Trade Secret Misappropriation

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A perennial issue in trade secret litigation is: what factual allegations must be pled regarding what trade secrets are left when there are related patents from the same company on the same technology.  The recent decision Safe Haven Wildlife Removal and Property Management Experts, LLC v. Meridian Wildlife Services LLC provides insight on this issue…

The Ninth Circuit’s decision in Perrin Bernard Supowitz, LLC v. Morales continues to highlight the high bar necessary for a motion for preliminary injunction, the evidence required to establish irreparable harm, and the limited “abuse of discretion” standard that may be applied during any appeal.  Case No. 23-55189, 2023 WL 1415572 (9th Cir. Feb. 5, …

A Central District of California court recently denied a defendant’s motion for summary judgment where the defendant argued that the plaintiff’s claims for trade secret misappropriation were barred by the applicable statute of limitations. The court determined that the statute of limitations did not bar the plaintiff’s claim because a reasonable jury could find that the plaintiff did not have reason to believe that all of the elements of its trade secret misappropriation claim were met prior to the bar date. In particular, the court concluded that a reasonable jury could find that the plaintiff did not have reason to believe that the defendant possessed the required knowledge of the trade secrets themselves, despite having knowledge that the product was manufactured using the trade secrets.Continue Reading Pinkerton Tobacco v. Kretek Int’l: Defendant’s Statute of Limitations Argument Goes Up in Smoke

A judge in the Northern District of Texas recently declined to dismiss a lawsuit, CiCi Enterprises LP et al. v. Mucho Pizza, LLC et al., alleging a pizza franchisee failed to maintain the confidentiality of Texas pizza chain CiCi Enterprises LP’s trade secrets after two affiliates inked a development deal with competitor, Papa John’s. This case highlights the importance of comprehensive agreements and the reduction of agreement modifications to writing.

Beginning in 2010, CiCi Enterprises[1] and Mucho Pizza, LLC[2] entered into 17 franchise agreements, which provided Mucho Pizza access to CiCi Enterprises’ trade secrets and other confidential information, including confidential financial and store performance information, pricing, supplier contacts, strategic marketing research, and sales techniques. Each agreement required Mucho Pizza commit to not communicating, divulging, or otherwise using for another party’s benefit these trade secrets and confidential information. The agreements also required Mucho Pizza not to directly or indirectly hold an interest in a competitive pizza restaurant during or immediately after the agreements’ term. These agreements were signed by Mucho Pizza and Mucho Pizza’s personal guarantor, Guillermo Perales. CiCi Enterprises asserts both were bound by the agreements’ terms.Continue Reading Trade Secrets Food Fight Spotlights Importance of Comprehensive Agreements

The Defend Trade Secrets Act (DTSA) was enacted in 2016. The DTSA allows an owner of a trade secret to sue in federal court when seeking relief for trade secret misappropriation related to a product or service in interstate or foreign commerce, and does not preempt any state law. A goal of the DTSA is to “provide a single, national standard for trade secret misappropriation with clear rules and predictability for everyone involved.” S. Rep. No. 114-220, at 14 (2016). For the majority of the time, this goal is upheld. Aside from establishing a relation to a product or service in interstate or foreign commerce, state trade secret laws are typically almost identical to the DTSA. However, if states trade secret laws do differ from the DTSA, they are usually in regard to remedy.Continue Reading The Defend Trade Secrets Act and How it Differs from State Trade Secret Laws

NBA star Zion Williamson has more to celebrate than his recently announced five-year maximum rookie contract extension with the New Orleans Pelicans, worth up to $239 million. Williamson was also victorious in a lawsuit he filed against his former agent Gina Ford, and her agency Prime Sports Marketing LLC (“Prime Sports”). The case is Williamson v. Prime Sports Marketing LLC et al. in the District Court for the Middle District of North Carolina, No. 1:19-cv-00593.

Williamson entered into a marketing agreement with Ford and Prime Sports when he was just a freshman at Duke University. He brought suit in 2019, seeking to void the marketing agreement on the grounds that it violated North Carolina’s Uniform Athlete Agent Act (“UAAA”), by failing to include a “conspicuous” warning to the student athlete that execution of the contract would result in a loss of intercollegiate eligibility. In January 2021, the court ruled in favor of Williamson, holding that Williamson’s agreement with Ford and Prime Sports failed to contain the required warning, and also failed to meet the UAAA’s requirements in several other respects. The court thus deemed the marketing agreement void and unenforceable.Continue Reading NBA Star Zion Williamson Secures Wins on the Basketball Court and in the Courtroom, After Defeating Claims of Trade Secret Misappropriation

Restrictive covenants and non-compete agreements have been a frequent topic of this blog in recent months, and rightfully so. Non-competes are generally thought to be effective tools to help firms protect trade secrets and competitive advantages. However, these agreements are falling out of favor across the country – the DOJ recently file a Statement of Interest in a state court case taking the position that non-competes may violate the Sherman Antitrust Act. Further, states continue to pass laws limiting or banning the use of noncompete agreements, including Illinois, Oregon, Nevada, D.C., and Colorado. 

But one Texas court seems to buck this trend. Last month, Fort Bend County District Judge J. Christian Becerra granted a temporary restraining order (“TRO”) in a trade secret misappropriation case, forcing multiple former employees to stop work for a competing business, and limiting one particular employee from engaging in any competing work for any competitor. The catch? Not a single employee had a non-compete agreement.Continue Reading No Non-Compete? No Problem. Texas Court Grants TRO Forcing Former Employees to Stop Working for Competing Business.

To continue our series on trade secret employee contract clauses, we’ve surveyed the First Circuit for updates to the law relating to restrictive covenants. Such covenants remain predominantly governed by statutes in Maine, Massachusetts, New Hampshire, and Rhode Island, while Puerto Rico continues to govern them by common law. And with no significant updates since 2020, restrictive covenants remain disfavored and under increased scrutiny in the First Circuit. Generally, these courts will only enforce noncompete agreements that are reasonable, no broader than necessary to protect an employer’s legitimate business interests, properly noticed, and in line with public policy. The applicable law for each state is set forth below.
Continue Reading Restrictive Covenants in the First Circuit

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Earlier this week, a Virginia jury awarded software company Appian Corp. more than $2 billion in damages after finding that competitor software company Pegasystems Inc. had misappropriated its trade secrets. The complaint alleged that Pegasystems engaged in corporate espionage and trade secrets theft in an effort to better compete with Appian. Pegasystems hired Youyong Zou, an employee of a government contractor and former developer for Appian. In exchange for payment, Zou provided Pegasystems with copies of Appian’s confidential software and documentation in violation of confidentiality restrictions that barred him from sharing Appian’s trade secrets. In 2020, Appian filed suit against both Pegasystems and Zou.
Continue Reading $2B Jury Verdict in Trade Secrets Suit

As a part of our series on trade secret employee contract clauses, we have surveyed the Seventh Circuit for updates on  the law pertaining to Restrictive Covenants. Each state’s laws are set forth below. But generally in the Seventh Circuit, states focus on reasonableness, geographic, and income restraints in restrictive covenant agreements. Indiana applies a reasonableness-standard common law approach to enforcing covenants, strictly construed against the employer. Wisconsin’s restrictive covenant statute also focuses on reasonableness restraints, and will void all parts of the covenant even if remaining portions are reasonable. Illinois recently passed a restrictive covenant statute in 2021, the Illinois Freedom to Work Act, which codifies the state’s longstanding common law, adding provisions restricting covenants against certain incomes and professions.
Continue Reading Restrictive Covenants in the Seventh Circuit