Seyfarth attorneys Robert Milligan, Joshua Salinas, Amy Abeloff, and Olivia Wada contributed to this year’s ABA Section of Intellectual Property Law, Trade Secrets and Interferences with Contracts Committee Annual Trade Secret Law Report.

The Annual Report, found here, covers the significant trade secrets cases from around the country that were decided in 2017. The Report is a good resource for staying current in trade secrets developments and trends.

In what appears to be a first under the Defend Trade Secrets Act (“DTSA”), a United States District Judge has thrown out claims against an alleged trade secret thief on the basis of the DTSA’s immunity for confidential disclosures to attorneys in the course of investigating a suspected violation of the law. Christian v. Lannett Co., Inc., No. 16-cv-00963-CDJ, 2018 WL 1532849 (E.D. Pa. Mar. 29, 2018).

Certain Trade Secret Disclosures to Attorneys or the Government Are Protected

The DTSA exempts from both criminal and civil liability any trade secret disclosure made in confidence to a federal, state, or local official or to an attorney if the disclosure is made “solely for the purpose of reporting or investigating a suspected violation of law.” 18 U.S.C. § 1833(b)(1). Continue Reading Defend Trade Secrets Act First: Claim Tossed Based on Whistleblower Immunity

Please join us for a one-hour CLE webinar on Tuesday, May 22, 2018, at 1:00 p.m. Eastern / 12:00 p.m. Central / 10:00 a.m. Pacific.

The risk of trade secret theft to businesses has increased in recent years, with greater employee mobility between companies, the alarming frequency of targeted data theft attacks, and the explosion of social media and cloud computing. Companies cannot simply react to these real business risks to their data after the data is compromised. By then, it’s too late.

To address these recurrent issues, Seyfarth Shaw helps clients protect their important assets and effectively manage risk by conducting trade secret audits. Our experience has shown that companies gain tremendous value by taking a proactive, systematic approach to assessing and protecting their trade secret portfolios through a Trade Secret Audit. In Seyfarth’s third installment in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Kate Perrelli, Dawn Mertineit, Justin Beyer, and Andrew Stark will cover the following topics:

  • Identifying trade secrets and secrecy protections
  • Effective secrecy protections, including employment and non-compete agreements
  • Effective hiring and termination protocols, including effective exit interviews and termination protocols
  • Employing a comprehensive approach and trade secret protection plan
  • Managing and working to protect computer-stored data, including responding to emergency issues related to computer fraud and security breaches

A recent decision from the Eastern District of Pennsylvania reinforces the importance of the timing of purported misconduct in alleged violations of the Computer Fraud and Abuse Act (CFAA) and Defend Trade Secrets Act (DTSA). In Teva Pharmaceutical USA, Inc. v. Sandhu, et al., 2018 WL 617991 (Jan. 30, 2018), Judge Savage found that a defendant former executive could not be liable under the CFAA for conduct that occurred while she had authorized access to computers from which she misappropriated trade secrets. Id. at *1. However, the court also found that CFAA claims could be brought against the recipients of those trade secrets under an “indirect access” theory, and that DTSA claims could be brought on the basis of activity that began before the enactment of the DTSA but continued to occur after its passage. Continue Reading Federal Court Dismisses CFAA Claims Against Former Executive, Allows CFAA and DTSA Claims Against Competitor in Pharmaceuticals Trade Secret Dispute

This post originally appeared on the Workplace Class Action blog.

Seyfarth Synopsis: There are currently pending at least four class actions claiming that provisions contained in franchise agreements prohibiting the hiring of employees of other intrabrand franchisees without the consent of their employer violate the antitrust laws.  That being said, in 1993 the Ninth Circuit affirmed summary judgment in favor of a franchisor in a similar “no-hire” case.  It reasoned that due to the control the franchisor exercised over its franchisees, the franchisor and its franchisees were incapable of conspiring in violation of Section 1 of the Sherman Act. While the so-called “single enterprise” defense is potentially available, franchisors should be cognizant that in developing that defense, they may create evidence or admissions that would support a subsequent claim that the franchisors are joint employers of their franchisees’ employees.  In light of the availability of other defenses, franchisor employers should assess whether the joint employer risk is worth accepting in order to pursue the single enterprise defense.  Continue Reading Franchise “No-Hire” Agreement Class Actions And The Single Enterprise Defense

Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Compete Practice Group Co-Chair Robert Milligan is on the panel for the “Discovery in Trade Secret Litigation” session on May 4 at The Sedona Conference Working Group on Electronic Document Retention & Production 2018 Midyear Meeting in Nashville, Tennessee. The “Discovery in Trade Secret Litigation” sessions will include an introduction to The Sedona Conference’s new Working Group 12, and issues raised by the rising tide of trade secret litigation. These types of cases often involve discovery of personal devices and third-party apps, leading to a perfect storm of privilege, privacy, and proportionality considerations while handling proprietary and confidential information. The panel will also address trade secret identification issues and protective orders.

The Midyear Meeting is critical to move existing Working Group work product forward, and the topics have been chosen to help identify where The Sedona Conference can provide further guidance.

Among the Featured Sessions Are:

  • New Technology and eDiscovery Competence: Explore the impact of technology on discovery, including AI, Blockchain, IoT, and Apps. Do you know how to get information from these sources or audit the data in them?
  • GDPR for the U.S. eDiscovery lawyer: How to safely navigate cross-border EU/U.S. data transfers––making the best of tough decisions and avoiding problems on both sides.
  • Guidance from in-house lawyers to law firms and other legal service providers: Tips for outside counsel and vendors to add more value to eDiscovery engagements.

For more information, to see the full agenda, or to register, click here: https://thesedonaconference.org/node/108211

This post originally appeared on the Workplace Class Action blog

Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions. While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal. Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace. Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks. Continue Reading DOJ Announces First of a Number of Anticipated No-Poach Enforcement Actions – What Should Employers Do Now?

Late last week, the Texas Supreme Court denied a petition for mandamus in which the petitioner sought an order compelling a plaintiff to identify the specific trade secrets it contends were misappropriated, bucking what petitioner claimed is a “growing consensus” among the states.

In August 2015, B.J. Reynolds resigned from Sanchez Oil & Gas Corp. and began working as the vice president of operations for Terra Energy Partners LLC. In early March 2016, Terra hired two other Sanchez employees, Wes Hobbs and Mark Mewshaw. Later that month, Sanchez brought suit against Terra for misappropriation of trade secrets, alleging that after leaving the company, Hobbs and Mewshaw stole various electronic data involving processes to drill oil wells and to secure cost savings from vendors.

During the course of discovery, Sanchez produced approximately 170,000 pages of documents that allegedly contained the misappropriated trade secrets. According to Terra’s petition for writ of mandamus, however, Sanchez never specifically identified what trade secrets it accused Terra of stealing. As a result, Terra filed a motion to compel Sanchez to describe the “steps or elements of any trade secret processes that it claims were misappropriated,” arguing that Sanchez’s “data dump” ran afoul of its disclosure obligations under the Texas Rules of Civil Procedure and the Texas Uniform Trade Secrets Act. Terra also argued that it would cost its expert witnesses more than $1 million in fees to review the nearly 200,000 pages of documents Sanchez produced, and even that would not identify the specific trade secrets Sanchez claims had been misappropriated.

The trial court denied Terra’s motion to compel, and Terra filed a petition for writ of mandamus with the First Court of Appeals in Houston. Although the appellate court stayed the lower court’s proceedings, it also ultimately rejected Terra’s request.

In its petition for writ of mandamus filed with the Texas Supreme Court, Terra argued that there is a “growing consensus” among the 46 states which have adopted laws similar to the Texas Uniform Trade Secrets Act that a plaintiff must disclose the allegedly misappropriated trade secrets “with reasonable particularity at an early stage in the litigation.” Terra therefore urged the Texas Supreme Court to follow suit.

Sanchez, in response, argued that mandamus relief should be denied because Terra was improperly seeking to delay the underlying trial and to impose additional, unwarranted discovery obligations on Sanchez.

The Texas Supreme Court denied Terra’s petition without explanation.

In re Terra Energy Partners LLC et al., case number 18-0120, in the Supreme Court of Texas.

Seyfarth Shaw LLP is pleased to be a Global Sponsor at ITechLaw’s 2018 World Technology Conference in Seattle, May 16-18.

Fairmont Olympic Hotel
411 University Street
Seattle, WA 98101

ITechLaw is a not-for-profit organization established to inform and educate lawyers about the unique legal issues arising from the evolution, production, marketing, acquisition and use of information and communications technology.

The World Conference will feature a wide-ranging program and invaluable networking opportunities that will focus on cutting-edge legal topics and will provide practical insight into the latest developments in technology law.

This year, Seyfarth Shaw Partner Robert B. Milligan is on ITechLaw’s Board of Directors and is the Co-Chair of the Local Representative Committee. Seyfarth Shaw Partner Eric Barton will be on a panel for the “Cyber Vulnerabilities & Crime” session on Friday. This session will focus on a broad range of issues influenced by the vulnerability of today’s data, including the protection of data in Russia, handling an online crisis, ransomware, and protecting IP. Seyfarth Shaw Partner Daniel Hart is also scheduled to attend and participate at the conference.

Please stop by our table during the conference to learn about our Intellectual Property, Corporate, Global Privacy & Security, and Trade Secrets, Computer Fraud & Non-Competes Practice Groups.

For more information click here: https://www.itechlaw.org/seattle2018

As a special feature of our blog—guest postings by experts, clients, and other professionals—please enjoy this blog entry from Donal O’Connell, Managing Director of Chawton Innovation Services Ltd., and Oliver Treidler, Managing Director of TP&C GmbH.

Introduction:

Any business professor will tell you that the value of companies has been shifting markedly from tangible assets, “bricks and mortar,” to intangible assets like intellectual property (IP) in recent years. Continue Reading The Valuation of Trade Secrets