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Litigators know it is generally not easy to recover attorneys’ fees in defense of a trade secret misappropriation action. The Federal Defend Trade Secrets Act (“DTSA”) permits a court to “award reasonable attorneys’  fees” to the defendant when a claim of misappropriation  is “made in bad faith,” which “may be established by circumstantial evidence.”[1] But what exactly does bad faith mean and what is the threshold?
Continue Reading A High Mountain to Climb: Filing DTSA Claims Without any Evidence is Not Enough to Meet “Bad Faith” Standard for Awarding Attorneys’ Fees to Opponent

Trade secret litigation presents a variety of procedural and practical complexities at every stage of the proceeding. One of the most important—yet often overlooked—issues in these cases can be summarized by the following question:
Continue Reading Signed, Sealed, Delivered? Fifth Circuit Finds Sealing of Sensitive Information Requires Far More Than a Protective Order

A recent decision from the Eastern District of California illustrates the sometimes fine line between the need for plaintiffs to allege a claim for trade secret misappropriation in sufficient detail, while avoiding disclosing the trade secret in so much detail as to destroy it.

In Dairy, LLC v. Milk Moovement, Inc., Dairy, LLC (“Dairy”) sued Milk Moovement, Inc. and Milk Moovement, LLC (collectively, “Defendants”), alleging trade secret misappropriation under both the Defend Trade Secrets Act and the California Uniform Trade Secrets Act and intentional interference with contractual relations.  No. 2:21-cv-02233, 2022 WL 1103822, at *1 (E.D. Cal. Apr. 13, 2022)
Continue Reading Dairy, LLC v. Milk Moovement, Inc.: Identifying Software Trade Secrets With Particularity to State a Claim for Trade Secret Misappropriation

Employers faced with an apparent trade secret misappropriation by former employees must decide what jurisdiction to bring suit in.  For an employer headquartered outside of California who employs California residents  working primarily in California, choice of law and forum selection clauses favoring states other than California may be ineffective against them unless they had counsel who negotiated the provisions on their behalves.  (Cal. Lab. Code § 925.)  A recent California Court of Appeal decision highlighted this point, and found that where a California employee is sued by the employer for trade secret misappropriation in a separate state based on an
Continue Reading California Labor Code Section 925: A Word of Caution for Out-of-State Employers of California Employees

This month, the Ninth Circuit’s decision in DePuy Synthes Sales v. Howmedica Osteonics  held that a U.S. district court in California properly invalidated a foreign choice-of-law and forum selection provision under California Labor Code § 925, and denied a motion to transfer the case to a different venue.  While this might seem at first blush like a technical issue of federalism and contractual interpretation, the decision indicates that federal courts in the Ninth Circuit will also apply California’s partial prohibition on the use of foreign forum-selection and choice-of-law clauses as to employees.
Continue Reading Ninth Circuit Upholds Application of California Labor Code To Contractual Forum-Selection and Choice-of-Law Clause To Keep Dispute Over Non-Compete Clause in California

On January 24, 2022, the Federal Circuit affirmed the grant of a preliminary injunction blocking the publication of a patent application on the basis that it contained the plaintiff, Masimo Corp.’s trade secrets. Masimo Corp. v. True Wearables, Inc., No. 2021-2146, 2022 WL 205485 (Fed. Cir. Jan. 24, 2022). The Court of Appeals did so despite evidence that a widely circulated and cited paper on statistics had disclosed an equivalent algorithm, because the defendant failed to show that others in Masimo’s particular field (or a related field) were aware of the paper.
Continue Reading Federal Circuit Deems Algorithm Potentially Valid Trade Secret Notwithstanding Prior Publication

In July 2021, President Biden signed an Executive Order directed at promoting competition in the U.S. economy.  As part of that overarching goal, the Biden Administration tasked the Federal Trade Commission (“FTC”) with curtailing the use of non-compete clauses “and other clauses or agreements that may unfairly limit worker mobility.”  While the FTC has only recently initiated informal proceedings on the issue, the agency – and perhaps Congress as well – seems poised to move forward in 2022 to address restrictive covenants.
Continue Reading FTC reviews non-compete agreements: An Update On The Future Of Restrictive Covenants Following The Biden Administration’s Proposed Curtailment and Safeguarding of Proprietary Information

In a recent decision from the U.S. District Court for the District of Florida, a healthcare product manufacturer’s claim of trade secret misappropriation against a competitor and a customer was thrown out on summary judgement.  While the plaintiff showed that at least some defendants had access to the plaintiff’s alleged trade secret protected CBD cream formula and manufacturing process, the plaintiff failed to demonstrate that the defendants’ accused CBD cream product was manufactured using the alleged trade secret.  Healthcare Res. Mgmt. Grp., LLC v. Econatura All Healthy World, LLC, No. 9:20-cv-81501-Matthewman, 2021 U.S. Dist. LEXIS 206871 (S.D. Fla. Oct. 27,
Continue Reading Healthcare Res. Mgmt. Grp., LLC v. Econatura All Healthy World, LLC – A Cautionary Tale: Meticulous or Careless Strategy Required to Prove Your Trade Secret Claim

With tightening labor markets and the increasing mobility of healthcare workers, including physicians, now is a good time to revisit non-compete agreements to ensure they are enforceable.  Texas courts will generally enforce non-compete agreements as long as they are ancillary or part of an otherwise enforceable agreement and do not contain restraints greater than necessary to protect the employer’s legitimate interests.  These interests include business good will, trade secrets, or other confidential  and proprietary information.
Continue Reading Healthcare Agreements – Key Issues Impacting the Enforceability of Non-Compete Clauses for Texas Physicians

A recent California Court of Appeals decision found nominal damages could be awarded for an employee’s breach of a non-disclosure agreement (“NDA”), even if no actual harm was done to the employer.  An award of nominal damages for breach of an NDA may be important for companies seeking to protect confidential information and trade secrets for two reasons: (1) this may give rise to an award of litigation costs, and (2) may also support a permanent injunction ruling preventing the former employee from any further possession or use of the protected information.
Continue Reading NDA: An Effective Way to Protect Confidential Information

No-hire or “no-poaching” agreements have recently come under increasing scrutiny by the federal government, as well as various state regimes.  However, a recent Ninth Circuit decision upholding a no-poach agreement highlights the various hurdles an antitrust claimant will face in bringing such a claim.
Continue Reading Illegal Deal? Ninth Circuit Rejects Attempt to Revive No-Poaching Claims

Whether a court order is appealable is often the first issue analyzed by appellate attorneys. An interlocutory order is an order issued by a court while a case is pending. These orders are not a final disposition of the case, but some interlocutory orders may be appealed even while the litigation continues. California law generally holds that “[t]o qualify as appealable, the interlocutory order must be a final determination of a matter that is collateral—i.e., distinct and severable—from the general subject of the litigation.”[1]
Continue Reading Trade Secret Misappropriation: Denial of Motion for Attorneys’ Fees under CUTSA is Not an Appealable Order

A recent decision by the Ninth Circuit Court of Appeals in BladeRoom Group Limited v. Emerson Electric Co. further stresses the importance of carefully crafting the terms and conditions in a non-disclosure agreement (“NDA”), and ensuring there is no ambiguity as to when the NDA’s confidentiality protections expire.  The Court in Bladeroom reversed a multi-million dollar judgment for the plaintiff, based largely on the Court’s differing interpretation of the duration of the confidentiality obligations under the NDA.
Continue Reading A Cautionary Tale on Including an Expiration Date in NDAs

In an important decision on August 19, 2021, the Ninth Circuit Court of Appeals in Aya Healthcare Services, Inc. v. AMN Healthcare, Inc. affirmed the grant of summary judgment in favor of AMN, finding that the non-solicitation provision in the parties’ agreement was not an unreasonable restraint in violation of the federal antitrust law known as the “Sherman Act.”  Instead, the Court ruled that the non-solicitation provision was “reasonably necessary to the parties’ pro-competitive collaboration” and that Aya failed to show the non-solicitation provision had a “substantial anticompetitive effect.”[1]
Continue Reading Ninth Circuit Denies Sherman Act Challenge To No-Poach Provision

Trade secrets and patents offer very different forms of protection, with different pros and cons. A trade secret may last indefinitely, while a patent has a fixed term of 20 years. Independent reinvention is permissible under trade secrets, but not with patents. And of course to obtain a patent, one must disclose the claimed invention to the public, in sufficient detail to enable one skilled in the relevant technology to make and use the invention.
Continue Reading Trade Secret vs. Patent – a False Dichotomy