Noncompete agreements are nothing new, in fact, 18% of all U.S. workers are subject to noncompetes while an estimated 70% of senior executives and 43% of engineers are bound by noncompetes. Employers frequently use noncompetes—which may restrict former employees from working for or starting competing businesses for a set period of time—to protect a company’s
New York has recently enacted disclosure laws that could impact clean product manufacturers’ ability to protect their trade secret chemical formulations. While California was the first U.S. state to pass a law requiring disclosure of all substances contained in cleaning products, New York’s Department of Environmental Conservation (“DEC”) Household Cleansing Product Information Disclosure Program imposes…
The America Invents Act, the Defend Trade Secrets Act, and recent Court decisions demonstrate the ongoing changes affecting intellectual property. The new Trump administration is expected to continue this trend from the legislative perspective, and is expected that Congress will consider further legislation that may rival the size of the America Invents Act. At the…
In less than a year from its enactment, the Defend Trade Secrets Act (DTSA) has now yielded its first jury verdict with a victory for the Florida-based company Dalmatia Import Group, Inc. The center of controversy revolved around a gourmet fig spread made with a secret recipe and process. The jury returned a $500,000 award for theft of trade secrets, with another $2 million awarded for other claims. This case raises several important issues regarding damages and pleading both a state trade secret claim and a DTSA claim in the same lawsuit.
The facts of the case highlight the issues involved with disclosing trade secrets to vendors or distributors. Launched in 1999, Dalmatia’s Fig Spread by all accounts has become a popular gourmet article for many households. The recipe and production processes used to make the spread are claimed to be proprietary and extensively safeguarded. Dalmatia engaged New York-based company FoodMatch as an exclusive distributor and began using Pennsylvania company Lancaster Fine Foods as a contract manufacturer to expose the fig jam to a wider audience. To protect its trade secrets on the recipe and production process for the fig spread, Dalmatia required non-disclosure and non-competition agreements from FoodMatch and Lancaster.
The trio’s collaboration proved to be very successful for several years. However, in 2015 Dalmatia became dissatisfied with the quality of the fig spread from Lancaster and FoodMatch. Dalmatia then chose to engage another company for its manufacturing and distribution needs.
1. Clearly label Christmas cards as “Confidential” if these contain secret wishes.
2. Amend Confidentiality Agreements and Employee Manual to include the required Whistleblower language – those elves have rights.
3. Have robust exit interviews with all departing elves, reminding them of their obligations to keep “reindeer games” secret.
4. Insist that expert toy makers are warned not to reveal secret information while enjoying (too much) mulled wine with ‘Happy Holidays’-industry peers.
5. Further restrict access to the Sleigh Packing Room with candy cane key fobs.
On Friday, September 9, the U.S. Chamber of Commerce urged the Obama Administration to take more action against the theft of trade secrets and other intellectual property. The Chamber did so in response to a Request for Information issued by the National Institute of Standards and Technology (NIST), seeking industry input regarding various cybersecurity…
On June 15, Crowell & Moring hosted a trade secrets webinar, “What the New Federal Trade Secrets Law Means for Your Clients.” The panelists, Mark Klapow, Mark Romeo, Mike Songer, and Vince Galluzzo provided an overview Defend Trade Secrets Act (DTSA), signed by President Obama in May. The panelists also discussed how the courts are…
The Texas Supreme Court on Friday issued its first decision interpreting the recently enacted Texas Uniform Trade Secrets Act (TUTSA), holding that a defendant’s corporate representative does not have an absolute right to remain in the courtroom while a plaintiff’s trade secrets are discussed. In re M-I L.L.C. d/ba/ MI-Swaco, No. 14-1045 (Tex. Jan. 13, 2016). The Court’s decision is significant both because it is the first time the Texas Supreme Court has addressed the relatively new legislation (TUTSA was passed in late 2013), but also because its signals the Court’s willingness to interpret TUTSA expansively.…
Another court has rejected the broader interpretation of the Computer Fraud and Abuse Act (“CFAA” or “the Act”) as applying to employees who exceed their authorized use. A recent decision in Minnesota highlights the issue of whether the Act imposes civil liability on employees who have permission to access their employers’ data, but do so with a wrongful purpose. See TripleTree, LLC v. Walcker No. 16-609, 2016 WL 2621954 (D. Minn. May 6, 2016).
The court considered this question in the context of a trade secrets case. A former employee of TripleTree, an investment banking company, was discovered to have accessed the Company’s confidential information and to have engaged in a series of suspicious activities just prior to leaving the Company for a competitor. Id. at *1. TripleTree filed claims against its former employee for, among other things, violating the CFAA and the Minnesota Uniform Trade Secrets Act. Id. at 2.
The court sua sponte considered whether it should dismiss TripleTree’s CFAA claim. Id. at *3. The CFAA sanctions a person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from a protected computer.” 18 U.S.C. § 1030(a)(2)(c). Any person who suffers from a violation of the Act may bring a civil claim for damages. 18 U.S.C. § 1030(g). As an employee of TripleTree, the Defendant was permitted to access the Company’s confidential information. The court considered whether the Defendant’s malicious intent in accessing the information transformed an otherwise lawful act (using the Company’s computers) into a violation of the CFAA.
As predicted, today, May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016, S. 1890. Prior blog posts describe the details of this powerful federal weapon for use in protecting trade secrets, and you can find further information here.