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On March 13, 2021, borrowing from California Code of Civil Procedure § 2019.210 (which requires a plaintiff to “identify. . . trade secret[s] with reasonable particularity” before it can obtain discovery on those trade secrets), a Northern District of California judge narrowed trade secret claims asserted under the Defend Trade Secrets Act (“DTSA”) due to the plaintiff’s failure to specifically identify most of its asserted trade secrets prior to discovery.  Although not an explicit requirement under federal law, the Court reasoned that the disclosure requirement served to prevent plaintiffs from getting discovery and then using that discovery to “cleverly specify whatever happens to be there as having been trade secrets stolen from plaintiff.”  The decision could be significant for trade secret litigants going forward.

Continue Reading Federal Court Imports California Trade Secret Disclosure Rule and Narrows DTSA Claim

On December 16, 2020, the U.S. Court of Appeals for the Ninth Circuit held for the first time in Attia v. Google LLC that a misappropriation claim under the Defend Trade Secrets Act of 2016 (“DTSA”) may be brought for a misappropriation that started prior to the enactment of the DTSA as long as the claim also arises from post-enactment misappropriation or from the continued use of the same trade secret.  The decision further expands the reach of the DTSA and provides a blueprint for other courts to rule along the same lines.

The case, which was originally filed in the Northern District of California in 2014, was brought by an architect and his firm against Google under the DTSA, the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and state trade secret and contract laws for alleged misappropriation of the plaintiff’s “Engineered Architecture” technology.[1] Although the Ninth Circuit affirmed the District Court’s dismissal of the DTSA claim on the grounds that  the architect lacked standing under the DTSA because Google’s 2012 patent applications based on the “Engineered Architecture” technology placed the contested information in the public domain, extinguishing any trade secret claims over it,[2] the Ninth Circuit’s ruling was significant for other reasons, namely the expansion of the DTSA’s potential applicability.

Continue Reading Ninth Circuit Allows Defend Trade Secrets Act Claims for Conduct Predating the DTSA

On October 7, 2019, the U.S. Department of Justice (“DOJ”) issued a Step-by-Step Guide for Determining if Commercial or Financial Information Obtained from a Person is Confidential Under Exemption 4 of the FOIA. The Step-by-Step Guide is used by agencies, in conjunction with guidance from the Office of Information Policy (“OIP”) to determine whether commercial or financial information provided by a person is “confidential” under FOIA Exemption 4. FOIA Exemption 4 protects trade secrets and commercial information that is privileged or confidential. The DOJ Guidance is another tool that can be used by practitioners to determine when information must be disclosed under a FOIA Request.

The DOJ Guidance followed on the heels of the Supreme Court’s decision in in Food Marketing Institute v. Argus Leader Media (described in a previous blog post) where the Supreme Court addressed the question of “when does information provided to a federal agency qualify as confidential.” The Supreme Court held that information is confidential and protected if: (1) the information is “customarily kept private, or at least closely held” and (2) where the receiving party provides “some assurance” that the information will be kept secret.

The DOJ Guidance outlines three questions to help determine if information is confidential under FOIA Exemption 4.
Continue Reading DOJ Step-by-Step Guidance to Determine if Trade Secrets are Confidential Under the Freedom of Information Act (FOIA)

On May 6, 2020, the U.S. District Court for the District of Maine denied plaintiff Alcom’s request for a temporary restraining order (“TRO”), which sought to enjoin a competitor’s alleged misappropriation of trade secrets. The court denied the request for a TRO, holding that Alcom’s speculation about the potential harm it would suffer absent the TRO was not enough to show a likelihood of irreparable harm, as required to obtain a TRO. The case serves as a reminder that when proving irreparable harm, courts require more than just speculation.

In 2015, Alcom (a trailer manufacturer) hired Mr. Temple (defendant) as a sales representative for its horse and livestock trailers. As the sole salesperson in North America for the Frontier line of trailers, Mr. Temple gained significant responsibilities including developing and maintaining sales leads, as well as growing Alcom’s customer base for those trailers. Mr. Temple signed various agreements as conditions to his employment, including (i) confidentiality agreement, (ii) non-disclosure agreement, (iii) non-compete agreement, and (iv) a non-solicitation agreement. Alcom required Mr. Temple to sign the agreements as a precondition for accessing highly valuable and confidential company information relating to customer incentive program details, sales and marketing information, and unique insights into the needs and operational requirements of the trailer dealers he solicited.
Continue Reading Under Alcom v. Temple, Speculative Harm Does Not Meet the Irreparable Harm Requirement

In an effort to further combat the international theft of intellectual property, the U.S. government has taken multiple steps to restrict certain companies’ ability to operate within the United States and to prevent those companies from profiting off of their illegal activities. The governmental activity also underscored the increasingly important role that tech companies have in the administration’s national security policies.

Earlier this year, the President signed into law. H.R. 4998, the Secure and Trusted Communications Networks Act of 2019 (‘the Legislation”), which prohibits certain Federal subsidies from being used to purchase communications equipment or services from Huawei and other providers that are deemed to pose a risk to national security.
Continue Reading Tech Companies, National Security, Trade Secrets, and the Increased Controls on the Export of Emerging Technologies

The COVID-19 pandemic presents unique and unprecedented challenges to the ongoing need to protect confidential information and trade secrets. With entire workforces working remotely, employees are increasingly relying on video services to remain connected, but the increasing prevalence of video services does not come without problems. For example, Zoom Video Communications Inc. (“Zoom”) is a videoconferencing app which allows multiple people to be in the same “virtual room” at once and which has seen an uptick of users since the COVID-19 crisis. While Zoom permits employees to remain in contact, it and other video services also permit employees to use and share confidential information and trade secrets from their home. Now more than ever companies need to be extra vigilant in what platforms they allow their employees to use and how their employees use the platforms.
Continue Reading Is the Platform You’re Using a Potential Threat to Protecting Your Trade Secret?

As autonomous vehicles quickly move farther towards the mainstream, the underlying technology has become increasingly more valuable and has led to an uptick in the theft of autonomous vehicle (“AV”) trade secrets. Indeed, criminal prosecutions of former employees for trade secret theft have been on the rise, especially in the autonomous vehicle segment. Two recent cases underscore the enforcement agencies’ efforts to stem the rise in trade secret theft in the AV segment. Anthony Scott Levandowski was a former executive at both Uber and Google. He departed Google and created a new company named Ottomotto, LLC that was later purchased by Uber. Levandowski pled guilty to theft of trade secrets from Google, admitting that he downloaded approximately 14,000 files from an internal, password-protected Google server to his personal laptop, including a key internal tracking document from Google that detailed the status of its self-driving car program. Levandowki faces a maximum sentence of 10 years in prison, and $250,000 fine plus restitution.
Continue Reading Prosecutions of Trade Secret Theft by Former Employees in Autonomous Vehicle Development

Coronavirus-related emergency measures may limit litigants’ ability to protect trade secrets in state court. State courts are drastically altering their operations in response to the novel coronavirus pandemic, including closing courthouses, continuing trials and other deadlines, suspending rules requiring paper filings, and encouraging, if not requiring, telephone and videoconferencing.

New York State, which as of the publishing of this piece was the state with the highest number of confirmed cases in the United States, has imposed some especially restrictive measures for litigants in state court. New York’s Chief Administrative Law Judge, has restricted all non-essential filings (and has also postponed all “nonessential” services). New York courts are only accepting filings pertaining to emergency matters, which the Administrative Order defines to include criminal matters; family court; certain Supreme Court matters including guardianship matters, emergency election law applications, and extreme risk protection orders; and civil housing matters, including landlord lockouts, serious code violations, serious repair orders, and applications for post-eviction relief. The Order is available here. Filings in most civil suits are, accordingly, restricted.
Continue Reading Coronavirus Related Restrictions on Emergency Trade Secrets Filings in New York

Recently the District Court for the Southern District of New York issued a decision that illustrates the risks of taking an informal approach to protecting confidential business information. As described below, in Pauwels v. Deloitte et al., No. 19-CV-2313 (RA), 2020 U.S. Dist. LEXIS 28736 (S.D.N.Y. Feb. 19, 2020), the court dismissed Plaintiff’s complaint, finding that the facts alleged by Plaintiff failed to give rise to a valid claim for misappropriation because (among other issues) Plaintiff failed to impose adequate protections on his alleged confidential business information.

The Plaintiff worked as an “independent advisor” to the Bank of New York Mellon (“BNYM”), earning upwards of $750,000 per year for his advice on how to optimize BNYM’s investments in alternative energy companies (e.g., wind farms).  No contract governed the relationship; instead, Plaintiff submitted periodic invoices for his advisory work. In the course of his work, Plaintiff developed an investment model as a tool for analyzing BNYM’s alternative energy investments, and in his complaint he alleged that the tool was his proprietary information. Over the course of several years, Plaintiff sent BNYM more than 100 spreadsheets showing implementations of his investment model. Eventually, BNYM retained Deloitte to provide the analyses and severed its relationship with Plaintiff. Plaintiff alleged that Deloitte improperly used his proprietary model when advising BNYM.
Continue Reading Pauwels v. Deloitte: A Cautionary Tale About Informal Approaches to Protecting Confidential Business Information

On February 13, 2020 the United States filed a sixteen-count superseding indictment against Huawei Technologies Co., Ltd. and several U.S. based subsidiaries (collectively “Huawei”) charging Huawei with racketeering, money laundering, and violating U.S. sanctions against Iran. The new charges, announced by the United States Attorney’s Office for the Eastern District of New York, the Justice Department’s Criminal and National Security divisions, and the FBI, are the latest of a number of enforcement actions by the U.S. Government against Huawei, and yet another escalation in the U.S. Government’s quest to prevent Huawei from stealing trade secrets and other sensitive intellectual property from American companies.
Continue Reading New Charges Leveled Against Huawei, et al.