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Trading Secrets

A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

Upcoming Webinar: Information Security Policies and Data Breach Response Plans

Posted in Data Theft, Privacy

WebinarOn Tuesday, September 22 at 12:00 p.m. Central, Seyfarth attorneys Karla Grossenbacher and John Tomaszewski will present “Information Security Policies and Data Breach Response Plans.” With the recent uptick of high-profile data breaches and lawsuits being filed as a result by both employees and consumers as a result, every business should take a fresh look at its information security policies and data breach response plans with two thoughts in mind: compliance with applicable laws, and limiting liability in the event of litigation. Cybersecurity is a critical and timely issue for all businesses. If your company has employees and pays them or gives them benefits, then your company is maintaining their personally identifiable information and faces liability in the event of a data breach.

Currently, there is no comprehensive federal law that sets forth a uniform compliance standard for information security best practices or data breach response plans.  Companies operating in the U.S. must comply with a patchwork of 47 different states’ laws that set forth a company’s obligations in the event of a data breach. In the wake of several high-profile data breaches, state legislators in the U.S. have been updating these state laws in the past few months, adding new requirements.

In addition to dictating how and when a company must respond in the event of a data breach in which personal information has been compromised, a number of these laws also contain substantive requirements about cybersecurity measures a company must take generally. Add into this mix that a U.S. Court of Appeals agreed with the Federal Trade Commission (FTC) that it has the right to file lawsuits against businesses that it deems have lax information security protocols – without informing companies in advance of the standard to which they will be held.

Against this backdrop, the presenters will provide a high-level discussion on how your business can structure an information security program to comply with applicable law and minimize liability – since waiting for a breach is not an option. They will discuss, from a legal perspective:

  • Essential components of a comprehensive information security policy;
  • Key elements of a data breach response plan including strategies for state law compliance; and
  • Best practices for dealing with third party vendors that store personally identifiable information for your company.

Registration: There is no cost to attend this program, however, registration is required.



If you have any questions, please contact events@seyfarth.com.

*CLE Credit for this webinar has been awarded in the following states: CA, IL, NJ and NY. CLE Credit is pending for GA, TX and VA. Please note that in order to receive full credit for attending this webinar, the registrant must be present for the entire session.

Inevitable Disclosure Doctrine Held Inapplicable To Failed Business Transaction

Posted in Practice & Procedure, Trade Secrets

shutterstock_147490814An 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 of its own called “Empower.”  Destiny sued Cigna for trade secret misappropriation and breach of contract, alleging circumstantial evidence and “inevitable disclosure.”  Cigna’s summary judgment motion was granted, and the appeals court affirmed.  Destiny Health, Inc. v. Connecticut Gen. Life Ins. Co., No 1-14-2530 (Ill. App. Court, 1st Dist., Aug. 21, 2015).

Status of the case.  Because of a possible interest in “Vitality,” Cigna was considering entering into a joint venture or partnership with Destiny, or making an offer to acquire the company.  Destiny obtained a signed non-disclosure agreement, prohibiting use or misappropriation of Destiny’s confidential information, and then allowed Cigna to take a “deep dive” into data relating to “Vitality.”  The insurer ultimately decided that “Vitality” was too expensive and lacked flexibility.  Thereafter, with the assistance of others, Cigna created and began using “Empower.”  Claiming that Cigna inevitably misappropriated Destiny’s intellectual property and breached the confidentiality agreement, the developer sued the insurer but to no avail.

Background facts.  “Vitality” was used to motivate employees to engage in specific healthy activities and to be rewarded for doing so.  After deciding not to use “Vitality,”  Cigna designed and developed “Empower” with some assistance from a different vendor.  Both “Vitality” and “Empower” incentivize healthy activities by providing rewards.  “Vitality” does not permit employers to change the activities or the points to be awarded for each whereas employers using “Empower” can customize both the activities and the awards.  Soon after “Empower” was launched, Destiny sued in the Circuit Court of Cook County.  Following several years of discovery, Cigna moved for summary judgment.

Arguments for granting Cigna’s motion.  The insurer maintained that Destiny provided it with no trade secrets and that, in creating “Empower,” it used nothing learned from the developer.  Cigna also asserted that Destiny cannot prove damages.

Several Illinois court rulings recognize the “inevitable disclosure” doctrine.  Cigna purported to distinguish those decisions on the grounds that they all came early in the litigation, in connection with motions to dismiss or for a preliminary injunction, and all involved employer-employee disputes.  According to Cigna, since the instant lawsuit had passed those preliminary points and had reached the summary judgment stage, and because the case concerned a failed business transaction, the doctrine was inapplicable.  Cigna cited Omnitech Int’l v. Clorox Co., 11 F.3d 1316, 1325 (5th Cir. 1994), which held that, in a failed business transaction case, absent evidence of actual disclosure, an inference of misuse or misappropriation of trade secrets cannot be based on unsupported speculation.  Cigna also referred the court to Connecticut and New York court decisions holding that the “inevitable disclosure” doctrine cannot be used to create a triable issue of fact in opposition to a summary judgment motion.

Arguments against granting summary judgment.  Destiny admitted relying on circumstantial evidence but emphasized that it often is used to prove misappropriation.  The developer stressed that the Cigna team members who had evaluated “Vitality” had no prior experience with incentive-points platforms, and yet they designed “Empower” quickly after concluding that evaluation.  According to the developer, what the insurer learned from Destiny inevitably provided “a footprint for Cigna to work from in creating its own wellness” product.  Destiny insisted that the insurer should have constructed a “firewall” or “white room” to insulate the “Vitality” evaluation team from participating in the creation of “Empower.”

Further, Destiny contended that the question of whether the insurer inevitably used the developer’s intellectual property involved disputed issues of material fact which precluded entry of summary judgment for Cigna.  Destiny also argued that the same policy reasons underlying application of “inevitable disclosure” in a dispute between a former employer and its ex-employee apply when a business suitor is given access to confidential information and then uses it to create a competitive product.

The ruling.  The Illinois Appellate Court affirmed judgment for Cigna:

“The fact that the information provided by Destiny might have made Cigna more informed in evaluating whether to partner with Destiny or another vendor in the development of an incentive-points program does not support an inference that Cigna misappropriated Destiny’s trade secrets absent some showing that Cigna would not have been able to develop its incentive-points program without the use of Destiny’s trade secrets.”

Takeaways.  As Cigna argued and both courts agreed, Omnitech Int’l is the leading decision regarding the inapplicability of the “inevitable disclosure” doctrine to a failed business transaction.  The court there stated that a potential acquiring company must be free to examine the books of all potential targets and should not be presumed to have revealed confidences.

Unless precluded, a potential acquirer often uses the same team to evaluate all targets.  A target concerned about an “inevitable disclosure” would be well advised to obtain an express commitment from the potential acquirer to create a “firewall.”  Without such a commitment, the target may be unable to win a failed business transaction lawsuit claiming misuse of proprietary data unless (a) the target can show instances of actual misappropriation of its confidential information, or (b) the target can demonstrate that the potential acquirer could not have succeeded in entering into competition with the target without using the target’s secrets.

Upcoming Webinar: So You Want an Injunction in a Non-Compete or Trade Secret Case?

Posted in Non-Compete Enforceability, Trade Secrets

WebinarOn Thursday, September 24 at 12:00 p.m. Central, Seyfarth attorneys Eric Barton, Justin K. Beyer and Robert C. Stevens will present the seventh installment in its series of 2015 Trade Secret Webinars. Presenters will focus on the issues confronting plaintiffs in preparing for and prosecuting trade secret cases and the various ins and outs of seeking both temporary restraining orders and preliminary injunctions.

Topics will include:

  • Practical steps employers can implement to protect trade secrets and business relationships upon termination of an employee or business relationship;
  • How to conduct an internal investigation to determine its trade secrets were misappropriated or threatened by a former employee’s new employment;
  • What employers should do if their trade secrets are improperly removed or disclosed, or if a former employee or independent contractor is violating his/her agreements;
  • What internal considerations a company should weigh in deciding to prosecute a trade secret or non-compete case; and
  • How to prosecute a case against a former employee who has or is suspected of having misappropriated trade secrets or is in breach of a restrictive covenant agreement.

Our panel consists of a diverse panel of attorneys with nationwide experience prosecuting and defending trade secret cases as well as advising clients on restrictive covenant and trade secret issues.


There is no cost to attend this program, however, registration is required.


If you have any questions, please contact events@seyfarth.com.

*CLE Credit for this webinar has been awarded in the following states: CA, IL, NJ and NY. CLE Credit is pending for GA, TX and VA. Please note that in order to receive full credit for attending this webinar, the registrant must be present for the entire session.

Latest Update on Federal Trade Secrets Legislation

Posted in Legislation, Trade Secrets

keyposterlarge1-225x300With increased activity regarding proposed federal trade secrets legislation expected next month and for the remainder of the fall Congressional session, Seyfarth Shaw’s dedicated Trade Secrets/Non-Compete group has created a resource which summarizes the proposed legislation, outlines the arguments in favor of and against the legislation, and provides additional resources for our readers’ convenience. This page will be continuously updated as we monitor and keep you apprised of the most recent developments, debate, and news regarding the legislation.

Below we provide an overview of trade secret law and the proposed federal legislation, the arguments on both sides of the debate, and our most current resource links.

How Are Trade Secrets Currently Protected?

Trade secrets are legally protectable information and can include a formula, pattern, compilation, program, device, method, technique or process. To meet the most common definition of a trade secret, a trade secret has three parts: (1) information; (2) reasonable measures taken to protect the information; and (3) which derives independent economic value from not being generally known. Examples of trade secrets include, plans, designs, negative information, computer software, customer lists, non-public financial information, cost and pricing information, manufacturing information, confidential information about business opportunities, and certain personnel information.

Trade secrets are generally protected by state law under a particular state’s adoption of the Uniform Trade Secrets Act (UTSA). The UTSA, published by the Uniform Law Commission (ULC) in 1979 and amended in 1985, was an act promulgated in an effort to provide a unified legal framework to protect trade secrets.

Texas recently became the 48th state to enact some version of the UTSA. New York and Massachusetts are the remaining states not to have enacted the UTSA. Trade secrets are protected in those jurisdictions under the common law.

Trade secrets are also protected under federal criminal laws, i.e. the Economic Espionage Act of 1996, as well as state criminal laws.

Unlike patent, trademark, or copyright protection, there is no set time period for trade secret protection. A trade secret is protected as long as it is kept secret. However, once a trade secret is lost, it is lost forever. As we have seen in a post-Wikileaks and social media world, once confidential information is disclosed, it can be instantly distributed online for hundreds of millions to see, access, and download, and thereby lose its trade secret status.

What Is the Proposed Legislation?

On July 29, 2015, with bipartisan support, Congressional leaders in both the House and Senate, including Senators Orrin Hatch (R-UT), Christopher Coons (D-DE) and Representative Doug Collins (R-GA), introduced bills to create a federal private right of action for the misappropriation of trade secrets.  The identical bills are HR 3326 and S. 1890 and they were referred to their respective judiciary committee. The proposed legislation, titled the “Defend Trade Secrets Act of 2015” (“DTSA”), follows an unsuccessful attempt just last year to pass the “Defend Trade Secrets Act of 2014.”

The proposed legislation would authorize a private civil action in federal court for the misappropriation of a trade secret that is “related to a product or service used in, or intended for use in, interstate or foreign commerce.”  The proposed legislation features amendments from the 2014 bill and seeks to do the following: 1) create a uniform standard for trade secret misappropriation by expanding the Economic Espionage Act; 2) provide parties pathways to injunctive relief and monetary damages to preserve evidence, prevent disclosure, and account for economic harm to companies; and 3) create remedies for trade secret misappropriation similar to those in place for other forms of intellectual property.

The DTSA has some similarities with the Uniform Trade Secrets Act. The DTSA defines “misappropriation” consistently with the DTSA, and provides for similar remedies, including injunctive relief, compensatory damages, and exemplary damages and the recovery of attorneys’ fees in the event of willful or malicious misappropriation.

The DTSA, however, differs from the UTSA in several important aspects.  Most notably, it opens the federal courts to plaintiffs for trade secret misappropriation cases.  The DTSA also allows for an ex parte seizure order.  A plaintiff fearful of the propagation or dissemination of its trade secrets would be able to take proactive steps to have the government seize its trade secrets from the defendant prior to giving any notice of the lawsuit to the defendant.  The proposed seizure protection goes well beyond what a court is typically willing to order under existing state law.  Next, the DTSA’s statute of limitations period is five years compared to just three under the UTSA.  Additionally,  the DTSA allows for the recovery of treble exemplary damages versus double under the UTSA.  Finally, the DTSA contains no language preempting other causes of action that arise under the same common nucleus of facts, unlike the UTSA.

Do We Need Federal Trade Secrets Legislation?

Many business, professional, political, and academic leaders have called for the creation of federal civil cause of action for trade secret misappropriation. There has been some vocal opposition to the legislation. Legislation to create a civil cause of action for trade secret misappropriation in federal court has failed in at least three previous attempts.

Recent scholarly articles in the Gonzaga Law Review and Fordham Law Review have suggested that federal courts may be more equipped to devote resources to trade secret claims so as to establish a uniform body of case law, like other intellectual property.  See A Statistical Analysis of Trade Secret Litigation in State Courts, 46 Gonzaga Law Review 57 (February 2011); Four Reasons to Enact a Federal Trade Secrets Act, 19 Fordham Intellectual Property, Media & Entertainment Law Journal 769 (April 2009).

Additionally, published reports indicate that there is a growing rise in trade secret theft from foreign hackers, nation states, and rogue employees interested in obtaining U.S. businesses’ trade secrets.  Foreign economic collection and industrial espionage against the United States represent significant and growing threats to the nation’s prosperity and security.  In response, the Obama Administration released a 150-page report that unveiled a government-wide strategy designed to reduce trade secret theft by hackers, employees, and companies.  In its published strategy plan, the Obama Administration recognized the accelerating pace of economic espionage and trade secret theft against U.S. corporations and suggested looking into creating additional legislative protections.

Additionally, security company Mandiant published a report finding that the Chinese government is sponsoring cyber-espionage to attack top U.S. companies.  Moreover, CREATe.org released a whitepaper that highlighted how far-reaching and deeply challenging trade secret theft is for companies operating on a global scale.  Further, a report commissioned by IT security company Symantec revealed that half of the survey respondents, employees from various countries, including the United States, revealed that they have taken their former employer’s trade secret information, and 40 percent say they will use it in their new jobs. Lastly, estimates of trade secret theft range from one to three percent of the Gross Domestic Product of the United States and other advanced industrial economies, according to a report by PwC US and CREATe.org.

Indeed, the recent expansion of penalties and expanded definition of trade secrets under the EEA reflects a recognition by the government that the EEA is a valuable tool to protect secret, valuable commercial information from theft and that Congress can work in a bi-partisan effort to address such theft.

The significant harm caused by economic espionage for the benefit of foreign actors is illustrated by a recent case where a project engineer for the Ford Motor Company copied 4,000 Ford Motor Company documents onto an external hard drive and delivered them to a Ford competitor in China.  The documents contained trade secret design specifications for engines and electric power supply systems estimated to be worth between $50 million and $100 million.  Similarly, a former employee of a North American automotive company and the employee’s spouse were found guilty of stealing trade secrets related to hybrid vehicle technology worth $40 million.  The couple intended to sell the information to a Chinese competitor.

Another case involved the sentencing of a former DuPont employee who allegedly conspired with a South Korean company, Kolon Industries, to misappropriate trade secrets involving Kevlar, a well-known synthetic fiber product produced and sold by DuPont. Kolon Industries allegedly put a plan in place to recruit former DuPont employees so Kolon could create a product to compete with Kevlar without putting the time, effort, and expenditures into developing its own product.  The former employee, even though he signed a non-disclosure agreement while at DuPont, allegedly retained DuPont documents upon his departure and turned them over to Kolon when they recruited him.  Upon finding out about this scheme, the FBI investigated Kolon, and five of its executives were indicted for committing trade secret theft.  Kolon plead guilty and was sentenced to pay $85 million in penalties and $275 million in restitution.

There is also significant harm caused by economic espionage committed by insiders. An employee of a large U.S. futures exchange company recently pleaded guilty to stealing more than 10,000 files containing source code for a proprietary electronic trading platform. Prosecutors estimated the value of these trade secrets between $50 and $100 million. The employee said he and two business partners had planned to use this source code to develop their own company.

The FBI has recently launched a nationwide awareness campaign and released a short film based upon an actual case,  The Company Man: Protecting America’s Secrets, aimed at educating anyone with a trade secret about the threat and how they can help mitigate it.  The film illustrates how one U.S. company was targeted by foreign actors and how that company worked with the FBI to address the problem.

From the perspective of many of those in favor the legislation, the United States currently has an un-harmonized patchwork of trade secret protection laws that are ill-equipped to provide an effective civil remedy for companies whose trade secrets are stolen in our global economy.  Not all states have adopted the Uniform Trade Secrets Act, and many differ in the interpretation and implementation of certain trade secret laws.   For instance, states have differences in their definition of a trade secret (e.g. Idaho expressly includes computer programs) and what is required to maintain a claim for trade secret misappropriation, including what are reasonable secrecy measures. Some states have found a novelty requirement for information to be considered a trade secret and some are more protective of customer lists than others. There are also several states that have different statute of limitations for trade secret claims and there are also significant differences on the availability of a royalty injunction.  Many states also did not pass Section 8 of the UTSA which provides, “[t]his [Act] shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this [Act] among states enacting it.” Moreover, victims of trade secret theft can face lengthy and costly procedural obstacles in obtaining evidence when the misappropriators flee to other states or countries or transfer the evidence to other states or countries.  Obtaining service of process and discovery can be extremely difficult or impossible under the current system.

Proponents and Sponsors of the Bills

Announcement of the proposed legislation on July 29, 2015 was joined by a letter of support on behalf of the Association of Global Automakers, Inc., Biotechnology Industry Organization (BIO), The Boeing Company, Boston Scientific, BSA | The Software Alliance (BSA), Caterpillar Inc., Corning Incorporated, Eli Lilly and Company, General Electric, Honda, IBM, Illinois Tool Works Inc., Intel, International Fragrance Association, North America, Johnson & Johnson, Medtronic, Micron, National Alliance for Jobs and Innovation (NAJI), National Association of Manufacturers (NAM), NIKE, The Procter & Gamble Company, Siemens Corporation, Software & Information Industry Association (SIIA), U.S. Chamber of Commerce, United Technologies Corporation and 3M.  The joint letter expressed the need for a private right of action to supplement the existing Economic Espionage Act of 1996 (“EEA”), which only provides for criminal sanctions in the event of trade secret misappropriation.

In 2014, two similar trade secret bills were introduced and received support from various constituents.

The Heritage Foundation wrote an article in support of a private right of action.  Congresswoman Zoe Lofgren, D-Cal., previously proposed creating a civil cause of action in federal court with the PRATSA bill. A diverse set of companies and organizations supported the legislation or the concept of a federal civil cause of action, including Adobe, Boeing, Microsoft, IBM, Honda, DuPont, Eli Lilly, Broadcom, Caterpillar, NIKE, Qualcomm, General Electric, Michelin, 3M, United Technologies Corporation, National Association of Manufacturers, and the National Chamber of Commerce.

Proponents of the bills have cited the advantages of a federal cause of action, as among other things, a unified and harmonized body of law that addresses discrepancies under the existing law and provides companies a uniform standard for protecting its proprietary information.  From their perspective, federal legislation will treat trade secrets on the same level as other IP and establish them as a national priority, address national security concerns, and create a demonstrative effect on major foreign jurisdictions.  The legislation may also provide a complimentary measure to combat trade secret misappropriation by private industry in light of strained government resources.  A federal cause action may also provide service of process advantages, the ease of conducting nationwide discovery, and additional remedies to aid victims, such as ex parte seizure.

The former head of the Patent Office, David Kappos, came out in favor of the 2014 House bill on behalf of the Partnership of American Innovation stating, “Trade secrets are an increasingly important form of intellectual property, yet they are the only form of IP rights for which the protection of a federal private right of action is not available. The Trade Secrets Protection Act will address this void, and the PAI supports its swift enactment.”

Erik Telford of the Franklin Center for Government and Public Integrity added, “[t]he weakness of these laws is that there is no overarching legal framework at the federal level to account for both the sophistication and international nature of new threats.  As Mr. Kappos noted, even the government is bound by finite resources in its efforts to protect companies, evidenced by the fact that under the Economic Espionage Act, the Department of Justice initiated only 25 cases of trade secret theft last year.”

Opposition To The Bills

Last August, a group of 31 professors from throughout the United States who teach and write about intellectual property law, trade secret law, invocation and/or information  submitted an Opposition Letter to the 2014 bills. The professors cited five primary reasons for their opposition: (1) effective and uniform state law already exists; (2) the proposed Acts will damage trade secret law and jurisprudence by weakening uniformity while simultaneously creating parallel, redundant, and/or damaging law; (3) the Acts are imbalanced and could be used for anti-competitive purposes; (4) the Acts increase the risk of accidental disclosure of trade secrets; and (5) the Acts have potential ancillary negative impacts on access to information, collaboration among businesses, and mobility of labor.

Shortly after the introduction of the bills in July 2015, law  professors, David Levine and Sharon Sandeen, wrote a new letter to Congress setting forth seven differences between the 2014 bills and the 2015 bill while still contesting the arguments of the bill’s supporters.  The seven differences include: 1) the wrong is defined differently; 2) the ex parte civil seizure still remains but with apparently more stringent standards; 3) new encryption language has been added; 4) new concerns about employee mobility; 5) trade secrets are described as not intellectual property; 6) the reporting of trade secret theft abroad is unclear as to whether it means “theft” or “misappropriation;” and 7) “Sense of Congress” provision, which presumes trade secret theft is always “harmful.”  They believe that the recently introduced legislation does not ameliorate the problems it seeks to fix.

Current Status Of Proposed Legislation

Both bills have been introduced into their corresponding judiciary committee. HR 3326 and S. 1890 were sent into committee on July 29, 2015. We expect Congress to address the proposed legislation after the Labor Day recess.

For additional news and resources, please click here.

Inside Views: The Intersection Of Trade Secret Law And Social Media Privacy Legislation

Posted in Social Media, Trade Secrets

shutterstock_275396996Eric Barton authored the following article on August 20, 2015 in Intellectual Property Watch summarizing several recent cases addressing trade secret claims involving social media issues, as well as providing some suggested takeaways for employers based on the limited information presently available.

There is no question that social media privacy issues now permeate the workplace. In an attempt to provide further guidance and regulation in this area, since April 2012, a growing number of state legislatures in the United States have passed various forms of social media privacy legislation. In fact, to date, nearly all state legislatures, as well as the United States Congress, have considered or are considering some kind of social media privacy legislation.

The precise impact that these new social media privacy laws have on existing trade secret law is still very much in its infancy. Compounding matters, the plain language of several recently enacted privacy laws directly conflicts with judicial decisions regarding “company vs. employee” ownership of social media content that may otherwise constitute protectable trade secrets, including contact lists and business relationships. Moreover, very few court decisions have yet to interpret any of the new social media privacy laws.

In light of this uncertainty, the following is a summary of several recent cases addressing trade secret claims involving social media issues, as well as some suggested takeaways for employers based on the limited information presently available.

A. Definition of a Trade Secret – Brief Summary

In the simplest terms, under the Uniform Trade Secrets Act, which is in effect in 48 states, information and data may qualify for statutory protection if the valuable information is a secret, and its owner keeps it a secret. Though there are no bright lines for whether information is a protectable trade secret, it is likely to be found protectable if it is the result of a substantial investment of time, effort, and expense, generates independent economic value for its owner, is not generally known in the relevant industry, cannot easily be accessed by legitimate means, and cannot be independently reverse engineered without significant development efforts and expense. Experience shows that in many cases, the more egregious a defendant’s theft of an alleged secret, the more likely the court will find that the stolen data qualifies as a trade secret. Not merely to punish, but also because an employee’s theft and subsequent use of the stolen data or information itself tends to show (i) the independent economic value of the stolen information, and (ii) the information was not available publicly.

Information is kept secret if its owner takes affirmative measures to prevent its unauthorized disclosure, such as, but not limited to, non-disclosure, restricted-use, and mandatory-return agreements, confidentiality stamps, limited internal distribution and access permissions, and password protection of computers. Those efforts need only be “reasonable under the circumstances,” and “absolute” secrecy is not required.

B. The New Laws’ Potential Impact on Account-Content Ownership

The new privacy laws appear to be penetrating trade-secret-ownership lawsuits between companies and their former employees regarding who owns the latters’ social media relationships (i.e. LinkedIn contacts). For example, in PhoneDog v. Noah Kravitz, No. C11-03474 MEJ, 2011 U.S. Dist. LEXIS 129229 (N.D.Cal.) (Nov. 8, 2011) and Eagle v. Morgan, No. 11-4303, 2011 WL 6739448 (E.D.Pa.) (Dec. 22, 2011), held that the company’s Twitter feeds (PhoneDog) and the employee’s LinkedIn account (Eagle) may “belong to” the employer, due to the employer’s prior investment of time and expense in developing and maintaining those accounts. Further, in Ardis Health, LLC v. Nankivell, 2011 WL 4965172 (S.D.N.Y. Oct. 19, 2011), the court held that the employer owned its employee’s account content, due to the employment agreement’s spelling that out.

With the onset of social media privacy laws, however, will employees have ammunition to argue that they own their social-media relationships, especially in states where personal andnon-personal accounts are not clearly defined? Employees in trade secrets cases may argue that the new laws imply a degree of ownership of their social media accounts, even where they use them in part to advertise their employers’ businesses.

C. Whether the New Laws Will Affect the Protective-Measure Analyses in Trade Secrets Cases

Further, some might argue that unless employers investigate their employees’ social-media activities and any related data theft, employers will lose trade secret protection for that data due to their alleged failure to use “reasonable” efforts to protect its secrecy. Recall that under the Uniform Trade Secrets Act section 1(4)(ii), trade secret owners must have employed “efforts that are reasonable under the circumstances to maintain its secrecy.” The “reasonable under the circumstances” requirement is often the key disputed issue in trade secrets litigation – the owner claiming that it used reasonable efforts; the alleged thief claiming that plaintiff was too willy-nilly in handling its so-called secrets. Under the new laws, the question presented is whether an employer which could, but does not, investigate an employee’s suspected data theft involving his social networking account, has failed to use “reasonable efforts” to protect the data’s secrecy.

On the one hand, information that falls into the public domain, or becomes generally known to the relevant industry, usually loses its trade secret status. See, e.g. Newark Morning Ledger Co. v. New Jersey Sports & Exposition Authority, 31 A.3d 623, 641 (N.J. App. 2011) (trade secrets’ “only value consists in their being kept private…if they are disclosed or revealed, they are destroyed”). Similarly, information whose owner intentionally discloses it without imposing a confidentiality obligation on the recipient is at high risk of losing any secrecy protection. Seng-Tiong Ho v. Taflove, 648 F.3d 489, 504 (7th Cir. 2011) (plaintiff’s publishing its alleged secrets in trade journals destroyed any trade secret status that information had). An employee’s posting confidential employer data on his or her social networking account would pose a significant risk that the data would lose its trade secret protection, especially if the employer was authorized by the applicable privacy law to demand access to the employee’s account to investigate, but for whatever reason did not or had policies which did not prohibit such social media activities.

On the other hand, “absolute” secrecy is not required to maintain trade secrecy, but only reasonable efforts to maintain confidentiality. See, e.g., Avidair Helicopter Supply, Inc. v. Rolls-Royce Corp., 663 F.3d 966, 974 (8th Cir. 2011) (efforts to maintain secrecy “need not be overly extravagant, and absolute secrecy is not required”). Indeed, two relevant features of many privacy laws are (i) employer immunity for not investigating suspected misconduct (seeMichigan, Utah), and (ii) no duty to monitor employee account activity. (Id.). Employers faced with a waiver argument may cite these statutory provisions to counter the argument that they were required to investigate reports of employee-account-related data theft, lest they lose statutory protection for that data.

D. Takeaways

Issues related to social media privacy in the workplace are not going away, and we expect to see more litigation and legislation to define acceptable practices in this area. As detailed above, one’s ability to differentiate between personal and business ownership of information is often extremely difficult. In light of this uncertainty, employers should at a minimum consider doing the following:

  1. Determine whether your company has employees in any of the states that have adopted or are planning to adopt social media privacy laws.
  1. Review existing policies and agreements regarding employees’ use of social media and computer resources for business purposes to ensure that those policies and agreements clearly define ownership and access rights for such accounts.
  1. Social media policies should be narrowly tailored and provide examples of protected confidential information.
  1. Consider whether to block access to social networking sites not used for business purposes, as well as to other categories of potentially problematic Internet web sites that might be protected under some states’ statutes, such as file-sharing and internet-mail sites.
  1. Provide recurring training on the company’s social media policy confidentiality policies and agreements as well as evaluate the company’s computer network in order to reduce the opportunities for incidents of employee misconduct and network security breaches. Remind employees that the same confidentiality policies and agreements that apply in the workplace also apply in their social media activities.
  1. Evaluate whether the benefits of a bring your own device policy outweighs the risks to data security confidentiality, and employee privacy.

Webinar Recap! State Specific Non-Compete Oddities Employers Should Be Aware Of

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

shutterstock_164426618We are pleased to announce the webinar “State Specific Non-Compete Oddities Employers Should Be Aware Of ” is now available as a podcast and webinar recording.

In Seyfarth’s sixth installment, attorneys Michael Baniak and Paul Freehling discussed 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 non-compete laws continue to evolve from state to state in piecemeal fashion, companies should continually revisit their trade secrets and non-compete strategies in light of the evolving legal landscape and legislative trends.

As a conclusion to this well-received webinar, we compiled a list of key takeaway points, which are listed below.

  • Enforceability of non-compete, non-solicit, and confidentiality covenants in employment agreements depends primarily on the applicable statutes, and pertinent judicial decisions and conflict of laws principles, regarding (a) the acceptable breadth of such covenants, and (b) appropriate balancing of the legitimate business interests of employers, employees, and the public; enforceability requires constant vigilance in updating the covenants as the law, business and employment evolve, often very rapidly.
  • Because each jurisdiction’s version of the Uniform Trade Secrets Act as enacted — it has been adopted in one form or another in the District of Columbia and each of the 50 states except New York and Massachusetts– is unique, all relevant jurisdictions’ versions must be analyzed.
  • Oddities in the law of restrictive covenants include the following: (a) hostility in a few states to non-competes and/or non-solicit covenants in general, (b) in some states (whether by statutory provision or judicial fiat), certain employees are exempt from such covenants,  (c) there are disparities in various courts’ willingness to “blue pencil,” reform, or invalidate covenants deemed overbroad as written, and (d) there are variations in different courts’ views as to whether only actual disclosure, or also threatened or inevitable disclosure, of trade secret or confidential information will be enjoined.

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

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

shutterstock_139796827Christopher 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 of disputes involving preliminary and injunctive relief.

What someone wants and what someone agrees to, however, can vary drastically. Including an arbitration carve-out for preliminary injunctive relief is extremely common, but will the court honor it?

This issue arises at the intersection of two different provisions in an arbitration agreement: the carve-out to an arbitration provision and the delegation provision. The carve-out typically excludes certain disputes from arbitration, such as:

  • Example: “The Parties agree to resolve any dispute, controversy or claim that arises during the course of the Parties’ Agreement. If the Parties are unable to resolve a dispute, the dispute, other than a dispute relating to the breach of the confidentiality provision of this Agreement, shall be subject to final and binding arbitration by a single arbitrator.”
  • Example: “Any dispute arising out of or in connection with this Agreement shall be referred to and finally resolved by arbitration before a single arbitrator. The foregoing, however, shall not preclude the parties from applying for any preliminary or injunctive remedies available under applicable laws for any purpose.”

The delegation provision is a statement by the parties about who decides whether a dispute is arbitrable, usually indicated by:

  • A statement expressly reserving questions about the scope of arbitration for the arbitrator.
    • Example: “Any dispute arising out of or in connection with the arbitration provision of this Agreement, including any questions regarding its existence, validity or termination, shall be referred to and finally resolved by the arbitrator.”
  • Incorporating the Rules of the American Arbitration Association (“AAA”) or another arbitration organization’s rules that reserve disputes over the scope of an arbitration provision for the arbitrator.
    • Example: “The Parties agree that any dispute regarding the interpretation or enforcement of this Agreement shall be resolved by binding arbitration according to the rules of the American Arbitration Association.”

So what happens if an arbitration provision includes both a carve-out for preliminary injunctive relief and a delegation provision? According to several recent cases in the Eleventh Circuit, everything goes to arbitration, even claims expressly carved out by the parties.

The anomaly occurs because of the order in which the court must address what it has the authority to decide and what is reserved for the arbitrator.

The court begins by assessing whether questions about the scope or applicability of the arbitration provision may be addressed by the court. The default setting is that the court retains the authority to decide “questions of arbitrability.” The parties, however, have the ability to reassign that authority from the court to the arbitrator. Doing so means that the arbitrator decides whether a dispute should be in arbitration and the merits of any dispute subject to arbitration.

The delegation provision trumps any carve-out. If questions of arbitrability are reserved for the arbitrator, then the court cannot address claims within the carve-out unless both parties agree that the carve-out claims may be brought in court.

But any dispute about whether a claim is arbitrable or carved out obliterates the court’s authority to address the claim because questions of arbitrability must be heard by the arbitrator.

A recent case in the Northern District of Georgia demonstrates how a delegation provision stopped a former employer from enforcing non-compete and non-disclosure provisions against a former employee.

In Cellairis, Inc. v. Duarte, Case No. 2:15-cv-101-WCO (N.D. Ga. 2015), a cell phone kiosk franchisor filed a preliminary injunction to enforce non-compete and non-disclosure provisions against a former employee. The agreement contained an arbitration clause that sent everything to arbitration except for a few disputes where irreparable harm could result, like a confidentiality or non-compete violation.

But the agreement also contained a delegation provision, which unequivocally provided that all disputes over the scope of the arbitration clause must be decided by the arbitrator.

Even though the franchisor had some very compelling evidence that its former employee was competing in the same industry and violating the scope of the non-compete agreement, the court found that it lacked the authority to enjoin the employee because the arbitrator had to first decide whether a request for preliminary injunctive relief qualified as a “request for preliminary injunctive relief.”

Because the franchisor overlooked the effect of the delegation provision on its ability to bring an action in court, the franchisor wasted time and money seeking relief the court could not provide. Instead, after several weeks, the franchisor left the court with nothing more than an order to initiate arbitration proceedings.


  • If your agreements contain carve-outs in any form and either incorporate the AAA Rules or expressly delegate questions of arbitrability to the arbitrator, consider placing a “carve-out” in the delegation provision allowing the court to decide whether a dispute falls within the arbitration carve-out.
  • If you are involved or about to be involved in a dispute over an agreement with this issue, it may be more cost-effective and efficient to simply start in arbitration and decide scope issues in that forum. Otherwise, you run the risk of spending precious time arguing about whether the court can even consider your request for relief in the first place–let alone decide it.


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

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

shutterstock_104746322A 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., No. 14-2758 (7th Cir., July 29, 2015).

Summary of the Case

Turnell joined CentiMark, a national roofing product and servicing company, as a laborer and rose to Senior Vice President and Midwest Regional Manager.  Contemporaneously with one of his promotions and salary increases, he signed non-compete and non-solicit agreements required of management-level personnel.  He was terminated 25 years later for alleged misconduct and immediately was hired by Woodward, a small Chicago-area roofer.  CentiMark sued Turnell for breach of contract, and he sued the company for employment discrimination.  The company moved for entry of a preliminary injunction.  Applying Pennsylvania law (the agreements so specified as CentiMark is incorporated and headquartered there), the district court judge blue-penciled the covenants and enjoined him but only to the extent she determined to be “reasonably necessary” to protect CentiMark.  Recently, on Turnell’s interlocutory appeal, her ruling was affirmed.

The Covenants

Both the non-compete and the non-solicit lasted for two years after termination.  Both provided for tolling during any period of competition.

The non-competition provision prohibited engaging “in any competing business” to that of CentiMark.  “Competing business” was defined as selling the same or “similar” products to those sold by CentiMark.  The geographic scope of the provision was wherever he had “operated” as a CentiMark employee.

The non-solicitation clause forbad soliciting “competing business” both from CentiMark’s customers or suppliers, and from its “prospective customers or suppliers.”  The term “prospective customers” was defined as anyone “contacted” by CentiMark during specified periods.  The clause contained no geographic limit.

The District Court’s Rulings 

CentiMark asked the district court judge to bar Turnell from performing any work for Windward, but she deemed that request unreasonable.  However, she also declined to enter the order Turnell sought which would have invalidated the covenants altogether as overbroad and oppressive.

Even though CentiMark’s and Windward’s sales territories and roofing product lines were far from identical, the district court held that the companies were competitors.  But the court modified the prohibition in the non-solicitation clause against marketing to CentiMark’s “prospective customers” who CentiMark has “contacted.”  Her reasons, as summarized by the Seventh Circuit, were that the prohibition was “too vague (what kinds of contact count?), too broad (what relationship can CentiMark legitimately seek to safeguard with a prospect it merely called a few years ago?), and impractical (Turnell cannot know everyone his former employer contacted).”  Instead, the injunction ordered him, for two years from the date of issuance, not to sell, attempt to sell, or help to sell products or services related to “commercial roofing.”  Even though his territory had covered the entirety of four states and only parts of three others, the injunction applied to any actual customer of CentiMark as of the date he was fired who was located anywhere in those seven states.  CentiMark was required to post a $250,000 bond.

Opinion on Appeal

The Seventh Circuit explained that the only issues on appeal were (a) the likelihood of CentiMark prevailing in its effort to enforce the covenants, and (b) the balance of potential harms to the parties.  Turnell did not challenge on appeal the scope of the injunction, just the fact that it was issued at all.  So, some of the panel’s comments concerning the ambiguity of scope terms used in the covenant might seem to be dicta.  However, in a footnote the panel directed the district court judge to consider those comments if she chose “to modify the preliminary injunction” and “when and if [she] issues a permanent injunction.”

Noting that Pennsylvania jurists have discretion to blue-pencil but also to refuse to enforce an oppressive covenant, the appeals court stated that “Not every overbroad covenant is oppressive . . ..  In many cases, overbreadth has a more benign cause (such as poor drafting).”  Here, the covenants’ purported coverage of products and services “similar” to CentiMark’s was acceptable although it “might benefit from more precision (what counts as similar?) or a narrower focus (similar products do not necessarily compete).”  The restriction to locales where Turnell “operated” as a CentiMark employee also was criticized as imprecise but acceptable, and he was “free to work in other product and geographical markets.”

In the Seventh Circuit’s view, the district court judge “could have narrowed Turnell’s restrictive covenants even further than [she] did.”  For example, the prohibition against selling “‘commercial roofing’ is too broad, as CentiMark sells a more specific [product:] commercial flat single-ply roofing.”  Further, the injunction need not have pertained to the entirety of seven states because, with respect to three of them, Turnell’s territory only encompassed a portion.  But, recognizing that the covenants were executed a quarter-century earlier, and that neither the company nor Turnell could have anticipated precisely what the two of them would be doing many years later, the appeals court held that the covenants were “overbroad but not oppressively so.”  In sum, the district court judge “exercised [her] equitable discretion under Pennsylvania law to blue pencil the restrictions . . . and properly concluded that CentiMark has a strong chance of enforcing them, as narrowed.”  Finally, “the balance of harms favors Turnell, if at all, only slightly.  It is not enough to overcome CentiMark’s likelihood of success on the merits.”


The lesson of this case is that employers and their attorneys should take care in choosing the words and phrases used in restrictive covenants.  The terms “competing business,” “similar products,” places where an employee “operated,” “prospective customers,” and potential customers who were “contacted” all were held to be ambiguous.  Further, two companies are not necessarily “competitors” just because they have some product overlap.  Also, trying to extend the reach of a covenant beyond the territory where the employee actually worked may make a covenant unenforceable.  A court, particularly one in a jurisdiction that does not permit blue-penciling, might conclude that the former employer’s use of vague terms such as these renders a non-compete or non-solicit so oppressive as to warrant its invalidation.

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

shutterstock_299407832There 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 products company, terminated Wyles, its in-house IP attorney, after discovering he was attempting to set up a competing business with trade secrets he allegedly acquired from West Hills.  West Hills sued Wyles for misappropriation of trade secrets, intentional interference with economic advantage, negligent interference with economic advantage, computer fraud and abuse, conversion, breach of loyalty, breach of confidence, and unfair competition.  West Hills alleged that Wyles had improperly taken documents containing trade secrets, and confidential and proprietary information.

Wyles denied accessing any trade secret information and claims he only took documents that were relevant to a derivative shareholder lawsuit that he contemplated bringing against the company.

The Anti-SLAPP Motion. Wyles moved to dismiss the complaint based on the Strategic Lawsuit against Public Participation (SLAPP) statute codified in California Code of Civil Procedure Section 425.16.  The statute permits the court to strike a “cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech.” C.C.P. § 425.16(b)(1).  The court focuses on the “principal thrust or gravamen” of the complaint.

Wyles’ anti-SLAPP motion was premised on his claim that West Hill’s officers embezzled money, engaged in tax fraud, and other financial malfeasance. Wyles argued that his conduct constituted pre-litigation communication and was therefore protected under Civil Code Section 47(b).

West Hills convinced the court that Wyles had in fact taken trade secrets belonging to West Hills, and that Wyles used that information to try to form a competing business.  West Hills presented evidence that Wyles attempted to recruit West Hill’s consultant to join the new company.  Wyles told this consultant that his competing company would “take over” West Hills’ business and patents.  The consultant also saw agreements between Wyles’ new company and West Hills’ competitors.

West Hills also identified the following trade secret documents in Wyles’ possession: a confidential business plan, privileged and confidential drafts of a patent application, a confidential technical product description, and confidential agreements with potential partners.

The trial court denied Wyles’ motion, and Wyles appealed.

The Appeal. Applying de novo review,  the California Court of Appeal, Second District, held that Wyles did not meet his burden of showing that West Hill’s claims were actually based on his intention to file a derivative action.  Instead, the gravamen of West Hill’s complaint was Wyles’ improper access and use of West Hill’s trade secrets to form a competing venture.

The court focused its attention on the evidence submitted by the parties.  Wyles did not deny taking trade secret information, rather he insisted that the documents supported his embezzlement claims against the company.  The court found that these documents were not germane to the contemplated shareholder derivative lawsuit.

Competing Conduct Is Not Protected Activity. The court distinguished privileged pre-litigation communications from competitive conduct.  The court also acknowledged that the anti-SLAPP statute recognized pre-litigation communications that are encompassed by the litigation privilege under Civil Code Section 47(b).  However, the court rejected Wyles’ argument that he had engaged in such protected activity.  The court noted that the litigation privilege extended to communications, not conduct.  Thus, the privilege applied to a statement Wyles made to a West Hill investor concerning the alleged financial malfeasance.  But, the privilege did not apply to Wyles’ activities in furtherance of establishing a competing business.


The anti-SLAPP statute was intended to protect the public’s participation in government, in particular speech protected by the First Amendment.  Indeed, courts generally give credence to anti-SLAPP motions where speech is involved.  In the trade secret context, an anti-SLAPP motion can be successful when it involves purported defamatory speech or communication.

Therefore, a critical factor to fend off an anti-SLAPP motion appears to be defendant’s competing activity or conduct, and not speech.  West Hills alleged that Wyles engaged in competing activities.  It supported those allegations with evidence which  unequivocally demonstrated Wyles acted for his own financial gain, rather than communicating or making statements for purposes of bringing a shareholder derivative action.

A company wishing to protect its trade secrets should highlight conduct demonstrating the defendant’s use of the trade secret.  This, however, can present an obstacle for many plaintiffs at the onset of litigation.  Since most anti-SLAPP motions are brought before discovery commences, a company may not always have sufficient evidence of competing conduct by the defendant.

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

Posted in Practice & Procedure, Trade Secrets

shutterstock_222930670For 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 works incorporating ideas, systems and processes, among other types of noncopyrightable material as defined in § 102(b) of the Copyright Act. Spear Mktg., Inc. v. BancorpSouth Bank, Case No. 14-10753 (5th Cir. June 30, 2015).

Spear Mktg involved claims that the defendants violated the Texas Theft Liability Act (“TTLA”) and several other Texas laws by allegedly stealing technical and business trade secrets incorporated in software products for the banking industry.  The defendants removed the case to the N.D. Texas on preemption grounds because the plaintiff alleged they received the alleged trade secret information through screen prints and product demos — information and ideas fixed in a tangible medium as would be required in a copyright claim.  The plaintiff petitioned for remand, which the district court denied.

On appeal, the Fifth Circuit focused on preemption of the TTLA claim, applying the well-established two-part test to determine whether a state law claim is preempted by the Copyright Act:

First, the claim is examined to determine whether it falls “within the subject matter of copyright” as defined by 17 U.S.C. § 102. And second, “the cause of action is examined to determine if it protects rights that are ‘equivalent’ to any of the exclusive rights of a federal copyright, as provided in 17 U.S.C. § 106.

For the first element, the court explained that it favored the defendants’ reading of the preemption doctrine, finding that “state law claims based on ideas fixed in tangible media are preempted.”  In doing so, the Fifth Circuit sided with the Second, Fourth, Sixth and Seventh Circuits on this question, departing only from the Eleventh Circuit’s reading.  This was the Fifth Circuit’s first time addressing this issue because, as the unanimous panel noted, its prior decisions generally focused on the second (“equivalency”) element of the preemption test, which is typically more hotly litigated.

With regard to the second element, the court reasoned that the TTLA claim consisted of allegations of “copying, communicating, and transmitting,” which the court found sufficiently equivalent to the exclusive rights protected by copyright law.

Another trade secret defendant may look to Spear Mktg for support in appealing a 15 million dollar judgment issued by the same Texas district Court.  GlobeRanger Corp. v. Software AG, Case No. 15-10121 (5th Cir. 2015).  GlobeRanger involves a Texas trade secret misappropriation claim, which the district court found was not preempted based on the presence of “extra” elements, such as improper use, not present in a copyright claim.  GlobeRanger Corp. v. Software AG, 3:11-CV-0403-B (N.D. Tex June 11, 2015). These extra elements, according to the court, weigh against an equivalency finding.

Some commentators anticipate that Software AG will rely heavily on Spear Mktg in its appeal, but a closer look at the Spear Mktg opinion may give Software AG some pause.  In particular, the Spear Mktg panel commented on Globeranger and an earlier appeal for that case, suggesting that Globeranger’s trade secret misappropriation count differs from the TTLA count in Spear Mktg.:

GlobeRanger, our most recent foray into copyright preemption, appears to touch on the issue, but the claims in that case involved actual physical acts, not just software:

Software AG’s opening brief in the GlobeRanger litigation is due later this month, and trade secret practitioners will be watching closely to determine if the Fifth Circuit choses to extend the preemption doctrine even further.