Photo of Mark Klapow

The dichotomy between patent and trade secret cases is as old as time. But, Lex Machina’s newest platform – trade secrets – reveals some interesting new insights on key differences between patent and trade secret cases that will matter to plaintiffs and defendants alike. In trade secrets cases, 71% of cases that resolve at trial are won by claimants whereas 29% are won by claim defendants. LexMachina Article. By contrast, in patent cases filed between 2000 to 2018, 7% were won by the claimant whereas 4% were won by the defendant while 68% of those cases resulted in a likely settlement and 14% resolved on a procedural resolution. This stark contrast in outcomes when comparing the different types of intellectual property is useful to clients who are assessing how best to protect these valuable resources. Lex Machina offers evidence about the success of different types of remedies in trade secret cases, revealing 51% of cases granted a temporary restraining order (“TRO”), 86% of cases granted a Permanent Injunction, and 63% of cases denied a Preliminary Injunction which can be further refined by jurisdiction to provide useful intel on case strategy when bringing these cases. Lex Machina also offers empirical data on the outcome of patent litigation, notably the relative proportion of infringement versus no infringement findings at trial. With this data, attorneys can make more informed strategic decisions for their clients for both patent and trade secret cases.

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.

On June 15, Crowell & Moring hosted a trade secrets webinar, “What the New Federal Trade Secrets Law Means for Your Clients.” The panelists, Mark Klapow, Mark Romeo, Mike Songer, and Vince Galluzzo provided an overview Defend Trade Secrets Act (DTSA), signed by President Obama in May. The panelists also discussed how the courts are likely to interpret certain provisions and provided best practice guidance how to use DTSA to your client’s advantage.

Key Takeaways:

  1. The DTSA creates the first federal civil cause of action for trade secret litigants. Litigants can now freely access federal courts, including technology savvy judges, broad subpoena powers, and straightforward discovery rules and procedures.
  2. There is no preemption, so Uniform Trade Secrets Act (UTSA)-based state law claims remain independently viable. The definition of trade secrets and the test for misappropriation remain largely unchanged from the UTSA.
  3. Ex parte seizures are available on a heightened showing to stop imminent threats and attach assets.
  4. Notice requirements need to be incorporated into new and amended employee agreements to obtain enhanced damages and fees.

Please click on a link below to access webinar materials. (Note: to listen to the full recording you will need to sign-in or register with ON24.)

Presentation Deck [PDF]

Webinar Recording [ON24]

If you have any questions or would like additional information, please contact our team.

 

In the highest-profile case filed to date under the recently enacted Defend Trade Secrets Act, Space Data has accused Alphabet and Google of misappropriation of trade secrets in the launch of their balloon-based wireless network code named Project Loon, in a complaint filed in the U.S. District Court for the Northern District of California.

Space Data alleges that Google and it engaged in discussions and negotiations concerning Google’s possible acquisition of shares or assets of Space Data in 2007.  Later, in February 2008, Space Data provided Google with access to confidential and trade secret information, including business concepts for the use of balloons to provide wireless service.  According to Space Data, Google then abruptly cut off further discussions later in the month.

A Google subsidiary, now named “X,” first tested Project Loon over New Zealand in 2013.

Space Data’s complaint includes claims for patent infringement and misappropriation of trade secrets under the DTSA and California state law.  It includes allegations that Google’s misappropriations are ongoing.

The DTSA creates a federal cause of action for trade secret misappropriation.  But the law only applies “to any misappropriation of a trade secret . . . for which any act occurs on or after the date of the enactment of this Act,” or May 11, 2016, when President Obama signed the law.  The DTSA is unclear as to what constitutes such an “act” where the alleged misappropriation began before May 11 and purportedly remains ongoing.

The case is Space Data Corp. v. X, No. 16-cv-3260 (N.D. Cal.).

Another court has rejected the broader interpretation of the Computer Fraud and Abuse Act (“CFAA” or “the Act”) as applying to employees who exceed their authorized use.  A recent decision in Minnesota highlights the issue of whether the Act imposes civil liability on employees who have permission to access their employers’ data, but do so with a wrongful purpose.  See TripleTree, LLC v. Walcker No. 16-609, 2016 WL 2621954 (D. Minn. May 6, 2016).

The court considered this question in the context of a trade secrets case.  A former employee of TripleTree, an investment banking company, was discovered to have accessed the Company’s confidential information and to have engaged in a series of suspicious activities just prior to leaving the Company for a competitor.  Id. at *1.  TripleTree filed claims against its former employee for, among other things, violating the CFAA and the Minnesota Uniform Trade Secrets Act.  Id. at 2. 

The court sua sponte considered whether it should dismiss TripleTree’s CFAA claim.  Id. at *3.  The CFAA sanctions a person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains  . . . information from a protected computer.”  18 U.S.C. § 1030(a)(2)(c).  Any person who suffers from a violation of the Act may bring a civil claim for damages.  18 U.S.C. § 1030(g).  As an employee of TripleTree, the Defendant was permitted to access the Company’s confidential information.  The court considered whether the Defendant’s malicious intent in accessing the information transformed an otherwise lawful act (using the Company’s computers) into a violation of the CFAA.

Continue Reading Recent Case Highlights Circuit Split on Important Computer Fraud and Abuse Act Question

On Tuesday, the Federal Circuit decided, without opinion, not to take another look at the extraterritorial reach of Section 337 trade secret actions. As we reported in an earlier post, the ITC had issued an exclusion order against Chinese firm Sino Legend from importing tire resins based on misappropriated technology. Sino Legend appealed to the Federal Circuit, which summarily affirmed. Sino Legend then petitioned the Court to take the case up en banc, arguing principally that intervening Supreme Court precedent rendered the Federal Circuit’s 2011 decision in TianRui Grp. Co. v. Int’l Trade Comm’n, 661 F.3d 1322 (Fed. Cir. 2011) no longer good law. The Federal Circuit has now rejected that argument and effectively declared that the ITC still has jurisdiction to bar imports based on misappropriated trade secrets even if the acts of misappropriation occurred overseas.