Trade Secrets Trends

Trade Secrets Trends

Analysis and commentary on the latest developments in trade secrets protection, disputes, and enforcement

U.S. Supreme Court Rejects CFAA Appeal by Power Ventures against Facebook

Posted in U.S. Litigation

On October 10, 2017, the U.S. Supreme Court denied a petition for writ of certiorari challenging the Ninth Circuit’s holding that Power Ventures, Inc. had violated the Computer Fraud and Abuse Act (“CFAA”) by accessing Facebook user accounts.

Power provided a platform whereby its members could access their various social media accounts in one place.  Power received authorization from Facebook users for this service after sending them messages through the social media platform.  Facebook responded by sending Power a cease-and-desist letter demanding that Power immediately stop its access of Facebook computers.  Power nevertheless continued, evading Facebook’s attempts to block it.

Facebook filed a lawsuit in federal court in 2008 alleging that Power had used Facebook trademarks to send upwards of 60,000 spam messages to Facebook users to deceive them into thinking the messages were from Facebook, then stored and saved user account information outside the reach and protection of Facebook. Continue Reading

Trial Experts Must Pick a Lane – Source Code Expert Disqualified for Switching from Neutral Evaluator to Witness in StubHub Trade Secrets Matter

Posted in U.S. Litigation

In the hotly contested case of Calendar Research LLC v. StubHub, Inc. et al., which is venued in the Central District of California, the plaintiff alleges misappropriation of trade secrets. Recently, the federal judge overseeing the litigation ruled that a source code expert, who had served very early in the litigation as a neutral evaluator for the parties to determine whether the defendant’s source code was based on Plaintiff’s misappropriated code, was disqualified from being used as an expert witness by defendant, StubHub, at trial.

On September 22, 2017, Hon. Stephen V. Wilson of the U.S. District Court for the Central District of California ruled on plaintiff Calendar Research LLC’s motion to disqualify tech expert Dr. Cynthia Lee from serving as an expert witness for defendant StubHub, Inc. at trial.

The District Court noted in its opinion that early in the case, the parties had agreed to retain Dr. Lee as a neutral evaluator to analyze source code from all parties related to Calendar Research’s arguments that its former employee, Michael Gray, had stolen its trade secrets, including the source code of its primary product—a smartphone application called “Klutch.” That product purports to simplify scheduling of business meetings and meetups.  As part of her evaluation, Dr. Lee had entered into confidentiality agreements with the parties, received proprietary source code from the parties, and ultimately provided the parties with a written report of findings.  Months later, StubHub designated Dr. Lee as its expert for the case, a designation which Calendar Research immediately challenged. Continue Reading

Can Your Non Compete Agreement Be Invalidated Based on Wage-and-Hour Violations? One Appellate Court Says Yes.

Posted in Non-Competes, U.S. Litigation

In addition to federal and state‑specific hurdles facing employers who wish to utilize non‑compete agreements, the Appellate Division of the New Jersey Superior Court has provided a warning to employers across the country that those agreements can be stricken for seemingly unrelated employment issues.

On September 22, 2017, in the case of SpaceAge Consulting Corp. v. Maria Vizconde et al. (case no. A-3444-15T1), the Superior Court of New Jersey, Appellate Division, held that an employer had no ability to prevent its former employee from working for its direct client despite the existence of a non‑compete agreement expressly covering that client.  The Court noted that the employee was not paid properly by the employer during her training period and thus found that because the employment and non‑compete “agreements violated federal law, they were void and unenforceable.” Id. at *12. Continue Reading

Another Case on the Intersection of Criminal and Civil Trade Secret Claims

Posted in Criminal Prosecution, U.S. Litigation

“Ex-DuPont Worker Wins Discovery Stay In Trade Secrets Suit,” an article published earlier today by Law360, cites Crowell & Moring Partner, Mike Songer, as DuPont’s counsel in E.I. du Pont de Nemours and Co. v. Anchi Hou et al., 1:17-cv-00224 (D. Del). The case involves both a civil proceeding and a related criminal case, and the different strategies available in discovery in these situations. Click here to read more about this trade secrets case, involving alleged theft of the company’s printing plate technology.

U.S. Justice Department Announces Charges Against International Conspirators For Stealing Trade Secrets to Benefit China-based Company

Posted in Criminal Prosecution

In a press release last week, the U.S. Justice Department announced charges against a group of international conspirators for allegedly stealing trade secrets from an unidentified Houston company. Those charged include four U.S. citizens, two Chinese nationals, and a Canadian national. The beneficiary of the alleged theft appears to be a China-based company with funding from the Chinese government.

The trade secrets at issue concern a product known as “syntactic foam” – a material used in underwater military equipment (e.g. submarines) and other under water vehicles.  Sources report that the syntactic foam is rare, with only a handful of companies worldwide manufacturing the material.  Those same sources report high barriers to market entry: new market entrants need significant resources to develop the intellectual capital and technology to produce the foam. Here, the plot’s conspirators figured it easier to just steal the trade secrets. Continue Reading

Keeping it Under Wraps: Protecting, Asserting and Creating Value from Your Trade Secret

Posted in Defend Trade Secrets Act (DTSA), Event

Counsel Anne Elise Herold Li will be speaking at the 2017 BIO International Convention on a panel titled, “Keeping it Under Wraps: Protecting, Asserting and Creating Value from Your Trade Secret” that will begin at 1:45 pm on June 21.

The 2017 BIO International Convention will take place June 19 – 22 at the San Diego Convention Center.

Trade secrets are valuable IP assets and can create significant revenue opportunities for companies. Their importance in today’s global economy is growing in an age of digitalization and data sharing. So much so that on May 11, 2016, Congress passed the Defend Trade Secrets Act (DTSA). The DTSA is the product of years of growing concern over the threats to trade secrets in the information economy where companies have lost value due to the loss of trade secrets. This panel will discuss best practices for protecting company innovation and trade secret processes, data and communications in business transactions and day-to-day operations. Particular attention will be focused on best practices to maintain trade secrets, assert trade secrets under the DTSA and recommended language for employee agreements so that they comply with this new law.

Waymo v. Uber: An Update on the Ongoing Trade Secret Dispute

Posted in Defend Trade Secrets Act (DTSA), U.S. Litigation

Waymo’s recently filed case against Uber continues to unfold with some potentially important developments.  The case, which began in late February when Waymo (which shares a corporate parent with Google) accused Uber of misappropriation of trade secrets under the DTSA, patent infringement, and unfair business practices (covered by this blog here) had three recent decisions issue, all on the same day.

First, on May 11, U.S. District Judge William Alsup issued an order granting in part and denying in part Waymo’s motion for a preliminary injunction.  The court’s order is sealed, and neither Uber nor Waymo have commented on its contents.

Second, Judge Alsup sua sponte referred the case to the United States Attorney for investigation of possible trade secret theft.  Judge Alsup based this decision on the evidentiary record, which was described in detail in the aforementioned injunction decision (and therefore sealed). Continue Reading

Trump Administration’s Focus on IP Webinar

Posted in Defend Trade Secrets Act (DTSA), Event, Legislation & Policy

The America Invents Act, the Defend Trade Secrets Act, and recent Court decisions demonstrate the ongoing changes affecting intellectual property. The new Trump administration is expected to continue this trend from the legislative perspective, and is expected that Congress will consider further legislation that may rival the size of the America Invents Act. At the same time, there are several key cases before the Federal Circuit and the Supreme Court that will continue to shape how the courts interpret the laws that Congress enacts. IP practitioners need to be aware of the state of play and how it may affect their business. What challenges could you face?

Tune into the Trump Administration’s Focus on IP Webinar, and join Terry Rea and Mike Songer from Crowell & Moring as they discuss key issues and trends affecting intellectual property including a discussion of the administrative and judicial trends that have a direct impact on all forms of intellectual property, including patents and copyrights. Please click here to listen to the webinar or here to access the webinar event page.

Employee Who Stole the Cookie Recipe From the Cookie Jar Fined €1 (Yes, that’s one single Euro)

Posted in Criminal Prosecution, Cyberhacking, EU Regulation

Fig cookiesThe Criminal Court of Mechelen (Belgium) ruled in favor of Bofin Biscuits against a former production assistant accused of having stolen the assistant director of the cookie baker’s laptop. The laptop allegedly contained the secret recipes of all the cookies produced by Bofin Biscuits. This case is interesting because of the nature of the secrets and also when compared to that of the “fig spread”-case discussed here two weeks ago. It also confirms that trade secret misappropriation cases do not necessary only involve complex matters on state of the art technology owned by large multinationals.

The facts of the case are rather straight-forward. On November 12, 2013 the assistant-director of Bofin Biscuits noticed that his laptop had gone missing during his absence from November 6 to November 11. Images from the surveillance video system of Bofin Biscuits showed that the actual taking of the laptop had not been filmed. The camera hanging outside the assistant-director’s office did show a production assistant walking down the hallway where the office was located, entering it and leaving with something clearly hidden under his coat. During the trial the production-assistant did not contradict that he was the person that had been filmed, but he denied that he had taken the laptop. When asked what he then was hiding under his coat, he claimed not to recall anything.

For the public prosecutor this was a clear cut case and he requested the court to sentence the former production assistant to a six month effective prison sentence and a 4.800 EUR fine. Bofin Biscuits, who had joined the proceedings by suing its now ex-employee for civil injury, requested 1.500 EUR for the still missing laptop, 2.500 EUR for the time spent on recovering the information stored on the laptop, 500 EUR moral damages and a provisional damages amount of 25.000 EUR for having stolen the secret cookie recipes.

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The First DTSA Verdict: $500,000 for Misappropriation of a Fig Spread Recipe

Posted in Defend Trade Secrets Act (DTSA), Legislation & Policy, U.S. Litigation

In less than a year from its enactment, the Defend Trade Secrets Act (DTSA) has now yielded its first jury verdict with a victory for the Florida-based company Dalmatia Import Group, Inc. The center of controversy revolved around a gourmet fig spread made with a secret recipe and process.  The jury returned a $500,000 award for theft of trade secrets, with another $2 million awarded for other claims.  This case raises several important issues regarding damages and pleading both a state trade secret claim and a DTSA claim in the same lawsuit.

The facts of the case highlight the issues involved with disclosing trade secrets to vendors or distributors. Launched in 1999, Dalmatia’s Fig Spread by all accounts has become a popular gourmet article for many households.  The recipe and production processes used to make the spread are claimed to be proprietary and extensively safeguarded.  Dalmatia engaged New York-based company FoodMatch as an exclusive distributor and began using Pennsylvania company Lancaster Fine Foods as a contract manufacturer to expose the fig jam to a wider audience.  To protect its trade secrets on the recipe and production process for the fig spread, Dalmatia required non-disclosure and non-competition agreements from FoodMatch and Lancaster.

The trio’s collaboration proved to be very successful for several years. However, in 2015 Dalmatia became dissatisfied with the quality of the fig spread from Lancaster and FoodMatch. Dalmatia then chose to engage another company for its manufacturing and distribution needs.

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