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The Securities and Exchange Commission (“SEC”) levied an $18 million fine against J.P. Morgan Securities, LLC (“JPMS”) for allegedly including overbroad release provisions in settlement agreements. This marks the continuation of its recent activity to enforce SEC Rule 21F-17(a), a regulation that prohibits companies from taking any action to impede or discourage whistleblowers from reporting suspected securities violations to the…

Continue Reading SEC Continues to Police Confidentiality Provisions for Theoretical Whistleblower Suppression

SEC whistleblower Everyone generally agrees that people and organizations should be able to protect their proprietary and valuable information. But one area where we’ve seen legislative fretting is when that principle potentially impedes reporting wrongdoing to the government. As we have previously blogged, Congress and many state legislatures are exploring (or, in some cases, already enacted) legislative protections for reporting suspected misconduct to the government. And, at the federal level, Congress enacted the Defend Trade Secrets Act, which provides immunity for the disclosure of a trade secret if made in confidence to an attorney or government official for the purpose of investigating a suspected violation of law.
Continue Reading Recent SEC Order Reiterates Need for Affirmative Whistleblower Exclusion

In Seyfarth’s third installment in its 2019 Trade Secrets Webinar Series, Seyfarth attorneys Katherine Perrelli, Justin K. Beyer, and Amy Abeloff focused on the key provisions of the Defend Trade Secrets Act, how the DTSA has evolved since it was passed three years ago, and what to expect in the future.

As a conclusion to this well-received webinar, we compiled…

Continue Reading Webinar Recap! The Defend Trade Secrets Act: 3 Years Later

Continuing our annual tradition, we have compiled our top developments and headlines for  2018-2019 in trade secret, non-compete, and computer fraud law.

1. Government Agencies Increasing Scrutiny of Restrictive Covenants

In mid-2018, the Attorneys General of ten states investigated several franchisors for their alleged use of “no poach” provisions in their franchise agreements. 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 several franchisors about their alleged use of such provisions. Less than twenty-four hours later, some franchisors (mostly different ones than those who received the information demands) entered into agreements with the Washington State Attorney General’s Office to remove such clauses from their franchise agreements. The recent focus by state law enforcement on franchisors is a new twist, given that restrictive covenant agreements in the franchise industry are typically given more leeway than in the employment context.
Continue Reading Top 10 Developments and Headlines in Trade Secret, Non-Compete, and Computer Fraud Law in 2018/2019

A Ninth Circuit panel consisting of Judges A. Wallace Tashima, Johnnie B. Rawlinson, and Paul J. Watford recently heard oral argument in Anheuser-Busch Companies v. Clark, 17-15591, concerning the denial of a former employee’s anti-SLAPP motion in a trade secret misappropriation and breach of contract case. This is the second time the case has made its way up to the Ninth Circuit. We previously reported on this case in March 2017. The panel has not yet issued its decision but the Ninth Circuit’s decision could have far reaching implications for trade secret and data theft cases involving purported whistleblowing activities.
Continue Reading Hold My Beer: Ninth Circuit Hears Oral Argument in Trade Secret/Anti-SLAPP Row for a Second Time

A recent California Court of Appeal decision held that the receipt, retention and dissemination of confidential information by a whistleblower’s attorney is protected by the state’s anti-SLAPP statute. MMM Holdings, Inc. v. Reich, 21 Cal. App. 5th 167 (2018).

Factual Background

In 2010, Jose “Josh” Valdez was promoted to president of MSO of Puerto Rico, Inc. (“MSO”), a wholly-owned subsidiary of MMM Holdings, Inc. (“MMM”). MMM offers Medicare advantage health insurance plans in Puerto Rico and contracted with the U.S. Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services.
Continue Reading California Court of Appeal Holds That Disclosure of Confidential Information Protected by Anti-SLAPP Statute

In what appears to be a first under the Defend Trade Secrets Act (“DTSA”), a United States District Judge has thrown out claims against an alleged trade secret thief on the basis of the DTSA’s immunity for confidential disclosures to attorneys in the course of investigating a suspected violation of the law. Christian v. Lannett Co., Inc., No. 16-cv-00963-CDJ, 2018 WL 1532849 (E.D. Pa. Mar. 29, 2018).

Certain Trade Secret Disclosures to Attorneys or the Government Are Protected

The DTSA exempts from both criminal and civil liability any trade secret disclosure made in confidence to a federal, state, or local official or to an attorney if the disclosure is made “solely for the purpose of reporting or investigating a suspected violation of law.” 18 U.S.C. § 1833(b)(1).
Continue Reading Defend Trade Secrets Act First: Claim Tossed Based on Whistleblower Immunity

Robert B. Milligan, Partner and Co-Chair of Seyfarth’s National Trade Secret, Computer Fraud, and Non-Compete practice group, just finished co-editing and co-authoring a prominent new California trade secret treatise.

This Supplement to the Third Edition practice guide addresses the Defend Trade Secrets Act (DTSA ), which was enacted in 2016.  This Supplement includes additional practical tips and strategies related to…
Continue Reading Seyfarth’s Robert Milligan Co-Edits and Co-Authors New Treatise on Defend Trade Secrets Act

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_287601008A California federal district court has recently given employers a small victory against former employees who misappropriate trade secrets and assert whistleblower immunity or the litigation privilege as after-the-fact defenses. The federal district court for the Eastern District of California recently rejected, for a second time, a defendant’s anti-SLAPP motion to strike a trade secret lawsuit brought against him…
Continue Reading Second Shot at Anti-SLAPP Motion Fails in Trade Secrets Dispute Involving Former Beer Worker