Coronavirus-related emergency measures may limit litigants’ ability to protect trade secrets in state court. State courts are drastically altering their operations in response to the novel coronavirus pandemic, including closing courthouses, continuing trials and other deadlines, suspending rules requiring paper filings, and encouraging, if not requiring, telephone and videoconferencing.

New York State, which as of the publishing of this piece was the state with the highest number of confirmed cases in the United States, has imposed some especially restrictive measures for litigants in state court. New York’s Chief Administrative Law Judge, has restricted all non-essential filings (and has also postponed all “nonessential” services). New York courts are only accepting filings pertaining to emergency matters, which the Administrative Order defines to include criminal matters; family court; certain Supreme Court matters including guardianship matters, emergency election law applications, and extreme risk protection orders; and civil housing matters, including landlord lockouts, serious code violations, serious repair orders, and applications for post-eviction relief. The Order is available here. Filings in most civil suits are, accordingly, restricted.
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A recent decision by the Federal District Court for the Eastern District of New York reinforces that owners of trade secret computer programs should carefully approach copyright registration in order to maintain both copyright and trade secret protection. This includes being conscious of copyright regulations allowing the partial and redacted registration of computer code with the Copyright Office.

In a recent manifestation of this principle, Capricorn Management Systems accused GEICO of misappropriating Capricorn’s trade secret source code for medical billing software. Last week, the court granted GEICO’s motion for summary judgment, holding that the code was not entitled to trade secret protection, in part because it was registered, unredacted, with the U.S. Copyright Office, and was therefore publicly available.
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Recently the District Court for the Southern District of New York issued a decision that illustrates the risks of taking an informal approach to protecting confidential business information. As described below, in Pauwels v. Deloitte et al., No. 19-CV-2313 (RA), 2020 U.S. Dist. LEXIS 28736 (S.D.N.Y. Feb. 19, 2020), the court dismissed Plaintiff’s complaint, finding that the facts alleged by Plaintiff failed to give rise to a valid claim for misappropriation because (among other issues) Plaintiff failed to impose adequate protections on his alleged confidential business information.

The Plaintiff worked as an “independent advisor” to the Bank of New York Mellon (“BNYM”), earning upwards of $750,000 per year for his advice on how to optimize BNYM’s investments in alternative energy companies (e.g., wind farms).  No contract governed the relationship; instead, Plaintiff submitted periodic invoices for his advisory work. In the course of his work, Plaintiff developed an investment model as a tool for analyzing BNYM’s alternative energy investments, and in his complaint he alleged that the tool was his proprietary information. Over the course of several years, Plaintiff sent BNYM more than 100 spreadsheets showing implementations of his investment model. Eventually, BNYM retained Deloitte to provide the analyses and severed its relationship with Plaintiff. Plaintiff alleged that Deloitte improperly used his proprietary model when advising BNYM.
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Source: Claudia Künkel (Flickr)

A lawsuit seeking $1 billion in damages based on allegations that the rideshare company was founded based on stolen trade secrets can now move forward after a jury in San Francisco Superior Court decided last month that the plaintiff’s claim was timely filed. The complaint alleges that former Uber CEO Travis Kalanick and others misappropriated Plaintiff Kevin Halpern’s idea for a startup called Celluride Wireless Inc. – a peer-to-peer service enabling passengers to summon drivers and track them with their cell phones. Halpern claims that he disclosed information about his idea to Kalanick under the promise of secrecy around 2006. The Uber app was launched four years later.

In defense, Kalanick claims that Uber Chairman Garrett Camp, also an individual defendant in the lawsuit, came up with the idea that later became Uber when the two were in Paris. According to Kalanick and Camp, Camp’s initial concept was for a limo timeshare service.
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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.

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Crowell & Moring has released Litigation Forecast 2020: What Corporate Counsel Need to Know for the Coming Year. The eighth-annual Forecast provides forward-looking insights from leading Crowell & Moring lawyers to help legal departments anticipate and respond to challenges that might arise in the year ahead.

For 2020, the Forecast focuses on how the

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.
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On November 5, 2019, Black Knight Inc. brought suit in Florida state court against PennyMac Loan Services LLC (“PennyMac”) alleging breach of contract and trade secret misappropriation under the Florida Uniform Trade Secrets Act. PennyMac allegedly used its access to Black Knight’s trade secrets and other confidential information relating to its proprietary mortgage servicing software

Two South Korean competitors are locked in a heated battle over alleged theft of trade secrets relating to electric vehicle (“EV”) lithium-ion battery technology which is an industry expected by experts to generate over $23 billion in revenues by 2027.

The story starts back in April when LG Chem brought a lawsuit against SK Innovation

On September 23rd, 2019, the District Court for the District of Colorado awarded Atlas Biologicals, Inc. a total of $2 million against Defendant Thomas Kutrubes and his company, Peak Serum, Inc. Kutrubes, a part owner and former employee of Atlas, was found liable for trademark infringement, misappropriation of trade secrets, and breach of fiduciary duty.