How different is a celebrity-focused “cryptocollectible” from a celebrity-focused “cryptocurrency,” and how similar does it have to be to constitute a trade secret? That was the question facing the Southern California federal district court in deciding a motion for a preliminary injunction in Founder Starcoin v. Launch Labs, Inc., No. 18-CV-972 JLS (MDD) (S.D. Cal. July 9, 2018). Defendant Launch Labs, d/b/a Axiom Zen, is the developer of “CryptoKitties,” a game that uses the Ethereum blockchain technology to “allow users to securely buy, sell, trade, and breed genetically unique virtual cats.” Plaintiff Starcoin has a business plan to create a “regulated exchange” for secure “tokens” representing celebrities that can be bought and sold, not just by typical investors, but by a celebrity’s fans as well. Continue Reading California Federal Court Denies Preliminary Injunction In “Blockchain” Dispute
In Seyfarth’s fourth installment in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Robert Milligan and Scott Atkinson, along with Center for Responsible Enterprise and Trade CEO Pamela Passman, focused on identifying the greatest threats to trade secrets, implementing an effective trade secret protection program, and enacting effective risk reduction processes across an organization.
As a conclusion to this well-received webinar, we compiled a summary of takeaways:
- Building a culture of trade secret protection is essential for protecting against cyber threats. Simply having policies is not enough; companies need to follow up with training, acknowledgements/record keeping, and engaged leaders who lead by example.
- One key part of an effective trade secret protection plan is having an effective onboarding and off-boarding process, including exit interviews. Exit interviews should typically be conducted, and employees should be reminded of their continuing confidentiality and other obligations to the company. Don’t forget to ask for any passwords to any company-owned mobile devices.
- As companies build internal capabilities to protect trade secrets and ensure robust cybersecurity, those capabilities should be required of key supply chain partners or vendors that have access to trade secrets and should be measured and monitored to ensure they are effective.
On Wednesday, July 25, Seyfarth Shaw partners J. Scott Humphrey and Justin K. Beyer are presenting webinars for myLawCLE.
Scott Humphrey is presenting “Protecting Confidential Information & Client Relationships in the Financial Services Industry” webinar on July 25, 10 a.m. – 12 p.m. Eastern. The webinar will focus on the following topics:
- What are (and are not) considered trade secrets in the financial services industry
- Types of restrictive covenants and which covenants are most likely to be enforceable in court and before FINRA
- Practical steps financial institutions can implement to protect trade secrets and client relationships
- What to do if your trade secrets are improperly removed or disclosed, or if a former employee is violating his/her restrictive covenant agreements
- How to prosecute or defend a case against a former employee who is a FINRA member
- The impact of the Protocol for Broker Recruiting on trade secrets and client relationships
For more information or to register for “Protecting Confidential Information & Client Relationships in the Financial Services Industry” webinar, click here.
Justin Beyer is presenting “The Anatomy of a Trade Secret Audit” webinar on July 25, 2 p.m. – 4 p.m. Eastern. The webinar will focus on the following topics:
- Identifying trade secrets and secrecy protections
- Effective secrecy protections, including employment and non-compete agreements
- Effective hiring and termination protocols, including effective exit interviews and termination protocols
- Employing a comprehensive approach and trade secret protection plan
- Managing and working to protect computer-stored data, including responding to emergency issues related to computer fraud and security breaches
For more information or to register for “The Anatomy of a Trade Secret Audit” webinar, click here.
In a classic example of bad facts creating bad law, a federal judge in Kentucky recently denied a motion to dismiss claims brought against attorneys who allegedly counseled employees to breach a non-compete agreement and assisted in setting up a competing business. In Pinnacle Surety Services, Inc. v. Manion Stigger, LLP, the plaintiff sued its former attorneys and their respective law firms, alleging among other things that the attorneys tortiously interfered with a contractual relationship and aided and abetted Pinnacle’s former employees’ breaches of fiduciary duty, by encouraging them to violate their non-compete agreements and helping them set up a competing surety bond company. Continue Reading Can Attorneys Be Liable For Directing Clients to Breach Non-Competes? One Federal Court Says Maybe
We reported yesterday that the attorneys generals of ten states are investigating several fast food franchisors for their use of so-called “no poach” provisions in their franchise agreements. Well, less than twenty-four hours later, the New York Times has reported that seven fast food franchisors (mostly different ones than those who received the information demands discussed yesterday) entered into agreements with the Washington State Attorney General’s Office to remove such clauses from their franchise agreements. According to the New York Times:
Many types of franchise businesses impose the clauses, but they may be most prevalent in the restaurant industry. The fast-food sector, in particular, relies overwhelmingly on independently owned and operated franchise stores.
Washington State Attorney General Bob Ferguson is quoted in the article as stating that his “goal is to eliminate these provisions in all fast-food contracts” in Washington State. We will keep you posted on further developments.
The Attorneys General of ten states are investigating fast food franchisors for their alleged use of “no poach” provisions in their franchise agreements, according to a press release by the New Jersey Attorney General’s Office, and as reported by NPR. In a July 9, 2018 letter, the Attorneys General for New Jersey, Massachusetts, California, Washington, D.C., Illinois, Maryland, Minnesota, New York, Oregon, Pennsylvania, and Rhode Island requested information from eight fast food companies about their alleged use of such provisions. The letter states that the Attorneys General “have learned that certain franchise agreements used in our States and the District of Columbia . . . may contain provisions that impact some employees’ ability to obtain higher paying or more attractive positions with a different franchisee.” In other words, the agreements purportedly prohibit one franchisee of a particular brand from hiring employees of another franchisee of the same brand. Continue Reading State Attorneys General Investigate Fast Food Franchisor “No Poach” Agreements
Marc McGovern, the mayor of Cambridge, Massachusetts (home to many of the Commonwealth’s established and emerging pharmaceutical, biotech, and other life sciences companies), published an op-ed in today’s Boston Globe regarding the noncompete reform movement in Massachusetts (about which we have previously reported). Unsurprisingly, given that Cambridge has been referred to as the “People’s Republic of Cambridge,” Mayor McGovern comes out strongly in favor of severe restrictions on the use of employee noncompete agreements, stating, among other things, that “noncompetes are unfair to employees.” Among other things, Mayor McGovern proposes that noncompete agreements be banned outright, or at least severely limited; and if the latter, that employers be required to pay 100% of the employee’s salary during the restricted period (known as “garden leave” pay). In his words: Continue Reading Mayor of the “People’s Republic of Cambridge” Steps Into The Massachusetts Noncompete Reform Fray
The Texas Court of Appeals, Third District, issued an opinion in Tejas Vending, LP, et al. v. Tejas Promotions, LLC further delineating the applicability of Texas’s anti-SLAPP statute, the Texas Citizens Participation Act (“TCPA”). The Court emphasized that the TCPA was applicable to a conspiracy to misappropriate trade secrets claim, but found that it did not apply to requests for declaratory relief. This holding serves as a reminder that anti-SLAPP statutes can be a powerful shield in misappropriation of trade secret cases, particularly when such cases involve claims for an alleged conspiracy. Continue Reading The Texas Court of Appeals for the Third District Holds that the Texas Anti-SLAPP Statute Applies to a Conspiracy to Misappropriate Trade Secrets Claim
Seyfarth Shaw Partner and Co-Chair of the Trade Secrets, Computer Fraud & Non-Competes Practice Group Robert Milligan, along with iDiscovery Solutions’ Jim Vaughn, spoke with Corporate Counsel Business Journal about discovery and digital forensics in the age of the cloud. To learn more about the type of evidence from the cloud and mobile devices can be important during litigation, why cloud computing is so important in discovery and digital forensics, and more, check out “How the Cloud and Mobile Devices Have Changed Discovery” in the July/August issue of Corporate Counsel Business Journal here.
As a special feature of our blog—guest postings by experts, clients, and other professionals—please enjoy this blog entry from Jeremy Morton, Partner at Harbottle & Lewis LLP, London, UK.
For the first time ever, we have UK-wide legislation that concerns the protection of confidential information. Modifying its approach in light of a recent consultation exercise, the UK government introduced The Trade Secrets (Enforcement, etc.) Regulations 2018 on June 9, to implement the EU Trade Secrets Directive 2016/943. Continue Reading UK Adopts New Trade Secrets Legislation