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Ali Tehrani is an associate in Crowell & Moring's Washington, D.C. office and a member of the firm's Intellectual Property Group. His practice also intersects with the firm's Litigation &Trial Department, which was recently named Litigation Department of the Year for general civil litigation by the Washington Legal Times. In addition, Ali works with the firm's Government Contracts and Corporate Transactions groups on IP-related matters.

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.

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

The momentum for federal trade secrets legislation appears to be growing with last week’s introduction of the “Defend Trade Secrets Act of 2015” in both chambers of Congress. The bill, H.R. 3326 in the House and S. 1890 in the Senate, would create a uniform federal civil action for trade secret misappropriation, which is currently litigated exclusively in state courts and subject to the States’ various laws. Such a uniform federal civil action seeks to eliminate the splits of authority on trade secret law among the States and the resulting uncertainty about enforcement of trade secrets.  While this is not Congress’ first attempt at civil federal trade secret law, the stakes here are high:  it has been reported that publicly traded U.S. companies maintain a combined $5 trillion in trade-secret-related assets, with the annual economic loss attributable to trade secret theft estimated to be between $167 and $503 billion. These staggering numbers, combined with a recent surge in cyber-attacks and trade secret theft, have lawmakers considering the issue anew.

Continue Reading The Growing Momentum for Federal Trade Secrets Legislation