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

Virginia recently joined a growing list of states that have passed legislation prohibiting employers from enforcing non-compete agreements against low-wage employees.  Illinois, Maine, Maryland, Massachusetts, New Hampshire, Rhode Island, and Washington have already enacted similar legislation.  And as we previously posted, similar legislation was introduced in the United States Senate nearly a year ago, though it did not advance.  The trend reflects recognition among policy makers that non-compete agreements may unfairly restrict low-wage workers, who generally have limited bargaining power with respect to employers, from seeking new employment opportunities.

Continue Reading Virginia Joins States That Restrict Use of Non-Compete Agreements

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

In the First Circuit, restrictive covenants are governed predominately by statute (with the exception of Puerto Rico, which governs such agreements through common law). Within the last year, Maine, Rhode Island, and New Hampshire have amended their restrictive-covenant statutes to prohibit employers from requiring lower-wage earners to sign noncompete agreements. A recently proposed amendment to Massachusetts law, if passed, would render all noncompetition agreements void and unenforceable effective January 1, 2021. These efforts reflect increasing hostility towards, and increased scrutiny of, restrictive covenants in the First Circuit.

Continue Reading Restrictive Covenants in the First Circuit

As in other states, the enforceability of restrictive covenants or non-compete clauses in the Sixth Circuit turns primarily on the reasonableness of the restriction’s geographic and temporal scope. Michigan has enacted a statute explaining when non-competes may be enforced. In Kentucky, Ohio and Tennessee, enforcement is determined entirely by common law. In Ohio and Tennessee, courts will consider the public interest in addition to the interests of the parties involved.

Continue Reading Restrictive Covenants in the Sixth Circuit

After posts considering confidentiality protections under the EU Trade Secrets Directive 2016/943 when litigating in various jurisdictions, we next turn to how these issues arise in the context of arbitration.

Where trade secrets are protected by a contract, an opportunity arises for parties to consider alternative dispute resolution mechanisms including arbitration and whether to adopt express rules in arbitration that protect confidentiality.
Continue Reading Confidentiality of Trade Secrets in Arbitration

In our next post on the EU Trade Secrets Directive 2016/943, we turn to the Netherlands. In the Netherlands, the EU Trade Secrets Directive was implemented in 2018 by the Act on the Protection of Trade Secrets (Wet bescherming bedrijfsgeheimen) and led to amendments to Dutch procedural law including those related to confidentiality clubs. For example, access to alleged trade secrets introduced in proceedings is granted to at least one person of the opposing party and that party’s lawyer under confidentiality restrictions. (Article 1019ib, Dutch Code of Civil Procedure). Depending on the nature of the trade secret, however, the court may order that access to certain documents be limited to only a lawyer or another authorized representative but not a representative of the opposing party. (Article 22a(3), Dutch Code of Civil Procedure).
Continue Reading The Expansion of Confidentiality Protections in Trade Secret and IP Cases in the Netherlands and Belgium

The EU Trade Secrets Directive 2016/943 contains a variety of confidentiality protections expressly protecting the publicity of the proceedings because “[t]he prospect of losing the confidentiality of a trade secret in the course of legal proceedings often deters legitimate trade secret holders from instituting legal proceedings to defend their trade secrets, thus jeopardising the effectiveness of the measures, procedures and remedies provided for.  For this reason, it is necessary to establish, subject to appropriate safeguards ensuring the right to an effective remedy and to a fair trial, specific requirements aimed at protecting the confidentiality of the litigated trade secret in the course of legal proceedings instituted for its defence.”  Article 9 of the Directive specifically required EU member states to implement rules creating such protections, such as by restricting access to hearings and creating so-called “confidentiality rings” or “confidentiality clubs” limiting the dissemination of confidential information and documents to designated persons.

The United Kingdom’s implementing law, the Trade Secrets (Enforcement, etc.) Regulations 2018, requires that the court have the power to restrict access to documents containing alleged trade secrets and to hearings. s. 10(5).  There is already significant maturity in the kinds of confidentiality protections available in English litigation so this is unlikely to lead to significant change.  Although the principle of open justice is a fundamental feature of the legal system and departures are permitted only if necessary in the interests of justice, exceptions and restrictions to openness and respect for confidentiality are actually already well-established in the United Kingdom. See McKillen v Misland (Cyprus) Investments Ltd and others [2012] EWHC 1158 (Ch).
Continue Reading English Confidentiality Protections in Trade Secret and IP Cases

In Food Marketing Institute v. Argus Leader Media, the Supreme Court strengthened the federal government’s ability to protect trade secrets and confidential business information from disclosure in response to a Freedom of Information Act (“FOIA”) request. Food Mktg. Inst. v. Argus Leader Media, __ U.S. __, 139 S. Ct. 2356, 2366 (June 24, 2019). Under the facts of that case, the Court held that where the government received a third-party’s commercial and financial information and this information was treated confidentially, the information was exempt from disclosure and the government could not disclose it in response to a FOIA request. Many predict that this decision, which we previewed earlier this year, will help protect companies that provide sensitive information to government agencies and make it more difficult for the general public (including journalists and competitors) to access this information.
Continue Reading Supreme Court Weighs In On Protecting Trade Secrets and Confidential Information From FOIA Requests

Pay equity continues to be one of the most significant workforce issues facing employers today. Pay equity laws aim to increase transparency into employers’ pay practices – with the ultimate goal of ensuring that employees are paid fairly regardless of demographic factors including race and gender. However, they may also require employers to release sensitive, propriety information about internal pay practices – which arguably constitute trade secrets – potentially compromising employers’ ability to remain competitive in hiring and retaining top talent. See, e.g., In re High-Tech Employee Antitrust Litig., No. 11-cv-02509, 2013 WL 163779, at *2, 5 (N.D. Cal. Jan. 15, 2013) (explaining that trade secrets include “sources of business information that might harm a litigant’s competitive standing,” including “confidential information regarding . . . recruitment strategies, policies, and procedures, [and] quantitative data concerning those topics”).
Continue Reading Trade Secret Implications For Pay Scale Provisions