As we previously reported, on February 18, 2020, Medterra CBD (“Medterra”) filed a motion to dismiss a lawsuit alleging that it had misappropriated Healthcare Resources Management Group LLC’s (“Healthcare Resources”) proprietary formula for a CBD cream aimed at treating pain. In its motion, Medterra argued that Healthcare Resources failed to allege that it had provided or that Medterra had otherwise acquired any proprietary information. Additionally, Medterra claims that even if Healthcare Resources could establish that it had provided its propriety CBD cream formula to Medterra, Healthcare Resources did not take adequate steps to protect its trade secret by mandating Medterra sign a non-disclosure agreement.
Continue Reading CBD Cream Manufacturer Responds to Motion to Dismiss in Trade Secret Litigation
Peloton Surges to the Top of the Leaderboard in Competitor Spat
In 2012, Peloton rode into the home fitness scene with its now ubiquitous at-home exercise bike, which features a tablet that allows riders to stream both live and pre-recorded classes while competing against other riders on a virtual leaderboard. Peloton built the bike, including the associated technology and software, from scratch, and applied for and obtained a number of patents between 2015 and 2019 to protect its sizable investment of both time and money.
In 2017, Flywheel, a boutique exercise studio, pedaled into the home fitness scene as well with the FLY Anywhere bike. Like Peloton users, FLY Anywhere riders stream both live and pre-recorded classes while pedaling their way up the leaderboard.
Continue Reading Peloton Surges to the Top of the Leaderboard in Competitor Spat
Love in the Time of Coronavirus: Protecting Trade Secrets During a Pandemic
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.
Continue Reading Love in the Time of Coronavirus: Protecting Trade Secrets During a Pandemic
Webinar Recap! 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
In Seyfarth’s first installment in its 2020 Trade Secrets Webinar Series, Seyfarth attorneys Robert Milligan, Jesse Coleman, and Joshua Salinas reviewed the 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—plus, predictions for what to watch for
Continue Reading Webinar Recap! 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
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.
Continue Reading Pardon Me, Co-Packaging Partner Accused of Stealing Dijon Mustard Recipes
CBD Company Files Motion to Dismiss in Trade Secret Dispute
On February 18, 2020, Medterra CBD filed a motion to dismiss a lawsuit alleging that it had misappropriated Healthcare Resources Management Group LLC’s (“Healthcare Resource”) proprietary formula for a CBD cream aimed at treating pain. In its motion, Medterra argued that Healthcare Resource failed to allege that it had provided or that Medterra had otherwise acquired any proprietary information. Additionally, Medterra claims that even if Healthcare Resource could establish that it had provided its propriety CBD cream formula to Medterra, Healthcare Resource did not take adequate steps to protect its trade secret by mandating Medterra sign a non-disclosure agreement.
Continue Reading CBD Company Files Motion to Dismiss in Trade Secret Dispute
Top 10 Developments and Headlines in Trade Secret, Non-Compete, and Computer Fraud Law for 2019 & 2020
Continuing our annual tradition, we have compiled our top developments and headlines for 2019 & 2020 in trade secret, non-compete, and computer fraud law. Here’s what you need to know to keep abreast of the ever-changing law in this area.
1. Another Year, Another Attempt in Congress to Ban Non-Competes Nationwide
Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) introduced legislation in 2019 entitled the Workforce Mobility Act (“WMA”). The WMA seeks to ban non-compete agreements outside of the sale of a business or dissolution of a partnership.
Not only would the WMA abolish covenants not to compete nationwide, outside of the extremely narrow exceptions highlighted above, but it would also provide the Department of Labor (DOL) and Federal Trade Commission (FTC) with broad enforcement power. If enacted, the legislation would empower the FTC and DOL to enforce the ban through fines on employers who either fail to notify employees that non-compete agreements are illegal or who require employees to sign covenants not to compete. Additionally, the WMA establishes a private right of action for all employees allegedly aggrieved by a violation of the WMA.
The WMA contains a carve out for parties to enter into an agreement to protect trade secrets. As currently drafted, the WMA does not abrogate the scope of protections provided by the Defend Trade Secrets Act.
Presently, there are no generally applicable federal restrictions on non-compete agreements, and enacting such a law would have to pass Constitutional muster. We expect to see continued activity at the federal legislative level to attempt to ban or limit the use of non-competes.
2. New State Legislation Regarding Restrictive Covenants
Please Join Seyfarth at the AIPLA Trade Secret Law Summit – March 16-17, 2020
The American Intellectual Property Law Association (AIPLA) will host its annual Trade Secret Law Summit at The Orrick Building in San Francisco’s Financial District on March 16-17, 2020.
Seyfarth partner Scott Humphrey will be speaking on a panel entitled “Use of Litigation Funding in Trade Secret Cases” with representatives of two major litigation funders. Other Seyfarth attendees will include Erik
Continue Reading Please Join Seyfarth at the AIPLA Trade Secret Law Summit – March 16-17, 2020
The Dallas Court of Appeals Further Expands Goldberg and Holds that Communications Between a Competitor and Customers and Suppliers Do Not Involve Matters of Public Concern
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
Continue Reading The Dallas Court of Appeals Further Expands Goldberg and Holds that Communications Between a Competitor and Customers and Suppliers Do Not Involve Matters of Public Concern
Trade Secret Law in Russia
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