shutterstock_526002034This blog originally appeared in ALM Intellectual Property Strategist.

One year after its enactment, the Defend Trade Secrets Act (DTSA) continues to be one of the most significant and closely followed developments in trade secret law. The statute provides for a federal civil cause of action for trade secret theft, protections for whistleblowers, and new remedies (e.g., ex parte seizure of property), that were not previously available under state trade secret laws. The less than 70 reported DTSA cases to date provide an early glimpse into how courts may interpret the statute going forward and what early concerns about the statute may have been exaggerated.

Overstated Ex Parte Seizure Concerns

The ex parte seizure provision of the DTSA was one of the most controversial provisions of the statute during its drafting. The provision allows a trade secret holder to request, without notice to the alleged wrongdoer, that a district judge order federal law enforcement officials to seize property to prevent the propagation or dissemination of trade secrets. Opponents of the DTSA argued that the ex parte seizure provision would open the door to abuse by purported “trade secret litigation trolls” and increase litigation costs. The cases to date involving the seizure provision suggest that those early concerns may not materialize. Continue Reading Emerging Issues In the Defend Trade Secrets Act’s Second Year

shutterstock_486112282In a series of breakfast briefings, Seyfarth attorneys Robert Milligan, Joshua Salinas, and Scott Atkinson, joined by Jim Vaughn, one of California’s leading computer forensic experts, discussed how to navigate the tricky waters and provided best practices for trade secret protection. The briefings covered how to best identify and protect trade secrets, what employers need to know about the DTSA, the impact of new California Labor Code Section 925, how to catch a trade secret thief, and more. Click here to see the slides from the briefings.

As a conclusion to this well-received Breakfast Briefing Series, we compiled a summary of three takeaways that were discussed during the briefings:

  • Employers should continue to use caution when using non-California forum selection clauses and choice of law provisions in agreements that are “conditions of employment” with California employees. Attempting to enforce such provisions may not only result in litigation, but may also result in the employer being on the hook for the employee’s attorney’s fees under California Labor Code section 925.
  • Employers should update nondisclosure agreements and company policies to include language reference to the Defend Trade Secrets Act whistleblower provisions.
  • Employers should remember that mobile devices can be configured differently, and depending on how they allowed them to be configured, can be problematic post departure of the employee. Corporate partitions, company iTunes accounts, and mobile device management systems are all options to consider.

shutterstock_534162337A Northern District of California court recently held a plaintiff could amend its complaint to add a Defend Trade Secrets Act (“DTSA”) claim when discovery showed continued misappropriation after the enactment of the DTSA on May 11, 2016.

In VIA Technologies, Inc. v. ASUS Computer International, No. 14-CV-03586-BLF, 2017 WL 491172 (N.D. Cal. Feb. 7, 2017), VIA filed suit against ASUS, alleging infringement of VIA’s patent and trade secret misappropriation of VIA’s intellectual property related to its USB technology. VIA’s second amended complaint was filed in July 2015 prior to the enactment of the DTSA on May 11, 2016.

During discovery, ASUS produced data related to sales of products that allegedly incorporated VIA’s trade secrets. This data was produced in supplemental productions on November 16, 2016, and on December 22, 2016. VIA claims this data supports the alleged continuation of trade secret misappropriation after the enactment of the DTSA, and therefore, requests to add the claim. VIA claims it also inadvertently overlooked the sales data believing the November 16, 2016, production was merely a “re-production.” VIA filed the instant motion on January 4, 2017, after ASUS refused to stipulate to an amendment to add a claim under DTSA. Continue Reading Court Allows Plaintiff to Amend Complaint to Add Defend Trade Secrets Act Claim After Discovery Reveals Alleged Continued Misappropriation

shutterstock_393956815The Ninth Circuit recently held in United States v. Liew that it was not plain error for the district court not to instruct the jury that disclosure “‘to even a single recipient who is not legally bound to maintain [a trade secret’s] secrecy’ destroys trade secret protection.” As a result, the Ninth Circuit upheld criminal convictions under the (pre-Defend Trade Secrets Act) Economic Espionage Act (“EEA”) for trade secret misappropriation despite a third-party competitor (who was not bound by any confidentiality obligations) acquiring the trade secret.

The trade secret at issue in United States v. Liew concerned methods of producing titanium dioxide (TiO2), a white pigment found in anything from paint to Oreo creme, which makes its manufacture a (surprisingly) competitive industry. DuPont has been a leader in TiO2 production since the 1940s, when it became more efficient to produce TiO2 through a chloride-based process. DuPont opened chloride plants around the US, including one in Antioch, California and one in Ashtabula, Ohio. The Ashtabula plant was built for Sherwin-Williams, subject to a fifteen-year confidentiality agreement effective through the plant’s sale in the 1970s. The plant was sold multiple times thereafter and was ultimately acquired by a competitor of DuPont who was not bound by any nondisclosure or confidentiality obligations to the company.  Continue Reading Trade Secrets May Retain Protections Despite Disclosure to Single Competitor

Top_tier_firmsThe 2017 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 second consecutive year, our Trade Secrets practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Michael D. Wexler was ranked in the editorial’s “Leading Lawyers,” and Katherine E. Perrelli, Robert B. Milligan, Daniel P. Hart, Erik W. Weibust, and J. Scott Humphrey were recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States Awards 2017 is a new concept in recognizing and rewarding the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the U.S. legal market.

webinarIn Seyfarth’s third installment in its 2017 Trade Secrets Webinar Series, Seyfarth attorneys Justin K. Beyer, Dean Fanelli, Thomas Haag, and Marcus Mintz will focus on defining and protecting trade secrets in the pharmaceutical industry.

Pharmaceutical companies can easily spend in excess of $1 billion for the discovery and development of a new pharmaceutical product. Trade secrets are an invaluable intangible asset that, in conjunction with a pharmaceutical company’s patents and trademarks, form the foundation of a company’s overall intellectual property strategy. Proper implementation of a sound trade secret strategy at an early stage is essential for both large and small pharmaceutical companies to protect their confidential proprietary information.

The panel will address the following topics:

  • Defining and understanding trade secrets in the pharmaceutical market, including the “hidden” trade secrets involved in drug research, testing, and manufacturing stages
  • Reviewing significant civil and criminal cases in the industry
  • Discussing how federal and state trade secrets statutes and decisions may impact the protection of trade secrets
  • Suggested best practices for protecting trade secrets from invention through sale

Our panel has significant experience advising clients on trade secret issues, litigating trade secret cases, drafting protection agreements, and conducting trade secret audits.

Please join us for this informative webinar:

register

shutterstock_588521786Robert Milligan, Seyfarth Partner and Co-Chair of the Trade Secrets, Computer Fraud & Non-Competes Practice Group, will be a panelist for the “Trade Secret Mediations in 2017: What You Need to Know” webinar presented by The Knowledge Group, LLC Live Webcast Series on July 14, 2017.

In most intellectual property cases, particularly in trade secret disputes, mediation can be a highly effective mechanism to resolve conflicts early on. It can enable things that are not possible in court, such as private caucuses between a mediator and each party involved where private resolution of the issue can be offered.
Companies seeking mediation should first know their actual trade secrets and how to protect it. With the help of an experienced mediator, both parties can be able to identify the strengths and weaknesses of the case, and the requirements and risks of proving and disproving trade secret claims.
In this live Webcast, a panel of distinguished professionals and thought leaders organized by The Knowledge Group will help the audience understand the fundamentals of trade secret mediations. They will discuss how to leverage mediation for resolving trade secret disputes and avoid costly, slow and uncertain judicial process.
Key Topics Include:
  • Mediating Trade Secret Disputes
  • Confidentiality, Counsel and Mediator Ethics
  • Selecting a Mediator
  • The Role of Counsel in Mediation
  • Preparing for a Mediation Session
  • Drafting and Enforcing a Settlement Agreement
For more information or to register for the event, click here.

shutterstock_617698010As a special feature of our blog—special guest postings by experts, clients, and other professionals—please enjoy this blog entry from Charlie Platt, a director at iDiscovery Solutions and a Certified Ethical Hacker. He advises clients on data analytics, digital forensics, and cybersecurity.

At the airport recently, waiting for boarding, flipping through an issue of United States Cybersecurity Magazine, an article about detecting insider threats caught my eye. It was loosely based on a list of behaviors it claimed were ideal indicators for detecting insider threats. I thought, “Wow, this is great! I know plenty of clients who could benefit from this information.” Insider threats are difficult to detect, and I was excited by the opportunity to get new insight, but I became more and more distraught as I read on. The longer I read, the more I saw myself, and many of my cyber-colleagues, being described by the author’s so-called threat indicators. How could we, the good guys, be mistaken for threats?

I read through the list again, and for each point, I asked, “Is this a reliable indicator of a real threat, or a false positive?” I’ve provided the entire list below with my thoughts on each item. Continue Reading Great Employee or Insider Threat?

shutterstock_160974335In a recent formal Ethics Opinion, the American Bar Association stressed that lawyers must make reasonable efforts to prevent inadvertent or unauthorized access to confidential information relating to the representation of their clients. The ABA recognized that in the age of constant cybersecurity threats, law firms are targets for hackers for two reasons:

(1) they obtain, store and use highly sensitive information about their clients while at times utilizing safeguards to shield that information that may be inferior to those deployed by the client, and (2) the information in their possession is more likely to be of interest to a hacker and likely less voluminous than that held by the client.

The Opinion further recognizes that while the Model Rules of Professional Conduct do not impose greater or different duties of confidentiality based upon the method by which a lawyer communicates with his or her client, electronic communication involves risks that are constantly changing. Continue Reading ABA Encourages Encryption of Emails When Transmitting Confidential Client Information

shutterstock_421593898Join Seyfarth Shaw’s Trade Secrets Co-Chair Michael D. Wexler and Partner J. Scott Humphrey at the Management Association’s 2017 Employment Law Conference on Thursday, September 28, 2017. Mr. Wexler and Mr. Humphrey will discuss significant developments in Illinois and Congress, such as the Defend Trade Secrets Act, that have changed the landscape of trade secret and restrictive covenant enforcement. Understanding the impact of these changes, and the tools now available to employers for trade secret and restrictive covenant enforcement and protection, will help company’s safeguard its most valuable assets and maintain its advantage over competitors.

Please join us for a fast-paced and informative discussion that clarifies recent developments in restrictive covenant and trade secrets law, and provides “best practices” for protecting some of your company’s most valuable assets—trade secrets, restrictive covenants, and employees.

For more information and registration, click here.