On January 23, 2020, the Texas Fifth District Court of Appeals in Dallas retracted its previous ruling in the trade secrets dispute Goldberg, et al. v. EMR (USA Holdings) Inc., et al. and issued a new opinion upon rehearing. In doing so, the Court reversed course on its previous ruling that communications with customers and suppliers involved a matter of public concern and were an exercise of free speech.

The Court’s new ruling, which was decided under the pre-September 1, 2019, version of the Texas Citizens Participation Act (“TCPA”), makes clear that communications between a company and customers or suppliers that deal only with the sale of a commodity are not protected by the TCPA.[1]

The August 2019 Ruling
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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.

One of the key pieces of legislation related to trade secrets in Russia is the Federal Law of July 29, 2004 on Commercial Secrecy. This was passed by the State Duma on July 9, 2004, and endorsed by the Federation Council on July 15, 2004.

This piece of legislation consists of the following articles or sections …

  • Goals and scope of this federal law
  • Laws of the Russian Federation on commercial secrecy
  • Basic notions used in this federal law (including the definition of a trade secret as well as some details on the handling of trade secrets in agreements)
  • Right to classify information as information constituting a commercial secret and methods of obtaining that information
  • Data that may not constitute a commercial secret (i.e. what information may not be considered as a trade secret)
  • Supply of information constituting a commercial secret (i.e. under what circumstances may a trade secret owner have to divulge the information)
  • Protection of the confidentiality of information
  • Protection of the confidentiality of information within the framework of employee or labour relations
  •  Protection of the confidentiality of information as it is passed over to for example state authorities
  • Responsibility for violation of this Federal law (i.e. the various penalties for misappropriation)
  • Responsibility for non-provision of information constituting a commercial secret to the state power bodies, other state authorities, bodies of local self-government

Definition of a Trade Secret


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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.

Effective on September 1, 2019, the 86th Texas Legislature’s amendments to the Texas Citizen’s Participation Act, Texas Civil Practices and Remedies Code Chapter 27 (“TCPA”) essentially removed the vast majority trade secret claims from the TCPA’s grasp.[1] These amendments intentionally sought to eliminate the application of the TCPA, an anti-SLAPP statute[2] to certain run-of-the-mill trade secret cases with fact patters arising from independent contractor relationships and departing employees. Nevertheless, the TCPA may apply in light of past precedent to other, less common fact patterns. This article explores other trade secret claims that may still be “slapped” under the TCPA.
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In a trilogy of recent cases, the Texas Courts of Appeals have employed the “commercial speech” exception to exclude certain business claims from the scope of the Texas Citizen’s Participation Act (“TCPA”). This trend will likely only accelerate now that the legislature has further reduced the TCPA’s reach with additional statutory changes, restricting the protections regarding the right of association and the TCPA’s application to trade secret cases and non-compete cases.

Background

The TCPA is an anti-SLAPP (Strategic Lawsuit Against Public Participation) statute allowing litigants to seek early dismissal of a lawsuit if the legal action is based on, or is in response to, a party’s exercise of the right of free speech, right to petition, or right of association. Like other states, Texas enacted the TCPA to address concerns over the increasing use of lawsuits to chill the exercise of First Amendment rights.
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Manhattan restaurant Sottolio, Inc., d/b/a Norma Gastronomia Siciliana hired Giuseppe Manco—“a noted  Italian pizza chef, or pizzaiolo”—to consult on its menu. At the same time, Manco and his wife purchased a 9% interest in the restaurant, becoming co-owners of the business. Manco signed a non-compete and non-disclosure agreement in connection with his hiring, under which Manco agreed, for ten years, to not replicate, copy, or duplicate Plaintiff’s confidential information, including its “signature recipes” for arancine, pasta alla norma, caponata, anelletti al forno, and carbonara di mare, or to use the signature recipes within a ten mile radius of Sottolio’s Manhattan restaurant. 
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Seyfarth Synopsis: Knowledge that a competitor or former employee is misappropriating trade secrets is difficult to come by. At the same time, however, once a company has notice that misappropriation may be occurring, the statute of limitations begins to run on any trade secrets misappropriation claim. A recent decision from the California Court of Appeals reinforces these rules and provides a good reminder of the need to take proactive steps to protect any possible claims.

When a competitor or former employee misappropriates a company’s trade secrets, the company often does not know for an extended period of time. This is especially true when the perpetrator takes action to conceal its misappropriation. For these reasons, the statute of limitations only starts to run once the company knows or should have known of the misappropriation. But this rule is not a universal remedy; companies should be aware that once they have sufficient knowledge that misappropriation may be occurring, they must take action or risk the running of the statute of limitations. A recent decision from the California Court of Appeals reinforces these principles.
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On August 23, 2019, the United States Court of Appeals, Fifth Circuit ruled that the Texas Citizen’s Participation Act, Texas Civil Practices and Remedies Code Chapter 27 (“TCPA”), did not apply in federal court. Klocke v. Watson, 936 F.3d 240, 244 (5th Cir. 2019). Nine days later, on September 1, 2019, key statutory changes went into effect for cases filed after the amendments’ enactment.[1] See H.B. 2730, Sept. 1, 2019. These amendments changed the requirements of the TCPA in several ways, some of which the Klocke panel had directly addressed when determining the TCPA’s applicability in federal court.

The question therefore arises whether the TCPA remains inapplicable in federal court for cases filed after September 1, 2019.[2] A Fifth Circuit panel addressing this issue today, and applying the rulings in Klocke, would likely rule that the TPCA remains inapplicable. Specifically, despite the various changes, the TCPA still “imposes evidentiary weighing requirements not found in the Federal Rules, and operates largely without pre-decisional discovery[.]” Klocke, 936 F.3d at 246. Accordingly, the TCPA “conflicts with those rules,” “answers the same question” as those rules, and therefore “cannot apply in federal court.” Id. at 244, 245, 246.
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It is axiomatic that in order for information to be considered a trade secret, it must have been kept secret. But what if the trade secret is disclosed without the owner’s consent? Such was the issue in Intellisoft, Ltd. v. Wistron Corp. et al., No. H044281, slip op. (Cal. Ct. App. Oct. 16, 2019), a recent unpublished decision from the California Court of Appeal for the Sixth Appellate District. 
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Seyfarth Trade Secrets Attorneys are participating in The Sedona Conference Working Group 12 Annual Meeting in Charlotte, North Carolina, November 4–5, 2019.

On November 4, Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Competes Practice Group Co-Chair Robert Milligan is speaking on “The Employee Life Cycle Relating to Trade Secrets” panel, and Seyfarth Partner Erik