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

We previously wrote about whether Peloton instructors are (or should be) subject to non-compete agreements owing to their prominent role as the “face” of the company. Today, we take a look at another “face” of Peloton (and other companies), as we consider the use of restrictive covenants for paid corporate spokespeople, such as actors who appear in company ads and “influencers” who use their social media popularity to promote products.
Continue Reading Preventing the “Face” of Your Company from Doing an About-Face for a Competitor

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

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

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

Manhattan restaurant Sottolio, Inc., d/b/a Norma Gastronomia Siciliana hired Giuseppe Manco—“a noted  Italian pizza chef, or pizzaiolo”—to consult on its menu. At the same time, Manco and his wife purchased a 9% interest in the restaurant, becoming co-owners of the business. Manco signed a non-compete and non-disclosure agreement in connection with his hiring, under which Manco agreed, for ten years, to not replicate, copy, or duplicate Plaintiff’s confidential information, including its “signature recipes” for arancine, pasta alla norma, caponata, anelletti al forno, and carbonara di mare, or to use the signature recipes within a ten mile radius of Sottolio’s Manhattan restaurant. 
Continue Reading Fettucine Al Fraudo—New York Pizzaiolo in Hot Water After Alleged Theft of Secret Pasta Recipe

On June 28, 2019, Governor Mills signed LD 733, An Act To Promote Keeping Workers in Maine, into law.  The Act places limits on non-compete agreements and bans restrictive employment agreements.

Non-Compete Agreements

The Act defines a non-compete agreement as one restricting the employee “from working in the same or similar profession or in a specified geographic area for a certain period of time following termination of employment.”
Continue Reading Maine Governor Restricts Restrictive Covenants

A small, Chicago-based magnetic picture frame developer’s claims for trade secret misappropriation against a photo album manufacturer will be headed to trial after an Illinois federal district court largely denied the parties’ cross-motions for summary judgment. Puroon, Inc.’s (“Puroon”) founder and CEO, Hyunju Song, developed the “Memory Book,” “an all-in-one convertible photo frame, album, and scrapbook” that included magnetic openings and an “interchangeable outside view.” In 2013, Puroon launched a website displaying the Memory Book and Song attended various trade shows where attendees were able to interact with the product. Song also sent samples of the Memory Book to representatives of certain retailers without requiring them to sign a nondisclosure agreement.
Continue Reading Are Mom-and-Pop Companies Treated Differently When it Comes to Abandoning Trade Secrets? A Federal Court in Illinois Says Yes.

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.

Managing trade secrets belonging to Third Parties:

At first glance, you may be somewhat perplexed by the title. When and why should a company be concerned about managing trade secrets belonging to some 3rd party? It is tough enough for most companies to properly and professionally manage their own trade secrets, not to mind worrying about the trade secrets belonging to others. However, more and more, companies are indeed facing the challenge of having to manage trade secrets belonging to others. Allow me to explain.
Continue Reading The Sharing of Trade Secrets with Others

Reaching back over a decade, the Convolve and MIT v. Compaq and Seagate litigation involves a dispute between MIT, the owner of intellectual property related to signal haping technology, and Compaq and Seagate. 

While the dispute involves many facets, and the Federal Circuit’s most recent ruling included a reversal of a non-infirngement finding, notable for