The Ninth Circuit has certified questions to the California Supreme Court in Ixchel Pharma v. Biogen seeking guidance as to: 1) whether section 16600 of the California Business and Professions Code extends to contracts between businesses; and 2) whether pleading an independent wrongful act is necessary to state a claim for intentional interference with a contract outside the at-will employment contract context. The California Supreme Court has agreed to accept the Ninth Circuit’s inquiry and the appellate briefing was recently completed. We expect the Supreme Court to have oral argument and likely rule in the summer or fall of 2020. The California Supreme Court’s disposition of the novel issues could have sweeping ramifications that ripple through commercial and business industries.
Continue Reading Ninth Circuit Seeks Guidance From California Supreme Court on Business to Business Non-Competes

On May 14, 2019, Oregon Governor Kate Brown signed into law HB 2992, which, as of January 1, 2020, requires an employer to provide a terminated employee with a signed, written copy of his or her non-competition agreement within 30 days of his or her termination date.  Failure to do so will render the agreement voidable and unenforceable in the state of Oregon.

Backdrop for HB 2992

Under current Oregon law (ORS 653.295), a non-competition agreement is not enforceable unless the following four requirements are met: (1) the employer informs the employee of the non-competition agreement in a written employment offer received at least two weeks before the employee’s first day, or the agreement is entered into upon promotion; (2) the employee is engaged in administrative, executive, or professional level work; (3) the employer has a protectable interest in requiring the non-competition agreement; and (4) the employee’s gross annual salary and commissions at the time of termination exceeds the median family income for a four-person family.  Furthermore, the term of a non-competition agreement may not exceed 18 months from the date of the employee’s termination.  Any time remaining on a non-competition agreement beyond 18 months is voidable and precluded from enforcement by any Oregon court.
Continue Reading Oregon Adds Employee-Friendly Requirement to Existing Non-Compete Law… But Also Produces Company-Friendly Trade Secrets Law in Recent Court of Appeals Case

A California federal district court recently granted a temporary restraining order (“TRO”) against a former employee for misappropriating proprietary and confidential information in violation of the Defend Trade Secrets Act (“DTSA”), the California Uniform Trade Secrets Act (“CUTSA”), and company confidentiality and non-disclosure agreements. Bemis Co., Inc. v. Summers, No. 219CV00344TLNKJN, 2019 WL 1004853, at *1 (E.D. Cal. Feb. 28, 2019).

Background

Plaintiff Bemis Company, Inc. (“Bemis”) sued a former employee for trade secret misappropriation and breach of contract. Bemis is one of the largest global suppliers of flexible and rigid packaging products, including snack food bags, candy wrappers, cheese packaging, hot dog packaging, medicine packaging, and much more.
Continue Reading That’s a Wrap: California Federal Court Grants TRO Against Former Employee for Trade Secret Misappropriation

Continuing our annual tradition, we have compiled our top developments and headlines for  2018-2019 in trade secret, non-compete, and computer fraud law.

1. Government Agencies Increasing Scrutiny of Restrictive Covenants

In mid-2018, the Attorneys General of ten states investigated several franchisors for their alleged use of “no poach” provisions in their franchise agreements. In a July 9, 2018, letter, the Attorneys General for New Jersey, Massachusetts, California, Washington, D.C., Illinois, Maryland, Minnesota, New York, Oregon, Pennsylvania, and Rhode Island requested information from several franchisors about their alleged use of such provisions. Less than twenty-four hours later, some franchisors (mostly different ones than those who received the information demands) entered into agreements with the Washington State Attorney General’s Office to remove such clauses from their franchise agreements. The recent focus by state law enforcement on franchisors is a new twist, given that restrictive covenant agreements in the franchise industry are typically given more leeway than in the employment context.
Continue Reading Top 10 Developments and Headlines in Trade Secret, Non-Compete, and Computer Fraud Law in 2018/2019

A California federal district court recently granted a TRO and preliminary injunction against a general manager who allegedly misappropriated customer information from his previous employer in violation of the California Uniform Trade Secrets Act (CUTSA), Defend Trade Secrets Act (DTSA), and his employment agreement.  Sun Distributing Company v. Corbett, No. 18-cv-2231, 2018 WL 4951966 (S.D. Cal. Oct. 12, 2018).

Background

Sun Distributing is a distribution company that works with major national logistics companies to provide last-mile distribution to residences and businesses in California. Paul Corbett worked as a general manager at Sun Distributing. While employed, Corbett signed an employment agreement in which he agreed to a confidentiality provision stating that he would not use Sun Distributing’s trade secrets, including customer lists, needs, and pricing structures, in order to compete with Sun Distributing after he left the company. Corbett later resigned from Sun Distributing to work for Pacblue, a company that distributes free newspapers and other print media for publishers in California.
Continue Reading California Federal District Court Grants TRO and Preliminary Injunction to Protect Trade Secret Customer Lists

A Ninth Circuit panel consisting of Judges A. Wallace Tashima, Johnnie B. Rawlinson, and Paul J. Watford recently heard oral argument in Anheuser-Busch Companies v. Clark, 17-15591, concerning the denial of a former employee’s anti-SLAPP motion in a trade secret misappropriation and breach of contract case. This is the second time the case has made its way up to the Ninth Circuit. We previously reported on this case in March 2017. The panel has not yet issued its decision but the Ninth Circuit’s decision could have far reaching implications for trade secret and data theft cases involving purported whistleblowing activities.
Continue Reading Hold My Beer: Ninth Circuit Hears Oral Argument in Trade Secret/Anti-SLAPP Row for a Second Time

On June 3, 2017, Governor Sandoval signed Assembly Bill 276 into law, amending Nevada Revised Statute 613, which governs non-competition agreements. Notably, the law adds requirements to the enforceability and validity of non-competition agreements, and importantly, now allows courts to “blue-pencil” non-competition agreements, overturning Nevada Supreme Court’s recent decision in Golden Road Motor Inn, Inc. v. Islam.

First, the new law establishes that a non-competition agreement is void and unenforceable unless the agreement satisfies four requirements. The agreement must: (1) be supported by valuable consideration; (2) not impose a restraint greater than what is required to protect the employer; (3) not impose an undue hardship on the employee; and (4) impose restrictions that are appropriate in relation to the valuable consideration supporting the agreement.
Continue Reading Nevada Enacts New Non-Compete Law

shutterstock_534162337A Northern District of California court recently held a plaintiff could amend its complaint to add a Defend Trade Secrets Act (“DTSA”) claim when discovery showed continued misappropriation after the enactment of the DTSA on May 11, 2016.

In VIA Technologies, Inc. v. ASUS Computer International, No. 14-CV-03586-BLF, 2017 WL 491172 (N.D. Cal. Feb. 7, 2017), VIA filed suit against ASUS, alleging infringement of VIA’s patent and trade secret misappropriation of VIA’s intellectual property related to its USB technology. VIA’s second amended complaint was filed in July 2015 prior to the enactment of the DTSA on May 11, 2016.

During discovery, ASUS produced data related to sales of products that allegedly incorporated VIA’s trade secrets. This data was produced in supplemental productions on November 16, 2016, and on December 22, 2016. VIA claims this data supports the alleged continuation of trade secret misappropriation after the enactment of the DTSA, and therefore, requests to add the claim. VIA claims it also inadvertently overlooked the sales data believing the November 16, 2016, production was merely a “re-production.” VIA filed the instant motion on January 4, 2017, after ASUS refused to stipulate to an amendment to add a claim under DTSA.
Continue Reading Court Allows Plaintiff to Amend Complaint to Add Defend Trade Secrets Act Claim After Discovery Reveals Alleged Continued Misappropriation