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Raija Horstman

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On December 20, 2020, the US Senate unanimously passed a new bipartisan bill designed to punish foreign individuals and corporations involved in intellectual property theft.

The Protecting American Intellectual Property Act was co-authored by Sen. Ben Sasse, R-Neb., and Sen. Chris Van Hollen, D-Md.  The bill requires a report to Congress every six months identifying:

  • any individual or firm that has engaged in, benefitted from, or materially assisted the significant theft of U.S. trade secrets, if that theft constitutes a major threat to the national security, foreign policy, economic health or financial stability of the United States; and,
  • the chief executive officers and board members of the reported firms and whether those individuals have benefitted from the significant theft of U.S. trade secrets.

Continue Reading Senate Passed New Legislation to Punish Foreign Individuals and Corporations for IP Theft

Under the California Uniform Trade Secrets Act (CUTSA), and many other states’ trade secret acts, a plaintiff must identify its alleged trade secrets as a prerequisite to conducting discovery.  Cal. Civ. Code § 2019.210.  The Ninth Circuit recently held that the Defend Trade Secrets Act (DTSA) also includes this requirement to identify alleged trade secrets with sufficient particularity.  The Ninth Circuit was considering whether the U.S. District Court for the Central District of California had abused its discretion in granting summary judgment for a defendant on CUTSA and DTSA claims by finding that the plaintiff had not identified its trade secrets with sufficient particularity without any discovery. (Spoiler alert: It did.)
Continue Reading Ninth Circuit Opens the Door to Modifying a Trade Secret Identification After Discovery

A new lawsuit in the medical marijuana industry raises questions about the enforceability of noncompetes under Massachusetts’ new statute. On August 26, 2020, Alternative Compassion Services, Inc., (“ACS”) filed a federal lawsuit against its former Chief Operating Officer, Defendant Matthew Radebach (“Radebach”).
Continue Reading Pot Got Your Tongue? Company Alleges Former COO Disclosed Trade Secrets to Competitors

During these unprecedented times, some people are itching to get back to “normal.” As evidenced by the excitement over the recent re-opening of some states and cities, there is an obvious desire to return to the way of life we remember. However, this likely won’t be fully possible without the development of a vaccine, which, along with health-treatment drugs, is understandably the subject of intensive development efforts.

There are lurking intellectual property (“IP”) law issues in this rush to develop a vaccine. Most notable are the potential issues surrounding possible patent infringement, and sharing (or misappropriation) of trade secrets. Drug manufacturers are racing to find treatment drugs that they can mass-produce and make a sizable profit on. But, should these manufacturers rely on patents or trade secrets to protect their drugs and vaccines? Considerations to be weighed include:
Continue Reading IP and the Novel Coronavirus: Developing a Vaccine

Plaintiffs wishing to sue for patent, copyright, or trademark infringement all have one thing in common: they must prove they own the IP at issue. Not so for trade secrets. Last month, the United States Court of Appeals for the Third Circuit held that the Pennsylvania Uniform Trade Secrets Act only requires a plaintiff to lawfully possess, rather than formally own, the trade secrets it wishes to vindicate. With this opinion, the Third Circuit affirmed a district court decision awarding $3.5 million in damages and fees to NASA subcontractor Applied Fluid Systems Inc. (“AFS”) in its suit for trade secret misappropriation.

The “sorry story of disloyalty and deception piled upon deception” began in 2009, when AFS entered into a three-year contract with the Virginia Commonwealth Space Flight Authority (the “Authority”) to build, install, and maintain a hydraulic system for a NASA rocket launch facility. However, the Authority experienced financial difficulty, and eventually had to cede control of the launch system to a private entity, Orbital Sciences Corp. (“Orbital”). Through this acquisition, Orbital inherited the AFS contract. Importantly, the initial contract between AFS and the Authority made any materials generated by AFS for the Authority the property of the Authority.
Continue Reading A Story of Disloyalty and Deception: The Third Circuit Chimes in on Ownership Requirements in Trade Secrets Act Cases

When does a cause of action come close enough to a trade secret claim to become preempted by the California Uniform Trade Secrets Act (“CUTSA”)? CUTSA preempts statutory and common law claims “based upon misappropriation of a trade secret.” In other words, with some exceptions, claims predicated on trade secret misappropriation allegations may only be asserted through a CUTSA claim.

California courts have articulated two different CUTSA preemption tests: (1) the “common nucleus” test and (2) the “dependence” test. In many cases, the two tests will yield the same result. Sometimes, however, the tests will produce divergent outcomes.
Continue Reading Two Tests for Trade Secret Preemption Under California Law

The Federal Circuit recently rejected an attempt to avoid a trade secret trial in state court by invoking federal jurisdiction under patent law. Intellisoft discovered, in the early 2010’s, that Acer had applied for a patent which incorporated its alleged trade secrets.  Intellisoft sued Acer in March 2014 in California state court asserting various state law claims, including trade secret misappropriation. The Acer patent was thus a key component of Intellisoft’s trade secret misappropriation evidence and was the subject of fact and expert discovery by both parties.

The case proceeded in state court for three years. As discovery wrapped up, one of Intellisoft’s experts opined that an Intellisoft employee – who created some aspects of the trade secrets at issue – should be named as an inventor on Acer’s patent. Additionally, a second Intellisoft expert opined that portions of the Acer patent’s claims corresponded to various Intellisoft trade secrets.
Continue Reading Patents as Evidence of Trade Secret Theft Does Not Create Federal Subject Matter Jurisdiction

A recent decision by the Federal District Court for the Eastern District of New York reinforces that owners of trade secret computer programs should carefully approach copyright registration in order to maintain both copyright and trade secret protection. This includes being conscious of copyright regulations allowing the partial and redacted registration of computer code with the Copyright Office.

In a recent manifestation of this principle, Capricorn Management Systems accused GEICO of misappropriating Capricorn’s trade secret source code for medical billing software. Last week, the court granted GEICO’s motion for summary judgment, holding that the code was not entitled to trade secret protection, in part because it was registered, unredacted, with the U.S. Copyright Office, and was therefore publicly available.
Continue Reading GEICO Earns Victory at Intersection Between Copyright and Trade Secret Law Covering Source Code

A New Mexico court of appeals recently held that a former employee could not be permanently enjoined from disclosing trade secrets because his employment agreement provided for a five-year limit on the duty of confidentiality.

Lasen, Inc. (“Lasen”), a company that uses trade secret helicopter-mounted LIDAR imaging technology to detect methane gas leaks in natural gas pipelines, sued a former research scientist who wrote the source code for the company’s signature technology. Lasen alleged that the former employee stole the source code and other crucial information as well as deleted Lasen’s copies following his termination in 2009. As a result, Lasen was unable to update its LIDAR technology because it could not decipher the source code. Lasen also alleged that the former employee used its trade secrets in seeking employment with a direct competitor. After a bench trial, the court found the former employee did not misappropriate Lasen’s trade secrets, but he did breach his fiduciary duty and wrongfully retained intellectual property and trade secrets that belonged to Lasen. Therefore, the court permanently enjoined the former employee from disseminating or retaining any of Lasen’s trade secrets (the parties had stipulated that the source code was trade secret).
Continue Reading Permanent Injunctions Restricting Use of Trade Secrets May Only Be as Permanent as an Employment Contract’s Provisions

The Southern District of California recently confirmed that the California Uniform Trade Secrets Act (“CUTSA”) does not preempt other civil claims to extent they are based on wrongful conduct relating to non-trade secret intellectual property.

The case involves an employee leaving a company and allegedly commercializing its trade secret with a competitor. Defendant Mr. Corey was an original co-founder of Plaintiff Javo – which sold coffee, tea, and botanical extracts. He played a key role in developing Javo’s proprietary process for making extracts. The process involved using a specially made extraction vessel and particular levels of water quality, temperature and pressure. In 2011, as a result of Chapter 11 bankruptcy proceedings, Javo terminated Mr. Corey’s employment. Importantly to this case, his employment agreement had included an assignment of all his rights and interests in any trade secrets to Javo.

Mr. Corey went on to work for the Defendant, California Extraction Ventures (“CEV”). Shortly thereafter, Mr. Corey filed patent applications disclosing some of Javo’s allegedly proprietary information, including purported trade secret information, as well as other confidential (but not trade secret) information. Rather than assign the patent applications to Javo, Mr. Corey assigned them to CEV, his new employer. Eventually seven patents issued, and seven additional applications were published.
Continue Reading CUTSA Does Not Preempt Contractual Interference Claim Based on Confidential (But Not Trade Secret) Information