In M.C. Dean Inc. v. City of Miami Beach Florida et al., Case No. 1:16-cv-21731, in the U.S. District Court for the Southern District of Florida, a subcontractor for the Miami Beach Convention Center renovation project, sued the City of Miami Beach, accusing the city of improperly giving the International Brotherhood of Electrical Workers, Local 349 union confidential M.C. Dean employee records regarding their technical qualifications, which the company claims are valuable trade secrets not normally given out to unions.   Significantly, the plaintiff sued under the recently enacted Defendant Trade Secrets Act of 2016, in addition to a claim under the Florida Uniform Trade Secrets Act.  There were no other state law tort claims asserted in the complaint filed on May 16, 2016.
Continue Reading Defend Trade Secrets Act Gets Early Test In Florida Suit

As we have noted over the past several months, trade secrets will finally obtain additional protection under federal law. Yesterday, April 27, 2016, the House of Representatives passed the Defend Trade Secrets Act of 2016, S. 1890, without amendment. The bipartisan bill passed with a vote of 410-2, sending the bill to the White

A federal civil cause of action for trade secrets misappropriation appears to be quickly becoming reality. Following the lead of the Senate, on Wednesday, April 20, the U.S. House Judiciary Committee approved the Defend Trade Secrets Act of 2015, S. 1890, without amendment. The bipartisan bill will now head to the full House of

Last week the United States Senate unanimously approved legislation that would create a private right of action in federal court for trade secret theft. We reported on this legislation — The Defend Trade Secrets Act of 2015 – last summer, and explained how it would modify the Economic Espionage Act (EEA), 18 USC Chapter 90. See The Growing Momentum for Federal Trade Secrets Legislation
Continue Reading U.S. Senate OKs Federal Trade Secret Bill

One of the most complicated parts of litigating a trade secret case is the discovery process.  Plaintiffs often seek discovery immediately to determine the full extent of information that was taken and how it was used, and often seek expedited discovery to prevent the defendants from destroying or hiding evidence of wrongdoing.  Defendants, on the other hand, resist discovery in order to prevent the plaintiff from using the defendant’s information to help structure its claims, and to prevent the plaintiff from acquiring the defendant’s trade secrets.  Recognizing this danger, courts typically require the plaintiff to identify its trade secrets before the plaintiff may obtain any discovery from the defendant. Many states, including California, have made this preemptive disclosure requirement statutory.
Continue Reading Designation of Trade Secrets a One-Way Ratchet in Discovery

Plaintiffs in trade secret cases are often torn between two conflicting interests: the need to state their trade secrets with enough specificity to survive a motion to dismiss, and the necessity of keeping their trade secrets confidential. In order to resolve this dilemma, plaintiffs often seek to file their complaints under seal, so that the contents are withheld from the public but still available to the parties and the court.

In deciding whether to seal a court filing, the court must balance the need for privacy against the public’s “general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Comm., 435 U.S. 589, 597 (1978). In federal court, in order to succeed on a motion to seal, a plaintiff must state compelling reasons, supported by specific factual findings, that outweigh the public’s right of access to court filings and the public policies favoring disclosure of court documents. In re Hewlett-Packard Co., 2015 WL 8570883, *2 (N.D. Cal. 2015); see also Sherwin Williams Co. v. Courtesy Oldsmobile Cadillac, Inc., 2015 WL 8665601, *1 (E.D. Cal. 2015). State courts employ similar standards.  For example, in California, in order to seal a document the moving party must demonstrate: (1) There is an overriding interest that overcomes the right to public access to the record; (2) the overriding interest supports sealing the record; (3) there is a substantial probability that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) there is no less restrictive means to achieve the overriding interest. California Rule of Court 2.550(d).

Continue Reading Recent Decision Reinforces the Significance of Motions to Seal in Trade Secret Cases

Last week, the California Court of Appeal issued a decision highlighting the need for employers, especially large employers with operations and employees in several states or countries, to take great care in drafting mandatory forum selection clauses and to always be aware of the relevant law in the chosen jurisdiction. In Richtek USA, Inc. v. UPI Semiconductor Corp., 2015 WL 7479125, a state Court of Appeal affirmed that a mandatory forum selection clause in an employment agreement is binding on both the employee and the employer.
Continue Reading Be Careful What You Wish For: The Importance of Forum Selection Clauses

Earlier this month, in Ajaxo Inc. v. E*Trade Financial Corp., Case No. 1-00-CV-793529, the long-running dispute between Ajaxo Inc. and E-Trade over Ajaxo’s proprietary stock trading software took yet another turn following a two-part trial in Santa Clara County Superior Court.   In the latest round of this fight over trade secrets related to proprietary stock trading software, the California Court of Appeal delved into when a reasonably royalty may be recovered and the proof it takes to recover them.
Continue Reading Hammering a Hard Drive Instead of a Royalty Check

Earlier this month, the District Court for the Northern District of California addressed the scope of the Computer Fraud and Abuse Act (“CFAA”), drawing a firm line between causes of action based on improper access of an employer’s computer, and causes of action based on improper use of the employer’s data.  Because of the narrow view taken within the Ninth Circuit as to the scope of claims properly falling under the CFAA, the district court held that there was no viable claim under the CFAA.
Continue Reading Access v. Use: An Important Distinction in the Computer Fraud and Abuse Act