Defend Trade Secrets Act (DTSA)

On December 16, 2020, the U.S. Court of Appeals for the Ninth Circuit held for the first time in Attia v. Google LLC that a misappropriation claim under the Defend Trade Secrets Act of 2016 (“DTSA”) may be brought for a misappropriation that started prior to the enactment of the DTSA as long as the claim also arises from post-enactment misappropriation or from the continued use of the same trade secret.  The decision further expands the reach of the DTSA and provides a blueprint for other courts to rule along the same lines.

The case, which was originally filed in the Northern District of California in 2014, was brought by an architect and his firm against Google under the DTSA, the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and state trade secret and contract laws for alleged misappropriation of the plaintiff’s “Engineered Architecture” technology.[1] Although the Ninth Circuit affirmed the District Court’s dismissal of the DTSA claim on the grounds that  the architect lacked standing under the DTSA because Google’s 2012 patent applications based on the “Engineered Architecture” technology placed the contested information in the public domain, extinguishing any trade secret claims over it,[2] the Ninth Circuit’s ruling was significant for other reasons, namely the expansion of the DTSA’s potential applicability.


Continue Reading Ninth Circuit Allows Defend Trade Secrets Act Claims for Conduct Predating the DTSA

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

On October 2, 2020, a federal judge for the Central District of California denied a motion for a temporary restraining order (“TRO”) to enjoin the Discovery Channel from airing “The Lost Lincoln,” a documentary about an allegedly long-lost photograph of Abraham Lincoln on his deathbed.  Only 130 photographs of Lincoln are known to exist.

Plaintiffs Jerry Spolar and Terry Williamson own the photograph, known as an ambrotype, and spent years researching and authenticating it.  In 2018, they partnered with Whitny and James Braun to make a documentary about the photo and shared the details of their authentication efforts with the Brauns pursuant to non-disclosure agreements.  The project fell through at first, but late last month, Plaintiffs learned that their former partners had created a documentary about the photograph for the Discovery Channel.
Continue Reading Court Denies TRO in “The Lost Lincoln” Misappropriation Case

On September 2, 2020, a Southern District of California judge granted Defendant Road Runner Sports, Inc.’s motion to dismiss, finding that Plaintiff, Profade Apparel, LLC, failed to state a trade secret misappropriation claim under the federal Defend Trade Secrets Act (“DTSA”).

At Road Runner’s request, Profade designed a “Trigonomic Arch Support Sock” for sale in Road Runner running stores.  But, after ordering just a few small batches of the socks, Road Runner allegedly stopped buying the socks from Profade.  According to Profade, Road Runner then contracted with a separate vendor to manufacture socks using Profade’s design.

In asserting a DTSA claim, Profade described its trade secrets as “proprietary and confidential information regarding the development, design, and manufacture of the Trigonomic Arch Support Sock.”  It also claimed Road Runner misappropriated the “roadmap” for producing the Trigonomic Arch Support Sock.  To support these allegations, Profade attached a contract between the parties to its complaint.  The contract contemplated the parties exchanging confidential information relating to the socks’ design and production.
Continue Reading Beep, Beep: Road Runner Escapes DTSA Claim, for Now

On August 13, 2020, a Delaware District Court judge granted Defendant Azstrazeneca Pharmaceuticals LP’s motion to dismiss, finding that Plaintiff Lithero, LLC failed to plead a plausible trade secret misappropriation claim under the federal Defend Trade Secrets Act (“DTSA”).

Lithero’s complaint alleged that Azstrazeneca misappropriated Lithero’s confidential and proprietary information regarding Lithero’s Automated Regulatory Assistant (“LARA”), including information regarding how it is trained and the process by which it learns, as well as “years of past research and development, the current capabilities of LARA coming as a result of that research and development, and detailed plans for future areas of growth.” But none of these allegations were sufficient to survive dismissal at the pleadings stage.


Continue Reading Too Much or Never Enough? Another Trade Secret Misappropriation Claim Dismissed

A federal judge in Colorado declined to sanction Plaintiff DTC Energy Group Inc. (“DTC”) for disclosing information governed by a civil protective order. DTC Energy Group, Inc. v. Hirschfeld, 1:17-cv-01718 (D. Colo. July 27, 2020).

DTC, a consulting and staffing firm serving the oil and gas industry across the United States, filed suit in July 2017 against Defendants Ally Consulting, LLC (“Ally”), a former business partner and direct competitor of DTC, and two former DTC employees.

The amended complaint alleged a variety of claims, including trade secret misappropriation, unfair competition, breach of employment contract, and civil conspiracy to steal trade secrets.

During  discovery, and subject to an oral protective order issued by the court, Ally produced to DTC documents and information that contained certain of Ally’s trade secrets.  DTC later shared documents produced as “confidential” in the litigation with both its outside criminal attorney and with a Denver assistant district attorney after receiving a grand jury subpoena for those documents.  Ally and the other defendants accused DTC of malfeasance and of willful violation of the protective order, and sought sanctions in the  litigation.

Continue Reading Caught between a rock and a hard place; that is, a subpoena and a protective order

A Kansas District Court judge recently dismissed a trade secrets misappropriation action between two competing livestock nutrition companies.

In Biomin Am. Inc. v. Lesaffre Yeast Corp., Plaintiff Biomin America, Inc. (“Biomin”) sued competitor Lesaffre Yeast Corporation (“Lesaffre”) and two former Biomin employees who now work for Lesaffre, asserting trade secret misappropriation under the Federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 (“DTSA”) as well as a handful of state law claims, including breach of contract, tortious interference, civil conspiracy, and unfair competition.

Specifically, Biomin alleged that the two employees misappropriated trade secrets and violated restrictive covenants contained within their Biomin employment agreements by soliciting Biomin employees and customers and marketing Lesaffre’s competing products at a lower price.
Continue Reading Livestock Feed Trade Secrets Case Put Out to Pasture

A trade secrets spat between rival self-driving car companies WeRide Corp. and AllRide.AI Inc. has ended in settlement, but not before the Northern District of California imposed terminating sanctions against the defendant AllRide for its “staggering” spoliation of evidence when it intentionally purged emails and email accounts, wiped laptops and servers, and corrupted key source code.

The suit began in late 2018, when WeRide brought claims against Jing Wang (its former CEO), Kun Huang (its former Head of Hardware Technology), and AllRide, the competing company started by Wang and Huang. The claims included trade secrets allegations under the Defend Trade Secrets Act and the California Uniform Trade Secrets Act, along with claims for defamation and intentional interference with prospective economic advantage. WeRide accused Wang, who left WeRide to launch AllRide, of soliciting Huang to join him at his new company, and accused both of stealing WeRide’s trade secrets and immediately using them at AllRide. In April 2019 the Court granted WeRide a preliminary injunction that specifically prohibited Wang, Huang, and AllRide from destroying relevant documents, and ordered Huang to make several electronic devices available for inspection by WeRide. But in October 2019, WeRide moved the Court for sanctions, claiming that AllRide had destroyed emails and key source code. Central to WeRide’s motion was the accusation that AllRide had allowed its email system to continue to implement a 90-day automatic deletion policy, resulting in the destruction of thousands of potentially relevant emails. WeRide also accused AllRide of deleting six email accounts and the source code it supposedly developed to compete with WeRide.
Continue Reading Autonomous Vehicle Competitors Resolve Trade Secrets Case Colored by “Staggering” Spoliation

One of the more challenging questions in many complex trade secret cases is: When should a plaintiff be required to identify its alleged trade secrets, and with what level of specificity? This question is not answered by the Defend Trade Secrets Act or (in most instances) state trade secret statutes, and case law on this

On April 21, 2020, Lex Machina released the third iteration of its annual trade secret litigation report (request the report here). Based on data from federal district court filings in Lex Machina practice areas from 2010 – 2019, the report reveals several interesting items worth highlighting.

First, trade secret cases increased by about 30% between 2015 and 2017. This is no surprise given the May 2016 passage of the Defend Trade Secrets Act – the first federal statute directed at trade secrets. But, since 2017, the increase in trade secret filings has leveled off, with roughly the same number of cases in 2017, 2018, and 2019 (around 1400 in each year). Remarkably, the number of cases in these three years is within five of each other.

Second, the report provided stats for the other common causes of actions pled in trade secret cases.
Continue Reading Lex Machina Releases New Trade Secret Litigation Report