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

Tag Archives: Pennsylvania

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

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

Non-Compete and Forum Selection Clauses in Franchise Agreement Binding on Franchisee Who Signed It and on His Wife Who Didn’t

Posted in Non-Compete Enforceability, Practice & Procedure

A Florida franchisee executed a franchise agreement (FA) containing a non-compete provision and a Pennsylvania forum selection clause.  Following termination of the FA, the former franchisee’s wife opened a similar business in another part of Florida.  The franchisor filed suit in Pennsylvania against the former franchisee and his wife, and they moved to dismiss or, alternatively, to transfer the case … Continue Reading

Employees Strike Back Against Former Employer For Alleged Bogus Claim of Trade Secret Misappropriation

Posted in Practice & Procedure, Trade Secrets

A state court issued a preliminary injunction for alleged trade secret misappropriation, but the enjoined parties successfully used post-injunction discovery to convince the court that the complaint was baseless.  Those parties then filed a federal court lawsuit for abuse of process and other torts.  In Peek v. Whittaker, Case No. 2:13-cv-01188 (W.D. Pa., May 22, 2014), the court held … Continue Reading

The Romance of Trade Secrets: Competing Speed Dating Companies Engaged in Trade Secret Misappropriation Battle

Posted in Social Media, Trade Secrets

Dating comes with its own set of challenges, and apparently, these now include trade secrets!  This month, a speed dating service provider, Speed Date USA Inc. (“Speed Date”) filed a multi-million dollar lawsuit against Match.com (“Match”) in Pennsylvania federal court.

According to the Complaint, the parties had an agreement under which Speed Date would operate and manage speed dating … Continue Reading

Pennsylvania Federal Court Affirms Broad Pleading Standard for Uniform Trade Secrets Act and Ability to Plead Preempted Claims in the Alternative

Posted in Practice & Procedure, Trade Secrets

According to the allegations in a recently filed complaint, Defendant Implementation Management Assistance, Inc. (“IMA”) hired a long-time employee, Liana Hans, away from competitor Plaintiff Triage Consulting Group, Inc. (“Triage”). Hans allegedly had intimate knowledge of Triage’s proprietary systems and allegedly shared that knowledge with IMA, in derogation of her confidentiality agreement with Triage. IMA thereafter recruited another Triage employee, … Continue Reading

You’ve Already Signed Your Offer Letter– Can You Still Be Subject to a Non-Compete Agreement Signed at the Inception of Employment Without New Consideration? Pennsylvania Supreme Court Says Yes

Posted in Non-Compete Enforceability, Practice & Procedure

Is new consideration required for a valid covenant not to compete presented to an employee at the inception of their employment after they sign their offer letter? 

Under the majority approach, recognized in many states continued employment is sufficient consideration for a valid non-compete agreement.  However, a minority of jurisdictions, will not enforce a non-compete agreement offered for signature after … Continue Reading

Pennsylvania Appellate Court Orders Sanctions for Plaintiff’s Bad-Faith Trade Secret Misappropriation Claims

Posted in Practice & Procedure, Trade Secrets

On May 17, 2013, a Pennsylvania appellate court, with one of its judges dissenting, ordered that the trial court award attorneys’ fees to a married couple whose neighbors wrongfully accused them of trade secret misappropriation regarding flagstone artwork. Krafft v. Downey, Pa. Sup. Ct. No. 476 WDA 2012 (Donohue, J.).

According to the majority, plaintiffs Jack and Linda Krafft … Continue Reading

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 … Continue Reading

“Gist Of The Action” Doctrine May Require Dismissal Of Tort Claims Based On Breach Of Restrictive Covenants In Employment Agreement

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

Pursuant to the “Gist of the Action” doctrine, tort claims may be dismissed if they are “intertwined with,” and not just “collateral to,” contract claims in the same complaint.

In a Pennsylvania federal court case, an ex-employee was accused by his former employer of breaches of confidentiality, non-solicitation and non-compete agreements, and related causes of action. The portion of the … Continue Reading

Pennsylvania Federal Court Dismisses Employee’s Computer Fraud and Abuse Act Claim Based Upon Employer’s Alleged Improprer Access of LinkedIn Account: No Cognizable Damages

Posted in Computer Fraud, Computer Fraud and Abuse Act, Practice & Procedure, Trade Secrets

By Jessica Mendelson and Robert Milligan

Ownership of company social media accounts has recently become a hot topic in the legal industry, and with its decision in Eagle v. Morgan, 2012 WL 4739436, E.D.Pa., October 04, 2012 (NO. CIV.A. 11-4303) this past week, the Eastern District of Pennsylvania has added fuel to the fire.

Edcomm, a banking education company, was … Continue Reading

California Federal Court Boots Employee’s Challenge Of His Non-Compete Because Of Pennsylvania Forum Selection Provision

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

By Robert Milligan and Grace Chuchla

In a recent order, a federal court in the Northern District of California weighed in on the validity a forum selection clause contained in an employment agreement in connection with a California employee’s declaratory relief action to invalidate his non-compete provision with his former employer. The court found for the Pennsylvania-based employer and … Continue Reading

California Federal Court Ships California Employee’s Declaratory Relief Action Seeking To Invalidate His Non-Compete To Pennsylvania

Posted in Non-Compete Enforceability

On February 27, 2012, a California federal judge for the Northern District of California, decided the case of Hegwer v. American Hearing and Associates, finding that the alleged illegality of a non-compete clause in an employment agreement involving a California employee has no bearing on a legal forum selection clause. Accordingly, the Court transferred the employee’s declaratory relief action to Pennsylvania federal court.… Continue Reading

Pennsylvania Federal Court Salvages Customer Lists as Basis for UTSA Claim, But Shreds Liquidated Damages Provision and Rejects Fiduciary Claim

Posted in Trade Secrets

By Rebecca Woods

In the most recent ruling in long-running litigation styled AMG National Trust Bank v. Ries, NO. 06-CV4337, 09-cv-3061 (E.D. Pa.) (decided Dec. 29, 2011), the Eastern District of Pennsylvania partially granted the defendant Stephen Ries’s motion for summary judgment, jettisoning the plaintiff’s breach of fiduciary duty claims and plaintiff’s request for liquidated damages, but permitting the … Continue Reading

Court Rules Pennsylvania Trade Secrets Act Entitles Defendants To Attorneys’ Fees For Bad Faith Misappropriation Claim

Posted in Trade Secrets

By Justin Beyer

In a matter of first impression, Judge William Standish of the Western District of Pennsylvania ruled in Best Medical Int’l, Inc. v. Spellman, 07-cv-01709-WLS, 2011 U.S. Dist. LEXIS 147853 (W.D. Pa. Dec. 22, 2011), that, pursuant to the Pennsylvania Uniform Trade Secrets Act (“PUTSA”), a defendant may recover attorneys’ fees against a plaintiff where the plaintiff … Continue Reading

Employers May Have Sweat Equity In Their Executives LinkedIn Accounts, But Employees Score Win In War Over The Applicability Of The Federal Computer Fraud And Abuse Act In The Workplace

Posted in Computer Fraud and Abuse Act, Trade Secrets

By Scott Schaefers

In the age of social media and networking, where employees undoubtedly use their company-issued computers to network with customers, vendors, colleagues, and friends, a legal question presents itself: can employers claim an interest in their employees’ LinkedIn accounts, or other social networking accounts, which the employees use in part to grow and maintain their relationships for the … Continue Reading

A Pennsylvania District Court Finds That A Non-Compete Agreement Is Not Subject To Automatic Stay in Bankruptcy

Posted in Non-Compete Enforceability

            Once triggered by a debtor’s bankruptcy petition, the automatic stay suspends a parties’ right to commence or continue an action against property of the debtor’s estate. In general, a party can seek relief from the automatic stay for a variety of reasons, including for cause, lack of adequate protection or that the debtor has no equity in the property and … Continue Reading

TRO Entered Where Owner Of Trade Secrets Made “Substantial” Efforts To Maintain Confidentiality

Posted in Trade Secrets

A federal court recently entered a TRO to prevent disclosure of trade secrets justifiably shared, in confidence, with business associates. When two of those associates made plans, clandestinely, to form a competing company, they were enjoined from disclosing the trade secrets even though they had not signed a confidentiality agreement. Exl Labs., LLC v. Egolf, 2010 U.S. Dist. LEXIS 131105 … Continue Reading

Bimbo Bakeries v. Botticella: Man vs. Muffin, Muffin Wins Injunction

Posted in Trade Secrets

             On July 27, the United States Court of Appeals for the Third Circuit affirmed a district court’s order enjoining a senior executive from Bimbo Bakeries USA, Inc., from working for one of Bimbo’s competitors, Hostess, until after the district court resolved the merits of Bimbo’s misappropriation of trade secrets claim against the executive. Among other trade secrets at issue in … Continue Reading

Inevitable Disclosure of Nooks and Crannies

Posted in Trade Secrets

When explaining to lay people what we do, trade secret practitioners often use the classic examples of the formula for Coca-Cola or KFC’s secret recipe of eleven herbs and spices. Now, we can add as an illustration the nooks and crannies of Thomas’ English Muffins, as demonstrated by a case filed by Bimbo Bakeries (“BBakeries”) in the Eastern District of Pennsylvania. BBakeries, … Continue Reading

A Classic Fight Over Venue

Posted in Practice & Procedure

Because the laws of various states regarding non-compete clauses differ significantly, cases involving these provisions often entail fights at the outset as to the proper venue. The Eastern District of Pennsylvania recently faced just such an issue in CertainTeed Corp. v. Nichiha USA, Inc., Civil Case No. 09-CV-3932-LS, 2009 WL 3540796 (E.D. Pa. Oct. 29, 2009). In that matter, CertainTeed contested … Continue Reading