On August 23, 2019, the United States Court of Appeals for the Fifth Circuit issued its long-awaited opinion in Klocke v. Watson, 17-11320, 2019 WL 3977545, at *1 (5th Cir. Aug. 23, 2019), holding that the Texas Citizens Participation Act (“TCPA”) does not apply to diversity cases in federal court. This decision settles a split manifested across dozens of cases at the district courts.

By ruling that the TCPA does not apply to diversity cases in federal court, the Fifth Circuit foreclosed an otherwise potent weapon used by defendants throughout Texas in trade secrets litigation. Because of the TCPA’s extremely broad application, defendants in trade secrets cases, for example, often asserted that claims alleging the misappropriation of trade secrets and related causes of action were based on and related to the defendant’s freedom to speak freely on all topics, including the trade secrets at issue, and its freedom to associate with competitors, and therefore such claims should be dismissed under the TCPA. Such arguments are now foreclosed by this ruling, at least in federal court.
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Seyfarth Partner Jesse Coleman is presenting the “Recent Trends in Protecting and Exploiting Trade Secrets” program at an LES Houston event on August 28 at The Briar Club in Houston.

Trade secrets may variously include technologies, processes, formulas, and sensitive customer information. Accordingly, trade secrets often confer significant profit and competitive advantage to their owner.

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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On June 24, 2019, the Supreme Court issued its decision in Food Marketing Institute v. Argus Leader Media and resolved fractured circuit splits about the parameters for when the government may withhold information from a Freedom of Information Act (“FOIA”) request based on responsive information being confidential or a trade secret. Earlier this year, we reported on this case when the Supreme Court granted certiorari and predicted that the case would have significant ramifications for the protections given to sensitive information submitted by companies to the government.
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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.
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The 2019 edition of The Legal 500 United States recommends Seyfarth Shaw’s Trade Secrets group as one of the best in the country. Nationally, for the fourth consecutive year, our Trade Secrets practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Michael Wexler was ranked in the editorial’s “Leading Lawyers,” and Robert

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

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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The Financial Industry Regulatory Authority (FINRA) recently issued some expectations/guidance to industry members on FINRA’s expectations when a broker leaves for another firm. Specifically, on April 5, 2019, FINRA issued Regulatory Notice 19-10, which instructs/reminds FINRA member firms to: (1) promptly and clearly communicate to customers how their accounts will continue to be serviced when the broker servicing the customer leaves for another firm; and (2) if requested by the customer, provide customers with timely and complete answers, if known, to questions about a departing broker.
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As readers of this blog know, most trade secret misappropriation claims are brought in civil complaints—but a recent case out of Pennsylvania reveals how quickly the tables can turn on a civil plaintiff asserting claims against her former employer, resulting not only in civil counterclaims for trade secret misappropriation, but also in criminal prosecution. This case reveals how defense counsel can—and should—take an aggressive approach to protection of clients’ confidential and trade secret information, not only to preserve clients’ claim that such information is confidential, but to obtain critical leverage in high-stakes litigation. 
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