Defend Trade Secrets Act (DTSA)

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

For the first time, a United States federal court has held that a civil action for private damages under the Defend Trade Secrets Act (“DTSA”) can arise from acts of misappropriation that occur completely outside the United States – as long as they have a nexus with some activities within the U.S. In Motorola Sols., Inc. v. Hytera Commc’ns Corp., Ltd., No. 1:17-cv-1973 (N.D. Ill. Mar. 6, 2020) (an earlier decision in this case was previously discussed on this blog here), Motorola alleged that Hytera Communications, a Chinese company, hired away three engineers who then took with them Motorola trade secrets, including thousands of Motorola’s confidential technical documents containing millions of lines of source code and other highly confidential information.

Continue Reading After Motorola Verdict, DTSA Has Extraterritorial Application

Crowell & Moring invites you to attend the second installment of our Trade Secrets Webinar Series: Trade Secrets are Not Intellectual Property – At Least Not in the European Union, taking place on Tuesday, February 11th at 11:00 am (EDT).

How are trade secrets defined in the EU versus in the US?

How do the US and EU judicial bodies differ in their view of trade secrets, and how does that protect, or leave vulnerable, your company’s most valuable information?

How might cross-border (or transnational) companies protect their intellectual property assets and prepare for threats when subject to dual (EU & US) enforcement?

During this webinar, Crowell & Moring attorneys Jan-Diederik Lindemans and Judith Bussé will guide you through the small differences in the language and theory behind the EU Trade Secrets Directive and the US Defend Trade Secrets Act (DTSA), and the important consequences these have on your trade secrets protection and strategy.

To register, please click here.
Continue Reading Please Join Us for the Second Installment of our 2020 Webinar Series: Trade Secrets are Not Intellectual Property – At Least Not in the European Union

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

Legal services company CBX Law, LLC doing business as Latitude (“Latitude”) brought a lawsuit against alleged copycat company Lexikon Services, LLC in Tennessee state court. Latitude is seeking damages and injunctive relief based on allegations of trade secret misappropriation under the federal Defend Trade Secrets Act and Tennessee’s Uniform Trade Secrets Act, breach of contract,

Christopher M. Warman allegedly has some valuable fudge recipes. In his second action to protect what he claims to be a valuable trade secret recipe for fudge, Warman’s complaint does not sugar-coat the parties’ sticky situation. He and his company have sued his ex-wife, Christine Falvo, and her company for a myriad of claims—trade secret

On July 30th, 2019, the District Court for the Southern District of New York held that a news outlet’s publication of the Democratic National Convention’s (DNC) allegedly stolen trade secrets did not violate the Defend Trade Secrets Act, 18 U.S.C. § 1831, et seq. (“DTSA”).

In April 2018, the DNC filed suit against the Defendants, alleging that the Russian Federation’s military intelligence agency unlawfully hacked into the DNC’s computers and conspired with WikiLeaks to publicly distribute stolen campaign materials, which were at times helpful to the Trump Campaign.
Continue Reading S.D.N.Y. Holds the 2016 DNC WikiLeaks Dump Did Not Violate The Defend Trade Secrets Act