Employee Misappropriation

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

The U.S. Department of Justice has secured yet another conviction against a Chinese national for trade secret theft which is part of a larger push to protect valuable intellectual property.

Li Chen, a long time biotech researcher in a medical lab at Nationwide Children’s Hospital Research Institute in Ohio, pled guilty to conspiracy to misappropriate trade secrets and conspiracy to commit wire fraud.  Chen, and her husband Yu Zhou, a fellow biotech researcher, were indicted in September 2019 following an extensive investigation. The indictment and plea agreement details their efforts to steal trade secrets related to exosome isolation technology, which represents a critical development in the diagnosis and treatment of pediatric diseases, including liver cancer and a condition found in premature babies.

Continue Reading Chinese Biotech Researcher Pleads Guilty to Trade Secret Misappropriation

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

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

On May 6, 2020, the U.S. District Court for the District of Maine denied plaintiff Alcom’s request for a temporary restraining order (“TRO”), which sought to enjoin a competitor’s alleged misappropriation of trade secrets. The court denied the request for a TRO, holding that Alcom’s speculation about the potential harm it would suffer absent the TRO was not enough to show a likelihood of irreparable harm, as required to obtain a TRO. The case serves as a reminder that when proving irreparable harm, courts require more than just speculation.

In 2015, Alcom (a trailer manufacturer) hired Mr. Temple (defendant) as a sales representative for its horse and livestock trailers. As the sole salesperson in North America for the Frontier line of trailers, Mr. Temple gained significant responsibilities including developing and maintaining sales leads, as well as growing Alcom’s customer base for those trailers. Mr. Temple signed various agreements as conditions to his employment, including (i) confidentiality agreement, (ii) non-disclosure agreement, (iii) non-compete agreement, and (iv) a non-solicitation agreement. Alcom required Mr. Temple to sign the agreements as a precondition for accessing highly valuable and confidential company information relating to customer incentive program details, sales and marketing information, and unique insights into the needs and operational requirements of the trailer dealers he solicited.
Continue Reading Under Alcom v. Temple, Speculative Harm Does Not Meet the Irreparable Harm Requirement

Crowell & Moring invites you to attend the fifth installment of our Trade Secrets Webinar Series – The Revolving Door of Autonomous Vehicle Talent: Managing Employee Access to Trade Secrets & Facilitating Robust Investigation of Safety Issues, taking place on Tuesday, May 12th at 02:00 pm (EDT).

Autonomous Vehicle (“AV”) developers have been aggressively working to safeguard their vital design documents and data, and have increasingly relied on lawsuits to protect their proprietary information and to prevent such information from reaching their competitors as human talent continues to revolve through the AV industry. Given the increasing popularity of self-driving technology, AV developers should remain vigilant in protecting the trade secrets governing their autonomous vehicle programs and should be sure to implement sound policies for retrieving data upon employee departure.

Join Crowell & Moring attorneys Cheryl Falvey, Rukiya Mohamed, and Paul Mathis for a live discussion on trade secret and liability issues unique to AV developers as well as best practices.

To register, please click here.
Continue Reading Please Join Us for the Fifth Installment of our 2020 Webinar Series: The Revolving Door of Autonomous Vehicle Talent

In addition to reshaping how business is being done, COVID-19 has presented companies with unprecedented challenges and an increasingly remote work force and has made it more important than ever for businesses to evaluate the security and protection of their trade secrets and confidential information.

Crowell & Moring attorneys Jim Stronski, Anne Li,

The COVID-19 pandemic presents unique and unprecedented challenges to the ongoing need to protect confidential information and trade secrets. The massive business disruptions that enterprises of all kinds now face include (1) entire workforces forced to work remotely, accessing and using confidential information and trade secrets from home; (2) exigent circumstances created by the cessation or substantial slowing of commercial activity that may result in the disclosure of confidential information or trade secrets to third parties outside normal procedures; and (3) the off-boarding of remote employees who are accessing confidential information and trade secrets remotely.

Trade secret protection may not be the immediate priority of a business facing massive business disruptions, but taking reasonable steps now to protect the security of trade secrets and confidential information is critical to the preservation of these valuable assets when this crisis is over. Trade secret law – both federal and state – requires that a trade secret holder take reasonable measures under the circumstances to protect trade secrets.1 Reasonable measures relate not only to prevention of unauthorized disclosures, but also the minimization of the impact of any such disclosures after they occur, and these measures must be reasonable now under the current exigent circumstances.
Continue Reading Trade Secret Protection During the COVID-19 Pandemic

As autonomous vehicles quickly move farther towards the mainstream, the underlying technology has become increasingly more valuable and has led to an uptick in the theft of autonomous vehicle (“AV”) trade secrets. Indeed, criminal prosecutions of former employees for trade secret theft have been on the rise, especially in the autonomous vehicle segment. Two recent cases underscore the enforcement agencies’ efforts to stem the rise in trade secret theft in the AV segment. Anthony Scott Levandowski was a former executive at both Uber and Google. He departed Google and created a new company named Ottomotto, LLC that was later purchased by Uber. Levandowski pled guilty to theft of trade secrets from Google, admitting that he downloaded approximately 14,000 files from an internal, password-protected Google server to his personal laptop, including a key internal tracking document from Google that detailed the status of its self-driving car program. Levandowki faces a maximum sentence of 10 years in prison, and $250,000 fine plus restitution.
Continue Reading Prosecutions of Trade Secret Theft by Former Employees in Autonomous Vehicle Development

Companies and other organizations increasingly must face serious and complex threats to their business and infrastructure.  Whether the threat is trade secret theft, rogue insiders, cybercrime adversaries, aggressive competitors, or misconduct by business and supply chain partners, companies should remain constantly vigilant and defense ready. Adversaries, including especially cybercriminals operating exclusively in the digital domain, are often highly motivated, sophisticated, resourced, and innovative. The opaque, pervasive, and global nature of modern digital networked environments presents opportunities for criminals. The sophistication and relentless creativity of these bad actors pose significant challenges to companies and law enforcement agencies in being able to detect, assess, mitigate, attribute, and deter these threats. Because available tools and real-world practices to address these threats often outpace the law, companies are called upon to develop their own comprehensive approaches to investigate and remediate these forms of risk. In doing so, companies must be willing to assume a certain level of risk to effectively investigate and obtain sufficient insight to counter the problems.
Continue Reading Complex Threat Investigations: Tips for Investigating Trade Secret Misappropriation and Other Digital Crimes