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
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Latest from Trade Secrets Law Blog - Page 3
The Critical Nature of Employment and Trade Secret Diligence in Corporate Transactions
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
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Diminution in Value As A Measure of Damages for Trade Secret Misappropriation
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
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LG Chem’s Win In $1 Billion Electric Vehicle Trade Secret Dispute Upheld by International Trade Commission
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.
Continue Reading LG Chem’s Win In $1 Billion Electric Vehicle Trade Secret Dispute Upheld by International Trade Commission
A “Culture Of Concealment” – Scrutinizing Overbroad NDAs
Courts are increasingly scrutinizing agreements that extend beyond what is necessary to protect bona fide confidential information and trade secrets. The recent decision in Hamilton v. Juul Labs, Inc., Case No. 3:20-cv-03710-EMC, illustrates this trend. On January 27, 2021, a California federal judge ruled that an ex-employee’s lawsuit against e-cigarette manufacturer Juul Labs, Inc. regarding Juul’s allegedly over-restrictive non-disclosure agreements (NDAs) may move forward. The case, filed by Juul’s former Director of Program Management, Marcie Hamilton, is pending before the U.S. District Court for the Northern District of California, Judge Edward M. Chen presiding.
In her amended complaint, which
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The DTSA as a Tool for Foreign Entities’ Enforcement of Trade Secrets: A New Legal Frontier
In several recent decisions, district courts have held that liability under the Defend Trade Secrets Act can extend to extraterritorial defendants. As set forth by Sheppard Mullin’s Tyler Baker in a prior blog post, the extraterritorial reach of the DTSA is rapidly expanding. Non-U.S. Companies and the DTSA: Parameters of a Developing Reality | Trade Secrets Law Blog (citing vPersonalize Inc. v. Magnetize Consultants Ltd., 437 F. Supp. 3d 860, 878 (W.D. Wash. 2020); Micron Tech. Inc. v. United Microelectronics Corp., No. 17-cv-06932-MMC, 2019 WL 1959487 (N.D. Ca. May 2, 2019); Motorola Solutions Inc. v. Hytera Commc’ns Corp., 436 F.Supp.3d
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The China Pivot: Closing the “Back Door” to Trade Secret and IP Theft
During the Obama Administration, American foreign policy made a strategic “pivot” to Asia with the goal of establishing a more balanced economic, diplomatic, and security-focused approach and relationship between the U.S. and the region that would serve as a bulwark against growing Chinese influence (see, e.g., the Trans-Pacific Partnership).
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Illinois Appellate Court Upholds Sanctions Against Radio Advertiser For Bad Faith Trade Secrets Claims
The recent case of Multimedia Sales & Marketing, Inc. v. Marzullo, et al., — N.E.3d —-, 2020 IL App (1st) 191790 (1st Dist. Dec. 21, 2020), demonstrates the peril that attorney fees sanctions present for litigants who bring trade secret misappropriation claims in bad faith.
Like the federal Defend Trade Secrets Act, the Illinois Trade Secrets Act (“ITSA”) allows litigants to recover attorneys’ fees incurred in defending “bad faith” misappropriation claims. See 18 U.S.C. § 1836(b)(3)(D); 765 ILCS 1065/5. Illinois courts interpret claims of bad faith in conjunction with Illinois Supreme Court Rule 137—an analogue to Federal
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California Court Strikes Down Overbroad Confidentiality Agreement as a de facto Non-Compete
Trade secrets and other proprietary information can be among a business’ most valuable assets and drive its competitive advantage. It is therefore ordinarily critical that employees be bound by an enforceable agreement that prohibits them from misusing or otherwise harming the value of the employer’s confidential information. The recent California Court of Appeal decision, Brown v. TSG Management Co., LLC (2020) 57 Cal.App.5th 303, should be of concern to employers because it holds that an employee confidentiality agreement may be voided as a de facto unlawful non-compete agreement if it has the effect of preventing the employee from working in
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Ninth Circuit Applies the “Continued Use” Doctrine to the Defend Trade Secrets Act
The Defend Trade Secrets Act (“DTSA”), enacted in 2016, created a federal right of action for misappropriation of trade secrets. The Ninth Circuit recently addressed for the first time whether a DTSA claim may be brought against misconduct predating the enactment of the DTSA. The Ninth Circuit held that it could, so long as the misappropriation continued until after the enactment of the DTSA. See Attia v. Google LLC, — F.3d —, 2020 WL 7380256 (9th Cir. 2020).
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Ninth Circuit Applies the “Continued Use” Doctrine to the Defend Trade Secrets Act Claims
The Defend Trade Secrets Act (“DTSA”), enacted in 2016, created a federal right of action for misappropriation of trade secrets. The Ninth Circuit recently addressed for the first time whether a DTSA claim may be brought against misconduct predating the enactment of the DTSA. The Ninth Circuit held that it could, so long as the misappropriation continued until after the enactment of the DTSA. See Attia v. Google LLC, — F.3d —, 2020 WL 7380256 (9th Cir. 2020).
In Attia, plaintiff Eli Attia developed a new architecture technology called Engineered Architecture (“EA”). In July 2010, Google approached Attia about
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Don’t Neglect Forum Selection and Choice of Law Provisions When Drafting or Litigating Restrictive Covenants
Employment agreements with restrictive covenants typically contain both a forum selection clause, which determines the forum where a dispute must be heard, and a choice of law clause, which determines the law that applies to the dispute. As lawyers who regularly litigate post-employment restrictive covenant cases well know, enforcement or restrictive covenants often turns on which court decides the dispute, and what law applies, which is why these provisions are so important. Often, however, employers consider these provisions as mere drafting afterthoughts. They shouldn’t be, given the outsized importance they can play in determining enforcement. Moreover, at the dispute stage
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Trade Secret Takeaways from the Ninth Circuit’s Decision in InteliClear, LLC v. ETC Global Holdings, Inc.
Courts often require a plaintiff to identify a trade secret with reasonable particularity before commencing discovery (and it is a statutory obligation in California). But frequently a trade-secret plaintiff does not know precisely which trade secrets have been taken by the defendant before discovery commences. In the recent Ninth Circuit decision InteliClear v. ETC Global Holdings (9th Cir. Oct. 15, 2020), the appellate court held that, under its particular circumstances, a plaintiff who had not adequately specified its trade secrets at issue should nevertheless be permitted to engage in discovery for this purpose, where the plaintiff had shown discovery could provide
Continue Reading Trade Secret Takeaways from the Ninth Circuit’s Decision in InteliClear, LLC v. ETC Global Holdings, Inc.
California Court of Appeal Rules that Challenge to Google’s Confidentiality Agreements May Proceed Past the Pleading Stage
On September 21, 2020, in a published 2-1 opinion in Doe v. Google Inc., the California Court of Appeal (Dist. 1, Div. 4), permitted three current and former Google employees to proceed with their challenge of Google’s confidentiality agreement as unlawfully overbroad and anti-competitive under the California Private Attorneys General Act (“PAGA”) (Lab. Code § 2698 et seq.). In doing so, the Court of Appeal reversed the trial court’s order sustaining Google’s demurrer on the basis of preemption by the National Labor Relations Act (“NLRA”) (29 U.S.C. § 151 et seq.) under San Diego Bldg. Trades
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As A Reminder That California Has Rejected The Doctrine Of Inevitable Disclosure, Court of Appeal Rules Knowledge Of Former Employer’s Trade Secret Information Does Not By Itself Constitute Misappropriation
Grounded in California’s recognized hostility against restraints on competition, a recently published opinion from the California Court of Appeal, Hooked Media Grp., Inc. v. Apple Inc.[1], held that to establish trade secret misappropriation under California law,[2] it is not enough to show that the defendant has knowledge of the plaintiff’s trade secrets. Rather, in addition to proving that the subject information constitutes a trade secret,[3] the plaintiff must prove that the defendant improperly acquired or actually used the information. The ruling should be of interest to both former and new employers, as we explain below.
Hooked
Continue Reading As A Reminder That California Has Rejected The Doctrine Of Inevitable Disclosure, Court of Appeal Rules Knowledge Of Former Employer’s Trade Secret Information Does Not By Itself Constitute Misappropriation
Why Patents Can Matter In Trade Secret Cases
Why should companies considering trade secret litigation consider their patent portfolios? After all, trade secrets, by definition, are secret. They have value in the marketplace by virtue of not being disclosed. And like the formula for Coca-Cola, that value can continue perpetually as long as the secrecy of trade secrets is maintained. Patents, on the other hand, represent a limited monopoly granted to the patent-holder in exchange for an enabling disclosure of the patented invention, a disclosure sufficient to enable those skilled in the art to practice the invention. Of course, this public disclosure requirement for patentability destroys secrecy.
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