Earlier this week, the United Parcel Service, Inc. (“UPS”) filed a lawsuit in the Northern District of Georgia, Atlanta Division, against several unidentified UPS pilots, who are referred to in the complaint as “John Does 1-5.” The lawsuit alleges that “[i]n August 2017, certain UPS employees developed strategic plans regarding the Company’s aircraft. These plans were developed for, among other things, reporting to senior executives of the Company in late August 2017 so that they could make certain strategic business and financial decisions. Portions of these plans were included in a PowerPoint presentation created by this limited group of UPS employees (the “PowerPoint”). In preparation for the meeting, a very limited number of UPS employees had access to the PowerPoint for the purpose of its drafting and editing.” (Complaint, ¶ 7.) The lawsuit goes on to allege that the PowerPoint contained highly confidential and trade secret information. (Id. at ¶¶ 9-10.) Continue Reading Big Brown v. PowerPoint Pilferers in Trade Secret Spat
On September 7, at 3:00 p.m. – 4:00 p.m. Eastern, Robert Milligan will present “Understanding and Exploring the DTSA” CLE webinar.
The Defend Trade Secrets Act of 2016 establishes federal jurisdiction over trade secret theft and creates a federal cause of action for trade secret misappropriation. It affords damages and injunctive relief and further allows an aggrieved party to obtain an ex parte seizure of property necessary to prevent the propagation or dissemination of a trade secret. However, the law also provides immunity for certain disclosures, such as in a court filing under seal or to a government official for the purpose of reporting a suspected violation of law. Notice of the immunity provisions must be included in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. Continue Reading Robert Milligan to Present “Understanding and Exploring the DTSA” CLE Webinar
50 State Desktop Reference: What Businesses Need to Know About Non-Compete and Trade Secret Law
It has been an extraordinary year regarding trade secret and non-compete issues. We saw more and more cases filed in federal court asserting claims under the Defend Trade Secrets Act (“DTSA”) and for alleged violations of non-competes. Some states passed legislation further narrowing the use of non-compete agreements, and some media outlets, academics, and regulators have continued their criticism of such agreements. We expect over the next year, the law to continue to develop regarding the DTSA’s application, definitions, scope, limitations, benefits and interpretation with regard to the immunity provisions. Our 50 State Desktop Reference is a useful guide to know how the law is currently applied in each state.
Seyfarth’s Trade Secrets, Computer Fraud and Non-Competes Practice Group is pleased to provide the 2017-2018 Edition of our one-stop 50 State Desktop Reference, which surveys the most-asked questions related to the use of covenants and intellectual capital protection in all 50 states. For the company executive, in-house counsel, or HR professional, we hope this guide will provide a starting point to answer your questions about protecting your company’s most valuable and confidential assets.
How To Get Your Desktop Reference
To download the pdf of 2017-2018 Edition of the 50 State Desktop Reference, click here.
To request a hard copy of the Desktop Reference, click on the button below.
The Defend Trade Secrets Act (DTSA) states very clearly that an injunction issued pursuant thereto may not “prevent a person from entering into an employment relationship,” and that any conditions placed on a former employee’s employment in an injunction must be based on “evidence of threatened misappropriation and not merely on the information the person knows.” (Emphasis added). This language appears to bar injunctive relief under the DTSA based on the “inevitable disclosure doctrine,” which in some states permits a court to enjoin a former employee from working for a competitor—even in the absence of a signed non-compete agreement—if it can be established that the employee would “inevitably” (even if inadvertently) use his or her former employer’s trade secrets on behalf of a new employer. As a result, when the statute was first enacted, many commentators assumed that claims based on the inevitable disclosure doctrine would quickly be shot down. In practice, however, that does not appear to be the case. At the very least, some recent federal court decisions have sown confusion around this issue.
We recently wrote about a federal court’s ruling in the Northern District of Illinois that applied the inevitable disclosure doctrine to a DTSA claim. Despite its non-precedential value, this ruling was significant because it interpreted a federal law to allow the application of a doctrine that has been expressly rejected in several states, including California, Maryland, and Virginia, and, again, appears to be barred by the plain language of the DTSA. That case can perhaps be explained by the fact that it was decided on a motion to dismiss, not a motion for injunctive relief, and thus the DTSA’s apparent prohibition on basing an injunction on inevitable disclosure was not necessarily implicated. The same cannot be said about a decision that was issued just three weeks later by the United States Court of Appeals for the Third Circuit, in which the Court applied the inevitable disclosure doctrine in the context of a temporary restraining order. The case is Fres-co Systems USA, Inc. v. Hawkins, 2017 WL 2376568 (3rd Cir. June 1, 2017). Continue Reading The Third Circuit Addresses the Defend Trade Secrets Act and Appears to Have Applied the Inevitable Disclosure Doctrine
Uber’s ongoing battle with Waymo in the Northern District of California federal court over technology used in self-driving cars provided another significant decision concerning the broad scope of trade secret preemption under California state law.
Waymo accused Levandowski (a former employee) of taking more than 14,000 company files before leaving Waymo and starting his own self-driving truck company (which Uber bought for $680 million). Waymo asserted several claims against Uber for misappropriation of trade secrets under the federal Defend Trade Secrets Act (“DTSA”) and the California Uniform Trade Secrets Act (“CUTSA”). In addition to the trade secret claims, Waymo asserted four claims for patent infringement and one claim for violation of section 17200 of California’s Business and Professions Code. Continue Reading California Federal Court Finds CUTSA Preemption on Unfair Competition Claim in Uber Row
Robert B. Milligan, Seyfarth Partner and Co-Chair of the Trade Secrets, Computer Fraud & Non-Competes Practice Group, will be a panelist for the “Growing Importance of Trade Secrets in Protecting Emerging Technology” webinar presented by ITechLaw’s Intellectual Property Committee on July 11, 2017 at 11:00 a.m. Eastern.
With the growth of artificial intelligence and self-driving technology, we are see are a growing reliance by companies on trade secret protection. Robert Milligan will provide for an informative discussion regarding this important topic. Specifically, he will cover:
- Increasing reliance on trade secrets to protect cutting edge technologies
- Waymo v. Uber: lessons learned
- How the new U.S. federal trade secret law helps trade secret owners
For more information or to register for the event, click here or contact Mr. Milligan at firstname.lastname@example.org
On 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
On 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 2016, 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
This 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
In 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.