Called upon by the Ninth Circuit in Ixchel Pharma, LLC v. Biogen, Inc. to answer two key questions concerning the validity of a settlement provision requiring a party’s termination of a collaboration agreement with a third-party, the California Supreme Court unanimously held:

  1. to state a claim for tortious interference with an at-will contract, a plaintiff must allege that the defendant engaged in an independently wrongful act, and
  2. in determining the validity of a competitive restriction in a business-to-business agreement under Business and Professions Code section 16600, the rule of reason applies and such restriction is not per se void.

The Court’s decision will impact how companies contracting under California law decide to set up their contracts and whether they will agree to the at-will termination of such contracts. The decision also provides some clarity for businesses that include competitive restraints with other companies in their commercial dealings, such as exclusive dealing and collaboration agreements, licenses, leases, and franchise agreements, as such restraints are not per se void under Section 16600 but subject to a rule of reason analysis. Continue Reading California Supreme Court Clarifies Pleading Requirements for Claims of Tortious Interference with At-Will Contracts and Adopts Rule of Reason in Evaluating Competitive Restraints in Contracts Between Businesses

On Thursday, August 20 at 3-5 p.m. Eastern, Robert Milligan is presenting “How to Manage and resolve Complex Commercial Disputes: A Practice Guide” for The Knowledge Group. Speakers on the panel will discuss the use of process maps in identifying breakdowns, current settlement dynamics, and economic loss quantification.

Robert is presenting Segment 3 of the webinar and is focusing on:

  • How use of process maps can help identify breakdowns in complex process and areas for improvements on efficiencies
  • How effectively managing teams, assigning responsibilities, and accountability checks can help breakdown complex disputes into their constituent parts
  • How isolating core exposure issues and preparing targeted motions on such items with the backdrop of using a well suited discovery referee or mediator can more efficiently resolve complex disputes

Find more information and register for the webinar on The Knowledge Group’s website.

The much-ballyhooed legal battle over trade secrets concerning self-driving automobile technology involving Uber took its latest (and perhaps final) turn last week, when engineer Anthony Levandowski was sentenced to 18 months in prison and ordered to pay over $700,000 in restitution.

Embroiled in the middle of a billion-dollar dispute between tech giants, Levandowski had previously pled guilty to the single count of trade secret theft and was already facing a $179 million judgment awarded to his former tech employer. Naturally, the length of prison sentence and the amount of restitution had been of particular interest to the business and legal communities to see what kind of message would be sent by US District Judge William Aslup. But interestingly, it was another (non-traditional) aspect of the sentence that perhaps sent the clearest and most impactful message to tech companies and their employees: the requirement that Levandowski, whom the judge described as a “good person” and a “brilliant man”, must give speeches to the public entitled “Why I Went to Federal Prison.” Continue Reading Self-Driving to Federal Prison: The Trade Secret Theft Saga of Anthony Levandowski Continues

In a rare appellate decision on enforceability of non-disclosure agreements and a plaintiff’s burden to establish the existence of trade secrets, the First Circuit recently overturned a district court summary judgment order and trial verdict. This decision serves as an important reminder for both those who litigate trade secrets claims and those who draft restrictive covenants agreements.

Background

TLS Management and Marketing Services, LLC, a tax planning and consulting firm, sued its former employee, Ricky Rodríguez-Toledo, for alleged misappropriation of trade secrets under Puerto Rico’s misappropriation law and breach of his NDA with TLS. TLS claimed two trade secrets germane to the litigation, the “US Possession Strategy”—essentially a tax arbitrage strategy designed to help clients avoid higher mainland taxes—and “Capital Preservation Reports” or “CPRs,” client-specific reports with tax recommendations based on an analysis of applicable statutes and regulations. Continue Reading Rare First Circuit Decision Invalidating NDA and Overturning Misappropriation Verdict Serves as a Cautionary Tale

The American Intellectual Property Law Association’s (AIPLA) Trade Secret Committee (of which partner Erik Weibust is Vice Chair) is taking its annual Trade Secret Law Summit online this year, with a series of weekly webinars. The first of the series, on Wednesday, August 12, 2020, at 2:00 p.m. EST, features partner Scott Humphrey, who will be moderating a panel entitled “Litigation Funding in Trade Secrets Cases.”

Litigation finance is one of the hottest trends and topics in the legal industry.  In today’s economic and legal climate, companies and individuals are looking for alternative ways to fund their trade secret cases, and are turning to litigation funders for assistance. AIPLA’s panel on the “Use of Litigation Funding in Trade Secret Cases” will look at the use of litigation funding in the trade secret space both before and during the COVID pandemic, examine recent trends and likely future trends of the industry, discuss what litigation funders look for in a case, and provide tips on what an individual or company should consider when evaluating whether litigation finance is a viable funding mechanism for their case.

The full schedule for this year’s remote Summit, which features weekly 90-minute presentations covering two topics each, is as follows:

Session 1 (August 12)
What You Need to Know About Ex Parte Seizures under the DTSA
Litigation Funding in Trade Secrets Cases

Session 2 (August 19)
Judicial Perspectives on Trade Secret Matters
Legislative and Judicial Trends in Trade Secret Law

Session 3 (August 26)
Proving Damages in Trade Secret Litigation
Arbitration and Jury Trials in Trades Secrets Disputes

Session 4 (September 2)
Forensics and Artificial Intelligence in Trade Secret Protection and Litigation
Ethics in Trade Secret Investigations and Litigation

Participants can register for the entire Summit or individual sessions. Each session begins at 2:00 p.m. EST and will be followed by online networking beginning at 3:30 p.m. EST. Additional information and registration can be found here.

Partner Erik Weibust will be speaking on Thursday, August 13, 2020, at 12:00 p.m. EST, on an American Bar Association webinar entitled “Non-Compete Update: Practical Guidance in Response to COVID-19.” Erik will be covering topics including “Enforcing Non-Competes During High Unemployment” and “Preparation and Pursuit of Non-Compete Litigation During Court Closures/Limited Access.” Other topics include:

  • Level Set on Forms of Restrictive Covenants
  • Legislative Updates
  • Nationwide Non-Compete Programs
  • Employees Returning to the Workplace
  • Confidential Information and Remote Workers

Additional information and registration can be found here.

At the end of 2019, Coty Inc. (“Coty”) expanded its brand portfolio by closing a notable $600 million deal for a majority stake in reality star Kylie Jenner’s young cosmetics company, King Kylie LLC (d/b/a Kylie Cosmetics). The purchase placed the valuation of the Kylie Cosmetics at $1.2 billion. Drama soon followed the acquisition as reports questioning Ms. Jenner’s net worth (and consequently, the value of her cosmetics empire) surfaced in May 2020, overshadowing Coty’s launch of the Kylie Skin beauty line in Europe. On June 29, 2020, Coty announced a 21% investment in KKW Beauty (Ms. Jenner’s sister’s company) for $200 million. Prompted by these deals, the manufacturer behind both Kylie Cosmetics and KKW, Seed Beauty, LLC, filed two trade secret lawsuits in Superior Court in Los Angeles, California. Continue Reading Not so Pretty: Cosmetic Company Acquisitions Lead to Contentious Trade Secret Spat

As many of our blog readers will know, the enforceability of restrictive covenants often depends on which state’s law applies to the dispute. For example, California is well known for refusing to enforce employee non-competition agreements and, recently, refusing to honor forum selection clauses in agreements with California employees without the employee first receiving legal advice. In contrast, with limited exceptions, most other states will generally enforce restrictive covenants. Consequently, for employers, controlling and choosing the correct law to  apply to its restrictive covenant agreements can be critical to protection of its business interests. Continue Reading 6th Circuit Bolsters Employer’s Right to Contract for Chosen Law

Seyfarth partners Robert Milligan and Dawn Mertineit recently recorded a 60-minute webinar for California CLE provider CEB, “Handling a Remote Work Force and Return to Work Considerations in the Age of COVID-19: Best Practices for Protecting Trade Secrets and Confidential Information.”

The course focuses on the best practices and steps companies can take to continue to protect intellectual capital during the coronavirus pandemic, including the unique challenges of remote working and the efforts to slowly return to work. Topics covered include:

  • An overview of trade secret protection, including what is typically required as “reasonable measures” to protect trade secrets;
  • How coronavirus is displacing safe work environments;
  • Heightened risks to trade secret protection in light of remote working;
  • Suggested agreements and policies to strengthen trade secret protections;
  • Best practices for interviews and exit interviews and dealing with furloughed or laid off workers;
  • Tips to guard against cybersecurity threats in mobile work environment; and
  • Discussion of best practices and data repatriation upon a return to work of some (or all) of the workforce.

For more information or to register for this webinar, visit https://store.ceb.com/handling-a-remote-work-force-and-return-to-work-considerations-in-the-age-of-covid-19.

The Massachusetts Superior Court recently held in Now Business Intelligence, Inc. v. Donahue that a temporary reassignment during a business slowdown, consisting of the addition of certain non-billable duties, does not constitute a material change invalidating a non-compete agreement. The dispute centered on Now Business Intelligence, Inc.’s (“NBI”) ability to hold its former employee, Sean Donahue (“Donahue”), liable for breach of his covenant not to compete. Continue Reading Massachusetts Superior Court Axes an Attempt to Expand the Scope of the Seminal Non-Compete Law Concerning Material Change in Employment