Crowell & Moring has released Litigation Forecast 2020: What Corporate Counsel Need to Know for the Coming Year. The eighth-annual Forecast provides forward-looking insights from leading Crowell & Moring lawyers to help legal departments anticipate and respond to challenges that might arise in the year ahead.

For 2020, the Forecast focuses on how the digital revolution is giving rise to new litigation risks, and it explores trends in employment non-competes, the future of stare decisis, the role of smartphones in investigations and litigation, and more.

The intellectual property article, “Venue in Patent Cases: The Sea Change Continues” discusses how the Supreme Court’s landmark TC Heartland decision changed the venue calculus for patent plaintiffs and defendants. But two years later, some important issues are still being worked out in the lower courts.

Be sure to follow the conversation on Twitter with #LitigationForecast.

On January 14th, 2020, Crowell & Moring hosted a webinar session discussing blockchain and its implications for trade secret protection, as well as its potential implications on other areas of intellectual property (IP).

Introduced by Crowell & Moring partner Mark Klapow, attorneys Josh Rychlinski and Kayvan Ghaffari explained general principles of trade secret law, general principles of blockchain, and discussed how blockchain could be used to protect trade secrets, as well as other forms of intellectual property.

Below are a few key points participants took away from the discussion:

  • Blockchain offers an immutable record of transactions, which could be particularly useful for transactional history regarding a trade secret. Each transaction contains several pieces of information, including a timestamp, which is important for proving authorship and time of creation.
  • Blockchain’s unique combination of cryptography and hashing, when used on a private blockchain (as opposed to a public blockchain), could be construed as a “reasonable measure” of protecting a trade secret under applicable law. Crowell will continue monitoring the legal wires to see how courts ultimately rule on this issue.
  • Blockchain is decentralized, meaning that there are as many points of failure as there are users of the chain. This is in stark contrast to centralized systems, which often have only a limited amount of failure points, such as a primary server and a backup.
  • Blockchain’s immutability has other relevance in IP, such as in establishing a priority date in a patent context, authorship in a copyright context, or use in commerce in the trademark context.

If you missed the live discussion, you can listen to a recording here.

The Southern District of California recently confirmed that the California Uniform Trade Secrets Act (“CUTSA”) does not preempt other civil claims to extent they are based on wrongful conduct relating to non-trade secret intellectual property.

The case involves an employee leaving a company and allegedly commercializing its trade secret with a competitor. Defendant Mr. Corey was an original co-founder of Plaintiff Javo – which sold coffee, tea, and botanical extracts. He played a key role in developing Javo’s proprietary process for making extracts. The process involved using a specially made extraction vessel and particular levels of water quality, temperature and pressure. In 2011, as a result of Chapter 11 bankruptcy proceedings, Javo terminated Mr. Corey’s employment. Importantly to this case, his employment agreement had included an assignment of all his rights and interests in any trade secrets to Javo.

Mr. Corey went on to work for the Defendant, California Extraction Ventures (“CEV”). Shortly thereafter, Mr. Corey filed patent applications disclosing some of Javo’s allegedly proprietary information, including purported trade secret information, as well as other confidential (but not trade secret) information. Rather than assign the patent applications to Javo, Mr. Corey assigned them to CEV, his new employer. Eventually seven patents issued, and seven additional applications were published. Continue Reading CUTSA Does Not Preempt Contractual Interference Claim Based on Confidential (But Not Trade Secret) Information

Crowell & Moring invites you to attend the first installment of our new Trade Secrets Webinar Series: Protecting Trade Secrets and other Intellectual Property with Blockchain, taking place on Tuesday, January 14th at 2:00 pm (EDT).

Blockchain technology is a powerful tool, outside of just the realm of cryptocurrency, that can be utilized to safely encrypt and thereby protect trade secrets. During this webinar, Crowell & Moring attorneys Mark KlapowJosh Rychlinski, and Kayvan Ghaffari will discuss ways in which your company can implement blockchain technology into its IT systems, and can be used practically and legally to protect trade secrets and other IP rights, giving you back your peace of mind.

We will provide a CLE certificate of attendance and other materials to use in seeking continuing education credits.

To register, please click here. Continue Reading Please Join Us for the First Installment of our 2020 Webinar Series: Protecting Trade Secrets and other Intellectual Property with Blockchain

California Business and Professions Code section 16600 states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This statute has been interpreted to mean that noncompete agreements in employment contracts are per se invalid in California as an unlawful restraint on trade. Quidel Corp. v. Super. Ct., 39 Cal. App. 5th 530, 539 (2019). However, on August 29, 2019, in Quidel Corp. v. Superior Court, the California Court of Appeal declined to extend this prohibition against noncompetes to circumstances outside of the employment context. Continue Reading California Declines to Extend Ban on Noncompetes Outside of Employment Context

On December 5th, 2019, Crowell & Moring’s Brussels office, in cooperation with the Belgian Institute for In-House Counsel, hosted a deep dive session into the EU Trade Secrets Directive and the changes this legal framework has brought about since it went into effect in 2016.

Crowell & Moring attorneys including Partners Jan-Diederik Lindemans and Emmanuel Plasschaert, Senior Counsel Gunther Meyer, and Associates Judith Bussé and Evelien Jamaels guided participants through best practices on maximizing protection of commercially valuable information under the legal framework, explained how it impacts companies’ relationships with employees and contractors, and finally discussed how the framework will co-exist with upcoming EU rules on whistleblowing. Participants especially appreciated the insights shared by Belgian State Security Counter-Intelligence Coordinator, L. Van Der Haeghen, about commonly used techniques to steal or otherwise unlawfully obtain trade secrets during the discussion.

Below are a few key points participants took away from the discussion: Continue Reading Crowell & Moring’s Brussels Office Hosts a Successful Deep Dive Session on Trade Secrets and Whistleblowers

Chinese national and materials scientist Hongjin Tan has pled guilty to stealing from his former employer Phillips 66 (“Phillips”) more than $1 billion in trade secrets related to next generation battery technology.

DOJ announced Tan’s guilty plea this week which revealed that he copied substantial research and development files that he knew contained protected company trade secrets. Only one day after copying the confidential files, Tan submitted a notice of resignation to Phillips and informed his manager that he would be returning to his home country of China. Given these red flags, the next day, Phillips contacted the FBI whose investigation uncovered that Tan had downloaded restricted information onto a personal USB drive and was allegedly offered a director position at a Chinese technology company with a $110,000 per year salary plus a $55,000 upfront payment in return for information on an unidentified Phillips product for the energy market.

In addition to the growing number of data breaches and cyber security threats, employees continue to pose a threat when attempting to safeguard valuable intellectual property and highlight the importance of entering into strong confidentiality agreements with employees especially those who deal with sensitive company information.

On November 5, 2019, Black Knight Inc. brought suit in Florida state court against PennyMac Loan Services LLC (“PennyMac”) alleging breach of contract and trade secret misappropriation under the Florida Uniform Trade Secrets Act. PennyMac allegedly used its access to Black Knight’s trade secrets and other confidential information relating to its proprietary mortgage servicing software platform (“MSP”) to work with third party software engineers and improperly develop an imitation mortgage-processing system. PennyMac purportedly did so to replace the MSP system and thereby avoid paying Black Knight the contractually required fees and save it years and hundreds of millions of dollars in development costs. Black Knight seeks monetary damages and injunctive relief and declaratory judgment on ownership of loan service modules.

One day later, on November 6, 2019, PennyMac filed a lawsuit in the Central District of California against Black Knight alleging violations of the Sherman Act and Cartwright Act and unfair competition based on an alleged pattern of anti-competitive and discriminatory practices to maintain control over the loan servicing systems market. PennyMac claims that it paid “extraordinarily high prices and fees for an under-performing and antiquated product,” was subjected to unconscionable contract terms, and had to incur “extraordinary technology expenses” to independently develop modules to support customer needs when performing mortgage servicing obligations. PennyMac seeks monetary and punitive damages among other relief.

How these dueling lawsuits will play out remains to be seen…

Crowell & Moring invites you to attend the third installment of our “Safeguarding Your Secrets in the Digital Age” webinar series: How to Work with Third-Parties, Including Those Internationally, taking place on Tuesday, November 12th at 12:00 pm (EDT).

During this webinar, Crowell & Moring Counsel Raija Horstman and Associate Judith Bussé will highlight best practices for trade secret protection, especially for when companies are required to share them externally or when collaborating with third parties or across borders. They will discuss tips for drafting, monitoring, and enforcing Non-Disclosure Agreements with third parties, key considerations when working with the government or across international borders, and the consequences and changes introduced by the recently transposed EU Directive on the protection of Trade Secrets. To register, please click here.

And in case you missed the second installment of our three-part webinar series, Reasonable Precautions to Protect Trade Secrets in The Digital Age, you can listen to the webinar here.

Legal services company CBX Law, LLC doing business as Latitude (“Latitude”) brought a lawsuit against alleged copycat company Lexikon Services, LLC in Tennessee state court. Latitude is seeking damages and injunctive relief based on allegations of trade secret misappropriation under the federal Defend Trade Secrets Act and Tennessee’s Uniform Trade Secrets Act, breach of contract, intentional interference, and unjust enrichment.

Latitude alleged that it identified Austin, Texas as a primary target for expanding its operations and posted an advertisement for a potential attorney business partner in this market. Chris Murphy, who subsequently founded Lexikon, responded and entered into a confidentiality and non-disclosure agreement with Latitude. Latitude alleged that it relied on these protections when having in-person and telephonic discussions with Murphy during which it shared trade secrets and confidential information about Latitude’s analysis of the Austin legal market, pricing and expense data, sales and recruiting methods, and financial modeling information. Murphy ended these discussions without entering into a partnership, and a few months later, formed Lexikon which purportedly used Latitude’s confidential and trade secret information.

In response to the lawsuit, Lexikon filed a Motion to Dismiss asserting a lack of general and personal jurisdiction because Lexikon is a Texas-based company, does not have any contacts in Tennessee, and has not conducted business and is not registered in the statute of Tennessee.