Fear of the coronavirus is causing many employers to permit—or in some cases mandate—employees to work remotely. While this measure is designed to minimize the risk of virus transmission, it presents an altogether different risk when it comes to protecting trade secrets, as employees have ripe opportunities to remove trade secrets and other sensitive information from company systems and databases. While remote access is ostensibly provided so that employees can perform their job functions from home, and may even be a necessity in that regard, some employees may take the opportunity to exploit the situation to more nefarious ends, and others may just be careless, which can lead to equally bad outcomes. In addition, employees’ external home networks may not have robust security on par with in-office network security.
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Pardon Me, Co-Packaging Partner Accused of Stealing Dijon Mustard Recipes
On February 25, 2020, Plaintiff Mustard Girl LLC (“Mustard Girl”), an award-winning mustard manufacturer, filed a lawsuit in the Circuit Court of Cook County for damages against its former co-packing partner, Olds Products Co. of Illinois, LLC (“Olds”), for misappropriation of trade secrets and other derivative claims. According to Mustard Girl, Olds engaged in a multi-year scheme to steal Mustard Girl’s recipes and then use those recipes to sell its own mustard products at lower cost to Mustard Girl’s largest accounts.
This mustard dispute presents a common trade secrets misappropriation scenario—the alleged misappropriator had lawful access to the trade secrets but then misused its access for an improper purpose. An additional wrinkle in this case is that Mustard Girl provided the mustard recipes to Olds under a confidentiality agreement, but admittedly lacks a counter-signed copy. Proving that reasonable measures were taken to keep trade secrets protected is necessary to prevail on a claim for misappropriation. If Mustard Girl is unable to prove that the recipes were provided to Olds under a confidentiality agreement, it may face a significant hurdle in proving that its recipes are, in fact, trade secrets.
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Upcoming Webinar! 2019 Year in Review: What You Need to Know About the Recent Cases and Developments in Trade Secrets, Non-Competes, and Computer Fraud for 2020
On Tuesday, January 28 at 12:00 p.m. Central, in the first installment of the 2020 Trade Secrets Webinar Series, Seyfarth attorneys will review noteworthy legislation, cases and other legal developments from across the nation over the last year in the area of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud.
Can a Party Recover Damages for the Anticipated Future Use of Trade Secrets?
Courts have long lamented that “computing damages in a trade secret case is not cut and dry,” Am. Sales Corp. v. Adventure Travel, Inc., 862 F. Supp. 1476, 1479 (E.D. Va. 1994), meaning that “every [trade secret] case requires a flexible and imaginative approach to the problem of damages,” Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 538 (5th Cir. 1974).
The federal Defend Trade Secrets Act (“DTSA”) and virtually every state’s version of the Uniform Trade Secrets Act (“UTSA”) (only New York has not adopted the UTSA) permits recovery of damages for (1) actual loss caused by the misappropriation; (2) unjust enrichment that is not addressed in computing damages for actual loss; or (3) a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. There has been little guidance from the courts, however, as to how to calculate these different, and sometimes competing damages calculations, many relying on the “flexible and imaginative approach” set forth in the Fifth Circuit’s 1974 pre-UTSA University Computing decision. Even more difficult is the case where a plaintiff’s damages are based on the defendant’s anticipated future use of the trade secret, given that those damages necessarily will involve speculation about the revenues the defendant will generate from its use of the trade secret.
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Louisiana Federal Court Rules Information in Patent Application Remains Actionable Trade Secret Under DTSA
The United States District Court for the Eastern District of Louisiana recently held that, under the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq., information included in a patent application remains an actionable trade secret, thereby extending the time for potential misappropriation until the patent’s publication.
DTSA
The DTSA was enacted in 2016 to expand trade secret law beyond its traditional roots as a state law doctrine, creating the first federal cause of action for trade secret misappropriation. To succeed in bringing a DTSA claim, a plaintiff must prove (1) the existence of a trade secret; (2) the misappropriation of a trade secret by another; (3) and the trade secret’s relation to a good or service used or intended for use in interstate or foreign commerce. Additionally, the owner must take reasonable measures to keep the trade secret a secret. 18 U.S.C. § 1836(b)(1).
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The Increasing Importance of Trade Secrets and Trade Secret Asset Management Explained
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.
The Neglected Step-Child of IP
Trade secrets have, up until recently, been somewhat ignored. When I started to pay attention to trade secrets, some of my colleagues and contacts probably thought that I was mad.
After all, trade secrets were not included in many IP educational sessions. The subject rarely came up at IP conferences and seminars. This form of IP was not addressed by most IP Law Firms, even so called full service IP Law Firms. It clearly was not in the ‘job spec’ of many in-house IP Managers or Chief IP Officers.
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Webinar Recap! The Defend Trade Secrets Act: 3 Years Later
In Seyfarth’s third installment in its 2019 Trade Secrets Webinar Series, Seyfarth attorneys Katherine Perrelli, Justin K. Beyer, and Amy Abeloff focused on the key provisions of the Defend Trade Secrets Act, how the DTSA has evolved since it was passed three years ago, and what to expect in the future.
As a conclusion to
Get Out Your Popcorn: Former Director of R&D Accused of Stealing Secret Popcorn Recipes
Caramel Crisp LLC, the owner of Garrett Popcorn Shops (“Garrett”), the renowned Chicago-based purveyor of deliciously flavored popcorn, recently filed suit in federal court in Chicago against its former director of research and development, Aisha Putnam, alleging that she misappropriated the company’s trade secrets, including its recipes for Garret’s famous popcorn, after she was fired. Putnam was hired in 2014 and was eventually promoted to the role of Director of Research and Development, where she had access to some of Garrett’s most confidential information and trade secrets. In that role, she was required to sign a confidentiality and non-compete agreement, which, among other things, required her to return all of Garrett’s confidential information upon the termination of her employment.
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Upcoming Webinar! The Defend Trade Secrets Act: 3 Years Later
On Thursday, May 2 at 12:00 p.m. Central Time, in Seyfarth’s third installment of its 2019 Trade Secrets Webinar Series, Seyfarth attorneys will focus on the key provisions of the Defend Trade Secrets Act, and how the DTSA has evolved since it was passed three years ago.
Seyfarth attorneys Katherine Perrelli, Justin K. Beyer, and
That’s a Wrap: California Federal Court Grants TRO Against Former Employee for Trade Secret Misappropriation
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.
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