Last week, the Ninth Circuit issued an important decision for employers in United States v. Christensen, No. 08-50531, 2015 WL 5010591, at *14 (9th Cir. Aug. 25, 2015). In that case, the Court of Appeals held that employees who misuse their access to their employers’ computer systems can be held criminally liable under California Penal Code § 502(c)(2). While many lower-court decisions within the Ninth Circuit had questioned the scope of Section 502(c) and certain of its sub-parts, and some considered it to be primarily an “anti-hacking statute,” the Ninth Circuit’s decision makes clear that § 502(c) applies even to an employee who accesses a database or system with a valid password, but proceeds to take, copy, or use data without permission to do so.
Continue Reading Access Denied — Christensen Sets the Standard for Violations of Penal Code § 502(c)
The Growing Momentum for Federal Trade Secrets Legislation
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
Threatened Misappropriation Under CUTSA in Absence of “Inevitable Disclosure”?
Under the inevitable disclosure doctrine, an employer may prevent a former employee from working for a competitor by simply demonstrating that the employee possesses the employer’s trade secrets and the former employee’s new job duties will “inevitably” cause her to rely upon those trade secrets. The doctrine is not available in California. However, California employers may be able to rely upon a “threatened” misappropriation of trade secrets to protect against the same risk.
Continue Reading Threatened Misappropriation Under CUTSA in Absence of “Inevitable Disclosure”?
“Will Not Reapply” Clauses on Life Support in California?
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Earlier this month, the Ninth Circuit rejected a “will not reapply” clause in a settlement agreement under Business & Professions Code Section 16600, the California state statute that makes most non-compete provisions unenforceable. It is unclear if the holding is limited to the particular facts or if all “will not reapply” clauses are at risk. Such clauses are typical features of settlement agreements arising from employment-based disputes. In settling such disputes, the employer does not want to risk another lawsuit on the same grounds brought by the same person in connection with another job. The employer will bargain for the “will not reapply” clause, giving the employer a contractual basis to reject future employment for that same person, and thus avoiding the risk of another suit. The Ninth Circuit decided, in the case at bar, that Section 16600 precludes such a provision as unenforceable restraint of a substantial character on the ability to work within a particular field or industry.
Continue Reading “Will Not Reapply” Clauses on Life Support in California?
Arizona Supreme Court Bucks Majority in Critical Decision Interpreting Arizona Uniform Trade Secrets Act
Against the majority of courts to have considered the issue, the Arizona Supreme Court held last week that the Arizona Uniform Trade Secrets Act (AUTSA) does not preempt (or displace) common-law claims when the claim is based on the misappropriation of confidential information as opposed to a trade secret. In other words, where the information
California Court Recognizes Narrowly Drawn CFAA Claim Against Traffickers of Access Credentials
In a blow to victims of data theft, the Ninth Circuit in United States v. Nosal held that the Computer Fraud and Abuse Act (CFAA) was not an available remedy where the alleged thief had authorized access to the computer system from which data was stolen. The Northern District Court of California’s recent decision in
District Court Carves Out “Trade Secret Exception” to California Ban on Enforcement of Non-Compete Agreements
It is common knowledge that California is somewhat of an outlier when it comes to trying to enforce contracts which prohibit employees from competing with their former employer. The recent federal decision in Richmond Technologies, Inc. v. Aumtech Business Solutions, et al., No. 11-CV-02460-LHK, 2011 WL 2607158 (N.D. Cal. July 1, 2011), now provides
Trade Secret Misappropriation and Non-Competes Across (California) State Lines: What Law Governs?
Choice of law issues permeate trade secret and non-compete cases because employers are nationwide and, employees themselves are extraordinarily mobile. Many decisions begin with a discussion of relevant choice of law issues, but often avoid deciding them by finding that the result would be the same under any of the applicable state laws, which are