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On October 29, 2021, the District of Delaware allowed Park Lawn Corporation to continue with its trade secret claims against fellow cemetery management competitor, PlotBox, Inc., holding that the competitor only needed to have a “reason to know” improper means were used to access alleged trade secrets, based on the position of the individual feeding them the secrets.

Both Park Lawn and PlotBox develop technological solutions to manage cemetery plot placement methods, using software to facilitate mapping of gravestones electronically. This software helps automate cemetery design plans and expedites managerial tasks. The lawsuit also states that Park Lawn planned to license the trade secrets in the software to others in the industry. This plan was eventually disrupted by the Chief Executive Officer of Park Lawn, who was allegedly feeding the trade secret information to PlotBox, which also tried to hire on Park Lawn’s Chief Technology Officer. Park Lawn sued under the Defend Trade Secrets Act (“DTSA”).
Continue Reading Cemetery Company’s Trade Secret Claims Survive Motion to Dismiss by Reasonable Interference of Misappropriation after CEO Fed Competitor Information

As we have previously posted, proper trade secret identification is often a key issue for parties bringing or defending against trade secret misappropriation claims. The precise standard of identification varies across jurisdictions and continues to evolve, but trade secret identification often functions as a gating issue early in a case. A recent decision from the Third Circuit serves as reminder that failure to properly identify purported trade secrets may not just be fatal to a party’s claim, but may render a preliminary injunction unenforceable.
Continue Reading Half-Baked Trade Secret Identification Leads Third Circuit to Vacate Preliminary Injunction

First off, don’t worry, Coca-Cola’s super-secret trade secret recipe is still safe.  But on April 22, 2021, a jury in the Eastern District of Tennessee convicted a former Coca-Cola employee, Dr. Xiaorong (a/k/a Shannon) You, of stealing trade secrets related to BPA-free coatings for the inside of beverage cans for the Chinese Government. The Indictment alleged that the trade secret information cost almost $120 million to develop. The twelve-day in-person trial focused not just on the former employee’s wrong doing, but also on some the best practices Coca-Cola and Eastman Chemical Company used to protect the trade secrets at issue.

Continue Reading Former Coca-Cola Employee Convicted of Stealing Trade Secrets for the Chinese Government

Recent confirmations of the U.S. Department of Justice’s (“DOJ’s”) senior leadership and enforcement actions coupled with the continued tough stance that the Biden administration is taking towards China signal that the DOJ’s China Initiative will likely remain a strategic priority. Announced in 2018, the China Initiative, led by the DOJ’s National Security Division, seeks to counter national security threats presented by the government of China by investigating and prosecuting economic espionage, trade secret theft, hacking, and other economic crimes. The China Initiative also focuses on protecting the nation’s critical infrastructure against external threats through foreign direct investment and supply chain compromises, as well as combatting covert efforts to influence the American public and policymakers without proper transparency. According to DOJ, “[a]bout 80 percent of all economic espionage prosecutions brought by the U.S. Department of Justice (DOJ) allege conduct that would benefit the Chinese state, and there is at least some nexus to China in around 60 percent of all trade secret theft cases.”

Continue Reading DOJ Appointments at the Top and Recent Enforcement Actions Signal That Its China Initiative Will Likely Remain Intact

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

Virginia recently joined a growing list of states that have passed legislation prohibiting employers from enforcing non-compete agreements against low-wage employees.  Illinois, Maine, Maryland, Massachusetts, New Hampshire, Rhode Island, and Washington have already enacted similar legislation.  And as we previously posted, similar legislation was introduced in the United States Senate nearly a year ago, though it did not advance.  The trend reflects recognition among policy makers that non-compete agreements may unfairly restrict low-wage workers, who generally have limited bargaining power with respect to employers, from seeking new employment opportunities.

Continue Reading Virginia Joins States That Restrict Use of Non-Compete Agreements

On September 2, 2020, a Southern District of California judge granted Defendant Road Runner Sports, Inc.’s motion to dismiss, finding that Plaintiff, Profade Apparel, LLC, failed to state a trade secret misappropriation claim under the federal Defend Trade Secrets Act (“DTSA”).

At Road Runner’s request, Profade designed a “Trigonomic Arch Support Sock” for sale in Road Runner running stores.  But, after ordering just a few small batches of the socks, Road Runner allegedly stopped buying the socks from Profade.  According to Profade, Road Runner then contracted with a separate vendor to manufacture socks using Profade’s design.

In asserting a DTSA claim, Profade described its trade secrets as “proprietary and confidential information regarding the development, design, and manufacture of the Trigonomic Arch Support Sock.”  It also claimed Road Runner misappropriated the “roadmap” for producing the Trigonomic Arch Support Sock.  To support these allegations, Profade attached a contract between the parties to its complaint.  The contract contemplated the parties exchanging confidential information relating to the socks’ design and production.
Continue Reading Beep, Beep: Road Runner Escapes DTSA Claim, for Now

Pennsylvania’s medical marijuana bill went into effect in 2016. In order to obtain a permit under that bill, potential medical marijuana grower/processors or dispensaries are required to provide detailed business information with their applications. However, under the state’s Right-to-Know Law (“RTKL”), applicants who can show that information about their security, storage and transportation are trade

On Monday, August 12, a Delaware federal jury found that L’Oreal USA Inc. misappropriated Olaplex LLC’s trade secrets, breached a nondisclosure agreement, and willfully infringed on two of Olaplex’s patents related to a hair-coloring product. The patents in question related to a three-step system that protects hair from damage during bleaching.

The jury deliberated for

States within the Fourth Circuit vary in their enforcement of restrictive covenants. Virginia, Maryland, and South Carolina govern the use of restrictive covenants through common law while North Carolina governs through statute. Despite the variations in governing authority, many of the factors used in these states will be familiar, given the widely accepted “reasonableness” standard