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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

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.).

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On Monday April 4, after remarks from the bill’s sponsors Orrin Hatch (R) Utah and Christopher Coons (D) Delaware, the Senate voted 87-0 in favor of the Defend Trade Secrets Act of 2015, S. 1890. As we have previously reported, the Act will create a federal civil cause of action for trade secrets misappropriation, which includes an ex parte seizure provision. The next hurdle for the creation of a federal civil action for trade secrets misappropriation, which as Senator Hatch pointed out is the only intellectual property tort for which there is not a federal remedy, is the House of Representatives. If the House passes its version of the bill, H.R. 3326, President Obama is expected to sign the bill into law.

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E.I. DuPont de Nemours & Co. settled its long-running trade secret dispute against Kolon Industries, Inc. over the theft of trade secrets related to DuPont’s flagship Kevlar® product. Crowell & Moring attorneys, in partnership with McGuireWoods LLP, represented DuPont in the six-year battle.

Kolon also pled guilty to one count of a conspiracy to convert trade secrets in the related criminal matter brought by the United States Department of Justice, and agreed to pay DuPont $275 million in restitution, along with $80 million in criminal fines. Previously, two former DuPont employees pled guilty to trade secret violations for their consulting work with Kolon. One of the employees served an 18-month prison term, and the other is awaiting sentencing.

Continue Reading Bellwether DuPont-Kolon Trade Secrets Case Resolved Through Civil Settlement and Criminal Guilty Plea

On November 28, 2013, the European Commission (EC) proposed a directive “on the protection of undisclosed know-how and confidential business information (trade secrets) against their unlawful acquisition, use and disclosure.” If adopted, the directive will establish a common definition of “trade secrets” and set of remedies in all 28 European Union (EU) Member States. The proposed directive now goes to the European Parliament and EU Member State governments via the European Council for adoption.

Click here to read this full alert on Crowell.com.

In the wake of legislation strengthening U.S. federal trade secret statutes and a recent National Intelligence Estimate sounding the alarm on the economic costs of cyber-espionage, the White House in February 2013 released a new “Administration Strategy to Mitigate the Theft of Trade Secrets.” The report, produced by the U.S. Intellectual Property Enforcement Coordinator, Victoria Espinel, represents a new push to develop effective, coordinated public policy responses to the misappropriation of trade secrets.

Click here to read this full alert on Crowell.com.

The Second Circuit Court of Appeals has given employers more flexibility in pursuing trade secret claims that are based on an employee’s theft of a company’s computer files. In MacDermid, Inc. v. Deiter, No. 11-5388-cv (2d Cir., Dec. 26, 2012), the court found that misappropriation from a computer server located in one state is a sufficient basis to haul the employee into court in that state. The decision suggests this is true regardless of the lack of other contacts with the forum state.

Click here to read this full alert on Crowell.com.

For the first time, the U.S. Department of Justice has indicted a Chinese state-owned enterprise for violating the Economic Espionage Act, in connection with efforts to acquire manufacturing technology for titanium dioxide, a white pigment commonly used in paint, plastics and paper. The indictment specifically alleges that “the People’s Republic of China (PRC) publicly identified the development of chloride-route titanium dioxide (Ti02) production technology as a scientific and economic policy.”

Click here to read this full alert on Crowell.com.