Trade Secrets Law Blog

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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

For most (if not all) professional services firms, client databases, client contact lists, and information reflecting client preferences are regarded by such firms as trade secrets that are essential to the business.  Invariably, businesses identify this type of information as proprietary and trade secret in their employee confidentiality agreements and handbooks and subject them to duties of confidentiality.  However, a recent federal ruling provides an important reminder that the term “trade secret” is a legal term of art subject to strict standards and merely labeling general categories of company information as trade secrets does not make them so—no matter how
Continue Reading Reminder to Professional Services Firms – Do Not Take Your Trade Secrets for Granted

On July 9, 2021 President Joe Biden issued an Executive Order on Promoting Competition in the American Economy, which urges the Attorney General and Federal Trade Commission (FTC) to curb the use of non-compete and no-poach agreements.  The Executive Order aims  to foster a “fair, open, and competitive marketplace,” and calls for a “whole-of-government” approach to reverse trends of industry consolidation and anticompetitive practices. The Order indicates these trends have harmed employees’ wages, work conditions, and mobility.  It further targets what it characterizes as the “overuse” of non-compete agreements and other barriers to entry in certain markets.
Continue Reading President’s Executive Order Aims to Foster a Competitive Marketplace

In trade secrets litigation, it is often critical to expeditiously obtain protection from further disclosure or continued misappropriation of the trade secret at issue through a motion for preliminary injunction.  Courts are quick to point out, however, that preliminary injunctions are “an extraordinary and drastic remedy,” and are only to be granted if the movant, “by a clear showing, carries the burden of persuasion” as to each element of the preliminary injunction test.  Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (observing that to obtain preliminary injunctive relief, a plaintiff must generally demonstrate that: “1) he is likely
Continue Reading Trade Secret Litigants Take Note: California District Court Provides Guidance on Obtaining a Preliminary Injunction and Expedited Discovery

You may be able to bring a misappropriation of trade secrets claim even if you do not actually own the misappropriated trade secret.  A growing number of federal cases indicate ownership of a trade secret may not be required in order for a plaintiff to sue for misappropriation; possession alone may be enough to confer standing.
Continue Reading Is Lawful Possession of a Trade Secret Enough for Standing to Sue for Misappropriation?

When filing a claim for trade secret misappropriation under the Defend Trade Secrets Act (DTSA) or a state’s Uniform Trade Secrets Act (UTSA), it is essential to strike the proper balance between sufficiently describing an underlying trade secret and avoiding disclosure of any details that would destroy its secrecy.  A federal court decision issued earlier this month in the Northern District of California, MBS Engineering Inc., et al. v. Black Hemp Box, LLC, et al., No. 20-cv-02825-JD, 2021 WL 2458370 (N.D. Cal. June 16, 2021), highlights this “obvious tension between the right of public access to court proceedings and the
Continue Reading Striking the Balance Between Detailed Description and Unnecessary Disclosure of the “Secret” in Trade Secret Litigation Pleadings

The Supreme Court’s recent decision in Van Buren v. United States, — S. Ct. —-, 2021 WL 2229206 (2021) resolved a longstanding Circuit split regarding the scope of liability under the Computer Fraud and Abuse Act of 1986 (CFAA), 18 U.S.C. § 1030 et seq. As we previewed last year, Van Buren addressed whether a person “exceeds authorized access” within the meaning of the CFAA when accessing information on a computer for an improper purpose. In an Opinion authored by Justice Barrett, the Supreme Court ruled, 6-3, that the CFAA does not cover those who have improper motives for obtaining computerized
Continue Reading Supreme Court Narrows The Scope of Liability Under The Computer Fraud and Abuse Act

Amidst long-simmering diplomatic tensions between China and the United States, disputes arising out of Chinese companies’ alleged theft of technological trade secrets from rival American companies[1] have found their way to federal courtrooms. This stems, in part, from the availability of worldwide injunctive relief under the Defend Trade Secrets Act (“DTSA”), which provides American companies with a robust tool to combat trade secret misappropriation by foreign entities in cases where “an act in furtherance of the offense was committed in the United States.” 18 U.S.C. § 1837(2).
Continue Reading Illinois Court Finds China Inadequate Forum For Trade Secret Misappropriation Claims Against Chinese Tech Company

When trade secret lawyers advise executives transitioning to a job with a competitor, they typically tell them to “take nothing with you” on the way out – meaning that no confidential, proprietary or trade secret information should be retained or transferred to their new employer – lest they be accused of misappropriating trade secrets.  For good measure, lawyers also typically remind their clients to be especially careful about information maintained electronically, since the rules apply to electronic as well as hard copy information.  A recent decision from the Southern District of New York serves as a useful reminder that these
Continue Reading Practice What You Preach: Trade Secret Rules (Of Course) Apply to Lawyers

Confidentiality and non-disclosure provisions in employment agreements can be a meaningful measure to help companies protect valuable intellectual property, including trade secrets.  Such provisions in employment agreements can also be important evidence of measures a trade secret owner employs to protect such important intellectual property.  Conversely, the failure to have in place a non-disclosure agreement can create difficult hurdles in asserting a trade secrets claim later on.  See, e.g., Mintz v. Mktg. Cohorts, LLC, No. 18-CV-4159, 2019 WL 3337896, at *6 (E.D.N.Y. July 25, 2019) (federal trade secrets misappropriation claim failed because plaintiff “did not require defendants to sign a
Continue Reading Employee Confidentiality Provisions: Overbreadth Can Lead to Under-Protection

California Labor Code Section 925 prohibits employers from requiring employees who reside and work primarily in California, as a condition of employment, to agree to any provision that would require the employee to litigate outside California any claim arising in California, or that would deprive the employee of the benefit of California law with respect to any claim arising in California.  Under Section 925, any such provision is voidable by the employee and if the employee exercises her right to void the provision, then any such claim shall be adjudicated in California under California law.[1]
Continue Reading California Labor Code Section 925 and How Employers Can Avoid It

On January 11, 2021, the mayor of the District of Columbia, Muriel Bowser, signed the Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”), which is set to be one of the broadest and most expansive bans on non-competes in the country.  The Act bans provisions in employment agreements that forbid any employee from working for a competitor not only after their employment, but also during their employment.  While the Act does not apply retroactively, any non-compete entered into after the Act’s effective date is void and unenforceable.
The Act was submitted for the requisite 30-day congressional review period
Continue Reading Employment Agreements: DC’s Recent Ban on Non-Competes is One of the Broadest in the Country

The protection and retention of confidential information and trade secrets permeate nearly every transaction. Employment-law successor liability presents a substantial risk in transactions even when purchase agreements seemingly contain protective language. The general rule that an asset buyer does not assume a seller’s liabilities does not necessarily apply in the employment context, at least not in all cases. Targeted labor and employment diligence helps to identify potential areas of post-acquisition risk. Diligence also helps foster a greater understanding of the seller’s business and its workforce, making for a smoother post-acquisition integration effort. Identifying key underlying trade secrets and efforts to
Continue Reading The Critical Nature of Employment and Trade Secret Diligence in Corporate Transactions

Whether under the federal Defend Trade Secrets Act (“DTSA”) or under state law uniform trade secrets acts (“UTSA”), assessing monetary damages in trade secret misappropriation cases is rarely easy.  By definition, trade secrets lose their value once they lose their secrecy, but the lost value is often difficult to monetize.  Calculating damages for misappropriation should account for the lost value of the trade secret “asset,” but courts often lose sight of this calculus in fixing damages.  Lost profits, unjust enrichment, and reasonable royalties are common measures of damages in trade secret misappropriation cases, but there is another rarely considered measure
Continue Reading Diminution in Value As A Measure of Damages for Trade Secret Misappropriation

Global competition in high-tech industries is as intense as ever, and U.S. administrative agencies continue to find themselves at the center of global disputes between foreign companies seeking to vindicate trade secret and intellectual property rights.  That outlook was confirmed this month in a highly-anticipated ruling by the International Trade Commission (“ITC”) in a trade secret dispute between two South Korean manufacturers of electric vehicle batteries.
On February 10, 2021, the ITC issued its final determination (Inv. No. 337-TA-1159) affirming an administrative law judge’s initial determination that the South Korean company SK Innovation had violated Section 337 of the Tariff
Continue Reading LG Chem’s Win In $1 Billion Electric Vehicle Trade Secret Dispute Upheld by International Trade Commission