. Generic Solution Engineering, LLC, Case No. 5D15-578 (Fla. App., Oct. 30, 2015); and Great Lakes Home Health Services Inc. v. Continue Reading

“Reasonable Suspicion” of Trade Secret Misappropriation Isn’t Always Enough

Posted in Practice & Procedure, Trade Secrets

Though an employer may be eager to bring a trade secret claim against former employees as soon as possible, filing suit before properly vetting the claim can lead to serious consequences: a malicious prosecution case against the lawyers who signed the pleadings.

A law firm is fighting such allegations in California after losing at bench trial on behalf of FLIR … Continue Reading

Dueling Dumpling Trade Secret Dispute Heads to District Court

Posted in Practice & Procedure, Trade Secrets

For Dumpling Daughter and its newly opened rival Dumpling Girl, things are heating up in the kitchen and the courtroom, as reported by the Boston Globe, after the former filed a lawsuit in federal court in Boston asserting a host of claims against Dumpling Girl and its three owners, including misappropriation of trade secrets, unfair competition, trademark infringement, conversion, … Continue Reading

Getting Your Money Back: New Jersey Employers Can Disgorge A Disloyal Employee’s Salary

Posted in Breach of Fiduciary Duty, Data Theft, Practice & Procedure, Trade Secrets

By Christopher Lowe and Robert T. Szyba

In a recent ruling, the New Jersey Supreme Court gave employers a great recourse for dealing with former employees who breach their duty of loyalty.  In Bruce Kaye v. Alan P. Rosefielde, the Court allowed an employer to recover compensation paid to a disloyal, recently terminated, employee, even where the employer sustained no … Continue Reading

Inevitable Disclosure Doctrine Held Inapplicable To Failed Business Transaction

Posted in Practice & Procedure, Trade Secrets

An Illinois appellate court recently rejected applying the inevitable disclosure doctrine in a trade secret misappropriation spat arising out of a failed business transaction.

After first securing an executed confidentiality agreement, Destiny, the developer of a proprietary healthcare wellness program called “Vitality,” shared details of it with Cigna, a healthcare insurer.  The insurer decided instead to create a wellness product … Continue Reading

Effective Carve-Outs to Seek Injunctive Relief from the Court in Arbitration Provisions

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants, Trade Secrets

Christopher Pike: “That’s a technicality.”

Spock: “I am a [lawyer], sir. We embrace technicalities.”

Star Trek Into Darkness

Arbitration is no longer the final frontier. Instead, arbitration is often the first and only forum for resolving disputes. The business community has embraced arbitration as an alternative method of dispute resolution, but sophisticated parties still maintain a preference favoring court resolution … Continue Reading

Court Decries Ambiguity Of Terminology Used In Non-Compete Agreement And Injunction

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

A preliminary injunction was entered against a fired executive of a roofer who, immediately after he was discharged, went to work for an alleged competitor.  The district court held, and the Seventh Circuit agreed, that his non-compete and non-solicit agreements were overbroad and confusing, but that some injunctive relief nonetheless was warranted in this case.  Turnell v. CentiMark Corp., … Continue Reading

Employer’s Action for Misappropriation of Trade Secrets Against Former In-House Counsel Who Engaged in Competitive Activities Not Subject to Anti-SLAPP Motion

Posted in Practice & Procedure, Trade Secrets

There are indeed limits to the reach of the anti-SLAPP statute, particularly in the trade secret context.  In West Hills Research and Development, Inc. v. Terrence M. Wyles, a California appellate court ruled that engaging in activity to set up a competing business is not protected activity under the anti-SLAPP statute.

Summary of the Case

West Hills, a medical … Continue Reading

Recent Developments on Copyright Preemption of Trade Secret Claims in the Fifth Circuit

Posted in Practice & Procedure, Trade Secrets

For the latest on the copyright preemption doctrine (codified at 17 U.S.C. § 301(a)) look no further than the Fifth Circuit, which, together with its district courts, issued a string of recent decisions regarding the preemption of trade secret claims involving software.  Most recently, the Fifth Circuit found that preemption extends to all fixed original works of authorship, even those … Continue Reading

Trade Secret Protection: What are Reasonable Steps?

Posted in Cybersecurity, Data Theft, Practice & Procedure, Trade Secrets

As a special feature of our blog –special guest postings by experts, clients, and other professionals –please enjoy this blog entry by Pamela Passman, President and CEO for the Center for Responsible Enterprise and Trade (CREATe.org)

-Robert Milligan, Editor of Trading Secrets

By Pamela Passman

Regional and national laws are increasingly focusing on the specific steps that companies … Continue Reading

Robert B. Milligan to Speak at 2015 ABA Annual Meeting on Trade Secret and Non-Compete Developments

Posted in Non-Compete Enforceability, Practice & Procedure, Trade Secrets

Join Seyfarth Trade Secrets and Non-Compete Co-Chair Robert B. Milligan at the 2015 ABA-IPL Annual Meeting in Chicago on July 30, 2015.  Robert will join expert panelists to discuss significant statutory changes to several jurisdictions’ laws regarding restrictive covenants and pending legislation proposed in additional jurisdictions over the past year, as well as the ongoing effort to federalize trade secret … Continue Reading

No Economic Recovery Available For Breach Of A Non-Compete Set Forth In A Distributorship Agreement Which Bars Damages Awards

Posted in Non-Compete Enforceability, Practice & Procedure

Where a freely negotiated contract between two sophisticated companies included a provision barring an award of monetary relief for breach of contract, the court will enforce the provision as written and award no economic damages.  CH2O, Inc. v. Meras Engineering, Inc., No. 45728-8-II (Wash. App. Court, July 21, 2015) (unpublished opinion).

Status of the Case

A non-exclusive distributorship agreement … Continue Reading

Upcoming Webinar: State Specific Non-Compete Oddities Employers Should Be Aware Of

Posted in Non-Compete Enforceability, Practice & Procedure, Trade Secrets

On Tuesday, August 18, 2015 at 12:00 p.m. Central, Kate Perrelli, Eddy Salcedo and Dawn Mertineit will present the sixth installment in our 2015 Trade Secrets Webinar Series. They will discuss the significant statutory changes to several jurisdictions’ laws regarding trade secrets and restrictive covenants and pending legislation proposed in additional jurisdictions over the past year.  As trade secrets and … Continue Reading

Sales Of $8,000 Stemming From Trade Secret Misappropriation Results In Liability For $1.3 Million

Posted in Non-Compete Enforceability, Practice & Procedure, Trade Secrets

At a time when an ex-employee’s newly created company was subject to an injunction prohibiting misappropriation of his former employer’s supposed trade secret, the new company allegedly used that confidential information on a few occasions in the course of providing services.  The former employer sued.  Although the trial court found no violation of the injunction, that ruling was reversed on … Continue Reading

Non-Compete Injunction Denied, Ninth Circuit Remands For Reconsideration, But District Court Denies It Again, Declines Equitable Tolling

Posted in Non-Compete Enforceability, Practice & Procedure

As directed by the court of appeals, a district court judge reconsidered his denial of a non-compete covenant case injunction but reached the same result on reconsideration.  He also stated why he would not have extended the covenant’s expiration date even if he had been inclined to enter the injunction.  Ocean Beauty Seafoods LLC v. Pacific Seafood Group Acquisition Co., … Continue Reading

Hawaii Bans Non-Compete and Non-Solicit Agreements with Technology Workers

Posted in Legislation, Non-Compete Enforceability, Practice & Procedure, Trade Secrets

Hawaii joined the small list of states that prohibit certain non-compete agreements with employees.

On June 26, 2015, Hawaii’s governor David Ige signed Act 158 which voids any “noncompete clause or a nonsolicit clause in any employment contract relating to an employee of a technology business.”

The Act defines “technology business” as one that “derives the majority of its gross … Continue Reading

Is An Offer Of At-Will Employment Adequate Consideration For A Non-Compete? Recent Court Rulings Split Three Ways

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

Three very recent decisions reflect the irreconcilable division of judicial authority regarding the adequacy of at-will employment as the sole consideration for an otherwise valid non-compete.  Compare (a) Standard Register Co. v. Keala, No. 14-00291 (D. Haw., June 8, 2015) (adequate under Hawaii law) (“majority rule”), with (b) Hunn v. Dan Wilson Homes, Inc., Nos. 13-11297 and 14-10365 … Continue Reading

Webinar Recap! How and Why California is Different When it Comes to Trade Secrets and Non-Competes

Posted in Practice & Procedure, Trade Secrets

We are pleased to announce the webinar “How and Why California is Different When it Comes to Trade Secrets and Non-Competes ” is now available as a podcast and webinar recording.

In Seyfarth’s fifth installment of its 2015 Trade Secrets Webinar series, Seyfarth attorneys focused on recent legal developments in California trade secret and non-compete law and how it … Continue Reading

How a Trade Secret Could Have Saved a Running Royalty From a Nearly Invincible Law

Posted in Practice & Procedure, Trade Secrets

In Kimble v. Marvel Entertainment, LLC, just handed down June 22, 2015, the Supreme Court reaffirmed the 50 year old holding  of  Brulotte v. Thys Co., 379 U. S. 29 (1964), that patent royalties cannot extend beyond the expiration of the patent. So why is this case being discussed in a blog directed to trade secrets? Because the Court also … Continue Reading

New Jersey Supreme Court Confirms Aspiring Whistleblowers Can’t Help Themselves to Confidential Documents

Posted in Practice & Procedure, Trade Secrets

By Robert T. Szyba and Jade Wallace

In a pivotal decision with broad implications for aspiring New Jersey whistleblowers, yesterday the New Jersey Supreme Court affirmed the Appellate Division’s finding that no qualified privilege exists to protect an employee from criminal prosecution for taking confidential documents from her employer under the guise of gathering evidence for an employment lawsuit.

In … Continue Reading

Non-Compete That Grants An Employer The Right To Seek Injunctive Relief No Guarantee That Injunction Will Issue

Posted in Non-Compete Enforceability, Practice & Procedure, Trade Secrets

A trial court declined to enter a preliminary injunction in a non-compete covenant case despite a provision in the covenant giving the employer the “right to seek injunctive relief in addition to any other remedy available to it.” The decision was affirmed on appeal.

Summary of the case. A 20% owner of a pest control service company (referred to by … Continue Reading

Court, Applying Pennsylvania And California Law, Declines To Enjoin Alleged Violation Of Worldwide Non-Compete

Posted in Non-Compete Enforceability, Practice & Procedure, Trade Secrets

A non-competition covenant prohibited employees of Adhesives Research (AR), a company based in Pennsylvania, from performing services for a competitor of AR anywhere in the world for two years after termination. Newsom, AR’s western U.S. manager of medical products, worked out of her home in California. When she quit and joined another adhesives manufacturer, AR sued and moved for entry … Continue Reading

Aggressive SEC Enforcement Efforts Regarding Confidentiality Agreements Will Continue

Posted in Practice & Procedure, Restrictive Covenants

By Ada W. Dolph

In a post-script to the SEC’s April 1 cease and desist order penalizing KBR, Inc. for a confidentiality statement that failed to carve out protected federal whistleblower complaints (our alert on it here), SEC Office of the Whistleblower Chief Sean McKessy today made additional comments that suggest public companies as well as private companies that … Continue Reading