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

Tag Archives: New York

Top 10 Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2013

Posted in Breach of Fiduciary Duty, Computer Fraud, Computer Fraud and Abuse Act, Cybersecurity, Data Theft, Espionage, International, Legislation, Non-Compete Enforceability, Practice & Procedure, Privacy, Restrictive Covenants, Social Media, Trade Secrets, Unfair Competition

By Robert Milligan and Joshua Salinas

As part of our annual tradition, we are pleased to present our discussion of the top 10 developments/headlines in trade secret, computer fraud, and non-compete law for 2013. Please join us for our complimentary webinar on March 6, 2014, at 10:00 a.m. P.S.T., where we will discuss them in greater detail. As with all

Careful, that Slice of Pizza You’re Eating Might Be Full of Trade Secrets…

Posted in Trade Secrets

It’s time for yet another meal filled with trade secrets! 

Earlier this month, New York Pizzeria, Inc., a pizzeria chain with over thirty restaurants in the United States and the Middle East, filed a complaint in federal court in Texas alleging trade secret misappropriation.  New York Pizzeria alleged that a former employee, as well as individual restaurant owners, were conspiring …

Comply or Lose: New York Affirms Enforcement of Non-Compete in Rescission Action for Employee Equity Grants

Posted in Non-Compete Enforceability, Practice & Procedure

By Marcus Mintz

A New York Supreme Court recently affirmed the viability of the “employee choice doctrine” in a rescission action involving employee equity grants.  See Lenel Systems Int’l., Inc. v. Smith, 106 A.D. 3d 1536, 966 N.Y.S.2d 618 (N.Y. App. Div. 2013).  The “employee choice doctrine” arises when an employee has a choice between complying with post-employment obligations, …

Recent Alleged Cyberattack By Ex-Employee Demonstrates Importance of Employer Diligence On Protecting Network Passwords

Posted in Computer Fraud, Computer Fraud and Abuse Act, Cybersecurity, Data Theft

By Robert Milligan and Grace Chuchla

A recently unsealed criminal complaint out of the Eastern District of New York raises allegations that paint a frightening picture for employers of the havoc that disgruntled ex-employees can wreak on company computer networks.

The prosecution alleges that a former employee of an unnamed company that manufactures high-voltage power supplies in Suffolk County, New …

The Computer Fraud and Abuse Act and Disloyal Employees: A Narrow Bridge To Nowhere?

Posted in Computer Fraud, Computer Fraud and Abuse Act, Data Theft, Trade Secrets

By Gary Glaser and Jacob Oslick

An old folk melody describes the world as “a very narrow bridge,” where one misstep can bring disaster. The song seeks to inspire, calling on people to have “no fear at all” while crossing through life’s perils.

However inspiring this song might be, some metaphorical bridges just aren’t worth crossing. Trying to assert Computer …

Second Circuit Largely Affirms $18.1 Million Trade Secrets Misappropriation Verdict

Posted in Data Theft, Trade Secrets

On February 6, 2013, the federal Second Circuit Court of Appeals affirmed $15 million of a $18.1 million dollar jury verdict (onto which the trial court tacked on an additional $1.5 million in interest) in favor of a New York subway brake manufacturer on its trade secret misappropriation claim against a former licensee turned competitor.  Faively Transport USA, Inc. v.

New York Federal Court Denies Injunction to Enforce Restrictive Covenants Against Terminated Employee

Posted in Non-Compete Enforceability

Garrod, a salesman for more than 25 years in the field of elastomeric precision products (EPP), was terminated in mid-2012 after spending an aggregate of a dozen of those years working for manufacturers of EPP parts Fenner and a company acquired by Fenner.

He had signed both employers’ agreements containing non-compete and customer non-solicitation clauses–which appeared reasonable on their face–and …

Fashion Company Launches Breach of Confidentiality/Unfair Competition Suit Against Former Employee

Posted in Restrictive Covenants, Trade Secrets, Unfair Competition

Now that the Tory Burch lawsuit has settled, it looks like we’ve got ourselves another preppy clothing dispute on our hands!  Last week, J. Crew sued one of its former employees, a senior design director named Dwight Fenton, for allegedly stealing confidential information in New York state court.  Fenton had recently resigned from the company to take a position at …

Aleynikov Case Continues to Grab Headlines in Trade Secrets Community

Posted in Data Theft, Espionage, Trade Secrets

Last year, Sergey Aleynikov, a computer programmer, beat federal charges of trade secret theft under the Economic Espionage Act. Although Aleynikov was initially convicted, the Second Circuit Court of Appeals overturned his conviction, finding that the trade secrets relating to the source code Aleynikov had taken were not related to a product “produced for. . . interstate or foreign …

New York Federal Court Rejects Heightened Specificity Pleading Standard for Breach of Confidentiality and Non-Disclosure Claim

Posted in Trade Secrets, Unfair Competition

By Joshua Salinas and Jessica Mendelson

The secret is out, Tic Tacs and bubblegum have the most valuable and desirable real estate in the entire grocery store.

On September 27, 2012, a district court for the Eastern District of New York granted in part and denied in part a motion to dismiss in a commercial dispute arising out of the …

The Trade Secret Is In the Swirl Cupcake: Bakery Sues To Protect Its Signature Icing Topping

Posted in Practice & Procedure, Trade Secrets, Unfair Competition

By James Yu

Apparently it’s not just the sweet, delicious taste of Magnolia Bakery cupcakes that had people lining up in droves for a box or three since it opened its first store in Greenwich Village, New York over 15 years ago.

According to a Complaint filed on September 20, 2012 by Magnolia, entitled Magnolia Intellectual Property, LLC v. Buba …

Connecticut Federal Court Finds That Non-Competition Covenant Which Is Silent Regarding Assignability May Be Enforceable Depending Upon the Parties’ Intent Under New York Law

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

A Connecticut federal court recently issued a significant decision concerning the rights of a buyer of a business to enforce non-competition agreements against employees who previously worked for the seller under New York law.

In 2003, Milso and each of its employees signed an employment agreement expressly governed by New York law. The agreement contained confidentiality, non-solicitation and non-competition covenants …

California Federal Court Transfers Trade Secret Dispute Involving High-Tech Gloves To New York

Posted in Practice & Procedure, Trade Secrets

By Robert Milligan and Jeffrey Oh

In today’s dynamic environment of interstate commerce, including internet transactions, deciding on the proper venue for a trade secret misappropriation dispute can be a complicated process involving a number of different factors particularly if the parties are domiciled and/or transact business in different states.

In the case of GLT Technovations, LLC v. Fownes Brothers …

Sale of Business “Good Will” and Subsequent Competition with Purchaser May Subject Seller to Perpetual Restrictions on Contacting Former Customers and Clients

Posted in Restrictive Covenants

A recent Second Circuit Court of Appeals decision provides guidance regarding New York law concerning permissible and impermissible competitive conduct by the seller of a business, including its “good will,” who — without giving a non-compete covenant — thereafter goes into competition with the purchaser. The Second Circuit was aided by New York’s highest court which answered certified questions concerning …

For Whom the Employment Agreement Tolls: New York State Appellate Court Applies Equitable Tolling Doctrine In Non-Compete Dispute

Posted in Non-Compete Enforceability, Practice & Procedure

An important procedural issue that often arises in a non-compete dispute is the idea of equitable tolling. This doctrine essentially allows a court to toll, or stay, the time remaining on a non-compete agreement during the period in which the employee is in breach. Equitable tolling, however, is not always available, and the remedy is highly dependent on what state’s …

A New York Court Holds that Employee Choice Doctrine Does Not Apply to Equitable Relief in a Non-Compete Matter

Posted in Non-Compete Enforceability

Employers often condition the payment of post-employment or deferred compensation on a departing employee’s compliance with a noncompete agreement. New York is one of the few states that specifically allow for such an arrangement under the "employee choice" doctrine. This doctrine holds that an employee who chooses to voluntarily resign and violate his or her noncompetition obligations can be deemed …

New York Federal Court Finds That Anti-Raiding Clause Is Subject to Rule of Reasonableness Under New York Law

Posted in Non-Compete Enforceability

In Renaissance Nutrition, Inc. v. Jarrett, 2012 WL 42171 (WDNY) (January 9, 2012), Renaissance, a vitamin and pre-mix company serving the dairy industry, alleged that two former top-level employees violated a five year "non-recruitment" or "anti-raiding" clause. In short, Renaissance alleged that these employees resigned in tandem with plans to develop a rival company, Cows Come First, and then …

Western District of New York upholds Non-Compete and Grants TRO

Posted in Restrictive Covenants

Plaintiff IDG USA, LLC (“IDG”), a Georgia company with its principal place of business in North Carolina, commenced an action against a former employee, Kevin J. Schupp (“Schupp”), a New York resident, alleging breaches of a Non-Compete Agreement, breach of a Confidentiality Agreement, unfair competition, and theft of trade secrets.

In a 12 page decision, IDG USA, LLC v. Schupp, …

To Get Injunctive Relief, Be Able to Prove Specific Irreparable Harm

Posted in Trade Secrets

In New York, injunctive relief will not be awarded unless the plaintiff sets forth specific non-monetary harm to Plaintiff in a trade secret case.

In Systems Management Planning, Inc., v. Gordon, 23 Misc.3d 1104(A), 2009 WL 901514 (N.Y.Sup.) (Sup. Ct., Monroe Co, April 3, 2009), the court, in determining a preliminary injunction, assumed that the trade secret status of the …

New York Federal Court Rejects Attempt to Recast State-Law Trade Secrets and Unfair Competition Claims as Federal Antitrust Claims

Posted in Unfair Competition

Emigra Group, LLC v. Fragomen, Del Rey, Bernsen & Loewy LLP, et al., No. 07 Civ. 10688 (LAK) (S.D.N.Y. Mar. 31, 2009).

In a decision that should be considerable reassurance to employers in general and law firms in particular, a district judge in New York has rejected an antitrust claim brought by a consulting firm against its former employer, an …

Next Stop, District Court (again)! Second Circuit Vacates Injunction Barring Disclosure of Trade Secrets Concerning New York City Subway Brakes

Posted in Trade Secrets

Opening with a tribute to the iconic New York City subway system, complete with citations to sources as diverse as Leonard Bernstein and The Bonfire of the Vanities, the Second Circuit Court of Appeals earlier this week vacated and remanded a preliminary injunction barring a braking system manufacturer from disclosing proprietary drawings and other information to the New York City …

New York State Court Rules that Noncompete Agreement Between Law Firms Previously Engaged In Merger Talks Is Unenforceable as Violative of Public Policy.

Posted in Non-Compete Enforceability

Nixon Peabody v. Taylor Wessing France, 2008 NY Slip Op. 51885(U) (Sup. Ct. Monroe Cty. Sept. 16, 2008).

A trial court in upstate Monroe County, New York earlier this month granted summary judgment for law firm Nixon Peabody LLP (“Nixon”), which sought a declaratory judgment and injunctive relief as a result of alleged tortious interference with prospective business relations by …

New York Bars Non-Compete Agreements for Broadcast Industry

Posted in Restrictive Covenants

On August 6, 2008, New York Governor David A. Paterson signed Bill S02393, dubbed the “Broadcast Employees Freedom to Work Act” into law. The act, amends the New York Labor Law so as to prohibit non-compete agreements in the broadcasting industry.  The enactment is effective immediately, and is codified as section 202-k of the Labor Law

Specifically, the newly minted Section …