In a rare appellate decision on enforceability of non-disclosure agreements and a plaintiff’s burden to establish the existence of trade secrets, the First Circuit recently overturned a district court summary judgment order and trial verdict. This decision serves as an important reminder for both those who litigate trade secrets claims and those who draft restrictive covenants agreements.

Background

TLS Management and Marketing Services, LLC, a tax planning and consulting firm, sued its former employee, Ricky Rodríguez-Toledo, for alleged misappropriation of trade secrets under Puerto Rico’s misappropriation law and breach of his NDA with TLS. TLS claimed two trade secrets germane to the litigation, the “US Possession Strategy”—essentially a tax arbitrage strategy designed to help clients avoid higher mainland taxes—and “Capital Preservation Reports” or “CPRs,” client-specific reports with tax recommendations based on an analysis of applicable statutes and regulations. Continue Reading Rare First Circuit Decision Invalidating NDA and Overturning Misappropriation Verdict Serves as a Cautionary Tale

The American Intellectual Property Law Association’s (AIPLA) Trade Secret Committee (of which partner Erik Weibust is Vice Chair) is taking its annual Trade Secret Law Summit online this year, with a series of weekly webinars. The first of the series, on Wednesday, August 12, 2020, at 2:00 p.m. EST, features partner Scott Humphrey, who will be moderating a panel entitled “Litigation Funding in Trade Secrets Cases.”

Litigation finance is one of the hottest trends and topics in the legal industry.  In today’s economic and legal climate, companies and individuals are looking for alternative ways to fund their trade secret cases, and are turning to litigation funders for assistance. AIPLA’s panel on the “Use of Litigation Funding in Trade Secret Cases” will look at the use of litigation funding in the trade secret space both before and during the COVID pandemic, examine recent trends and likely future trends of the industry, discuss what litigation funders look for in a case, and provide tips on what an individual or company should consider when evaluating whether litigation finance is a viable funding mechanism for their case.

The full schedule for this year’s remote Summit, which features weekly 90-minute presentations covering two topics each, is as follows:

Session 1 (August 12)
What You Need to Know About Ex Parte Seizures under the DTSA
Litigation Funding in Trade Secrets Cases

Session 2 (August 19)
Judicial Perspectives on Trade Secret Matters
Legislative and Judicial Trends in Trade Secret Law

Session 3 (August 26)
Proving Damages in Trade Secret Litigation
Arbitration and Jury Trials in Trades Secrets Disputes

Session 4 (September 2)
Forensics and Artificial Intelligence in Trade Secret Protection and Litigation
Ethics in Trade Secret Investigations and Litigation

Participants can register for the entire Summit or individual sessions. Each session begins at 2:00 p.m. EST and will be followed by online networking beginning at 3:30 p.m. EST. Additional information and registration can be found here.

Partner Erik Weibust will be speaking on Thursday, August 13, 2020, at 12:00 p.m. EST, on an American Bar Association webinar entitled “Non-Compete Update: Practical Guidance in Response to COVID-19.” Erik will be covering topics including “Enforcing Non-Competes During High Unemployment” and “Preparation and Pursuit of Non-Compete Litigation During Court Closures/Limited Access.” Other topics include:

  • Level Set on Forms of Restrictive Covenants
  • Legislative Updates
  • Nationwide Non-Compete Programs
  • Employees Returning to the Workplace
  • Confidential Information and Remote Workers

Additional information and registration can be found here.

At the end of 2019, Coty Inc. (“Coty”) expanded its brand portfolio by closing a notable $600 million deal for a majority stake in reality star Kylie Jenner’s young cosmetics company, King Kylie LLC (d/b/a Kylie Cosmetics). The purchase placed the valuation of the Kylie Cosmetics at $1.2 billion. Drama soon followed the acquisition as reports questioning Ms. Jenner’s net worth (and consequently, the value of her cosmetics empire) surfaced in May 2020, overshadowing Coty’s launch of the Kylie Skin beauty line in Europe. On June 29, 2020, Coty announced a 21% investment in KKW Beauty (Ms. Jenner’s sister’s company) for $200 million. Prompted by these deals, the manufacturer behind both Kylie Cosmetics and KKW, Seed Beauty, LLC, filed two trade secret lawsuits in Superior Court in Los Angeles, California. Continue Reading Not so Pretty: Cosmetic Company Acquisitions Lead to Contentious Trade Secret Spat

As many of our blog readers will know, the enforceability of restrictive covenants often depends on which state’s law applies to the dispute. For example, California is well known for refusing to enforce employee non-competition agreements and, recently, refusing to honor forum selection clauses in agreements with California employees without the employee first receiving legal advice. In contrast, with limited exceptions, most other states will generally enforce restrictive covenants. Consequently, for employers, controlling and choosing the correct law to  apply to its restrictive covenant agreements can be critical to protection of its business interests. Continue Reading 6th Circuit Bolsters Employer’s Right to Contract for Chosen Law

Seyfarth partners Robert Milligan and Dawn Mertineit recently recorded a 60-minute webinar for California CLE provider CEB, “Handling a Remote Work Force and Return to Work Considerations in the Age of COVID-19: Best Practices for Protecting Trade Secrets and Confidential Information.”

The course focuses on the best practices and steps companies can take to continue to protect intellectual capital during the coronavirus pandemic, including the unique challenges of remote working and the efforts to slowly return to work. Topics covered include:

  • An overview of trade secret protection, including what is typically required as “reasonable measures” to protect trade secrets;
  • How coronavirus is displacing safe work environments;
  • Heightened risks to trade secret protection in light of remote working;
  • Suggested agreements and policies to strengthen trade secret protections;
  • Best practices for interviews and exit interviews and dealing with furloughed or laid off workers;
  • Tips to guard against cybersecurity threats in mobile work environment; and
  • Discussion of best practices and data repatriation upon a return to work of some (or all) of the workforce.

For more information or to register for this webinar, visit https://store.ceb.com/handling-a-remote-work-force-and-return-to-work-considerations-in-the-age-of-covid-19.

The Massachusetts Superior Court recently held in Now Business Intelligence, Inc. v. Donahue that a temporary reassignment during a business slowdown, consisting of the addition of certain non-billable duties, does not constitute a material change invalidating a non-compete agreement. The dispute centered on Now Business Intelligence, Inc.’s (“NBI”) ability to hold its former employee, Sean Donahue (“Donahue”), liable for breach of his covenant not to compete. Continue Reading Massachusetts Superior Court Axes an Attempt to Expand the Scope of the Seminal Non-Compete Law Concerning Material Change in Employment

From court closures and the way judges conduct appearances and trials to the expected wave of lawsuits across a multitude of areas and industries, the COVID-19 outbreak is having a notable impact in the litigation space—and is expected to for quite some time.

To help navigate the litigation landscape, we are kicking off a webinar series that will take a look at what’s happening now and what to expect in terms of litigation practice and litigation trends in the months to come. The initial webinars detailed below will be supplemented by topic-specific programs that will take a deeper dive into the respective topics. Feel free to attend one or all, and please invite your colleagues.


Court Is “In Session”: The Post-Pandemic Courthouse

In the first installment of our Post-Pandemic Litigation Webinar Series, Seyfarth litigators from a variety of legal disciplines will examine the virtual courthouse in a post-pandemic world. Specifically, our presenters will address:

  • What is going on in courts across the country, and how/when are they rescheduling
  • How will state, federal, and bankruptcy courts run post-pandemic
  • Will we be able to have jury trials
  • How long this “new normal” is expected to last
  • Necessary tools needed to adapt and keep your cases moving forward
Moderator:

Scott Carlson, Partner, Seyfarth Shaw

Speakers:

Suzanna Bonham, Partner, Seyfarth Shaw
Gina Ferrari, Partner, Seyfarth Shaw
William Hanlon, Partner, Seyfarth Shaw
Scott Humphrey, Partner, Seyfarth Shaw

Tuesday, July 14, 2020

1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

If you have any questions, please contact Colleen Vest at cvest@seyfarth.com and reference this event.


New Era, New Litigation: Lawsuits You Can Expect in the Post-Pandemic Environment

During the second installment of our Post-Pandemic Litigation Webinar Series, our panel will provide high-level insights on what companies of all sizes can expect in terms of litigation as a result of COVID-19. Specifically, our presenters will address the high-level trends we are observing in the following areas:

  • Bankruptcy and Financial Services
  • Class Actions and TCPA
  • Commercial Litigation
  • Construction and Real Estate Litigation
  • Health Care, Life Sciences, and Pharmaceutical
  • Securities Litigation
  • Trade Secrets and Cybersecurity/Privacy
Moderator:

James McGrath, Partner, Seyfarth Shaw

Speakers:

Kristine Argentine, Partner, Seyfarth Shaw
Jesse Coleman, Partner, Seyfarth Shaw
Tonya Esposito, Partner, Seyfarth Shaw
Richard Lutkus, Partner, Seyfarth Shaw
Kate Schumacher, Partner, Seyfarth Shaw
Rebecca Woods, Partner, Seyfarth Shaw

Wednesday, July 22, 2020

1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

If you have any questions, please contact Danielle Freeman at dfreeman@seyfarth.com and reference this event.

Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Competes Practice Group Co-Chair Katherine Perrelli was recently named chair of the Trade Secrets and Interferences with Contracts Committee of the American Bar Association Intellectual Property Section for the 2020-2021 bar year.

The Trade Secrets and Interferences with Contracts Committee is focused on issues arising under federal, state, and foreign laws addressing trade secrets, unfair interference with contractual rights, and related unfair competition causes of action, including cooperation with the Uniform Law Commission in trade secret and related areas.

Learn more about the ABA Intellectual Property Section’s Trade Secrets and Interferences with Contracts Committee.

 

Dawn Mertineit and Robert Milligan authored an article in the Daily Journal, “‘Can’t we just be like California?’ Another solution in search of a problem.” The Seyfarth partners said while historically the issue of noncompete enforcement has been left to the states, the last year has seen the U.S. Department of Justice and the Federal Trade Commission begin to examine the effect of such covenants on the labor market. The authors question why the FTC should consider exercising rule making authority to intrude on regulating employment non-compete agreements, which are typically governed by individual state law.