It’s the time of year again when we are taking a look at 2021’s top ten most read posts. This year, we witnessed an increased risk of trade secret theft due to the Great Resignation, proposed trade secret misappropriation penalties as a result of Chinese government trade secret espionage, and the expansion of ITC involvement in trade secret misappropriation. Take a look at our top ten posts that highlight these key developments.
Continue Reading The Year’s Most Popular Posts
In October, we published a blog post describing how trade secret claims filed by AbbVie were dismissed by the Northern District of Illinois for lack of personal jurisdiction over AbbVie’s former employee in Singapore and the competitor that poached him, Alvotech of Iceland. At that time, we thought AbbVie might replead to keep its trade secret claims in Federal District Court. AbbVie chose instead to appeal the District Court’s dismissal to the Seventh Circuit.
In addition, AbbVie has now pursued a second route—one that is becoming more and more common for global corporations claiming injury from trade secret misappropriation: AbbVie has also filed a Section 337 Complaint to the International Trade Commission (“ITC”), seeking to block imports of Alvotech’s biosimilar of AbbVie’s Humira arthritis treatment. Unlike the Federal Court action, the Section 337 Complaint is against both Alvotech and Teva (Israel) as a commercialization partner.
Continue Reading AbbVie Turns Next to the U.S. International Trade Commission in Biosimilar Trade Secret Row
On October 29, 2021, the District of Delaware allowed Park Lawn Corporation to continue with its trade secret claims against fellow cemetery management competitor, PlotBox, Inc., holding that the competitor only needed to have a “reason to know” improper means were used to access alleged trade secrets, based on the position of the individual feeding them the secrets.
Both Park Lawn and PlotBox develop technological solutions to manage cemetery plot placement methods, using software to facilitate mapping of gravestones electronically. This software helps automate cemetery design plans and expedites managerial tasks. The lawsuit also states that Park Lawn planned to license the trade secrets in the software to others in the industry. This plan was eventually disrupted by the Chief Executive Officer of Park Lawn, who was allegedly feeding the trade secret information to PlotBox, which also tried to hire on Park Lawn’s Chief Technology Officer. Park Lawn sued under the Defend Trade Secrets Act (“DTSA”).
Continue Reading Cemetery Company’s Trade Secret Claims Survive Motion to Dismiss by Reasonable Interference of Misappropriation after CEO Fed Competitor Information
On November 23rd, Pfizer filed a complaint against former employee Chun Xiao “Sherry” Li in a California federal court alleging that Li pilfered over 12,000 files worth of critical documents and trade secrets. U.S. District Judge Cathy Ann Bencivengo granted Pfizer’s motion for a temporary restraining order barring Li from using, disclosing or transmitting any confidential information or trade secrets owned by Pfizer, destroying or altering any of that information or destroying any devices storing the information. Li also must return any hard copy documents containing Pfizer’s confidential information or trade secrets, Judge Bencivengo said.
Hired as associate director of statistics in Pfizer’s global product development group at Pfizer’s facility in La Jolla, California in 2006, Li sought greener pastures at Xencor Inc. in 2021. Perhaps in the spirit of the upcoming holiday season, Li treated herself to a parting gift of what Pfizer calls its clinical “playbook.” Its complaint also cited misappropriation of documents containing operational goals, goals for various drugs including cancer drugs, clinical development plans and clinical trial techniques.
Continue Reading Bad Medicine: Pfizer Files Complaint to Halt Potential COVID-Related Trade Secret Misappropriation
As we have previously posted, proper trade secret identification is often a key issue for parties bringing or defending against trade secret misappropriation claims. The precise standard of identification varies across jurisdictions and continues to evolve, but trade secret identification often functions as a gating issue early in a case. A recent decision from the Third Circuit serves as reminder that failure to properly identify purported trade secrets may not just be fatal to a party’s claim, but may render a preliminary injunction unenforceable.
Continue Reading Half-Baked Trade Secret Identification Leads Third Circuit to Vacate Preliminary Injunction
The Ninth Circuit recently issued an opinion that serves as a reminder of the importance of developing robust affirmative evidence of damages suffered as a consequence of trade secret misappropriation, including the causation of those damages. In Joshua David Mellberg LLC v. Will, the plaintiffs filed an action against its former employees and their new company for misappropriation of trade secrets and unjust enrichment. The district court granted summary judgment to defendants and the Ninth Circuit affirmed.
Continue Reading Ninth Circuit Reminds Plaintiffs That Trade Secret Misappropriation Damages Without Adequate Proof of Causation Are Not Enough
A recent case from the Sixth Circuit, addressing a source code agreement, highlights the importance of carefully specifying what happens to source code (and the trade secrets therein) after breach of the agreement. In Epazz, Inc. v. National Quality Assurance USA, Inc.,[1] the Sixth Circuit affirmed the district court’s decision that a software licensee did not misappropriate a trade secret of the licensor when the licensee acquired the source code from an escrow agent, because the plain terms of the license agreement between the two authorized the release if the licensor breached. Further, the licensee did not commit misappropriation by hiring another provider to maintain and further develop the source code, where the license provided “the right . . . to use the . . . Material” upon breach of the agreement.
Continue Reading Untangling a Messy Dispute: No Misappropriation for Trade Secret Use Authorized by Agreement
In March 2021, AbbVie, Inc. and AbbVie Biotechnology Ltd. (“AbbVie”) sued rival pharmaceutical company Alvotech hf. (“Alvotech”) for trade secret misappropriation under the federal Defend Trade Secrets Act (“DTSA”) and the Illinois Trade Secret Act. In May, Alvotech filed a motion to dismiss the Complaint for both failure to state a claim and lack of jurisdiction. And just a few days ago, the North District of Illinois Court issued an order finding that it lacked jurisdiction over AbbVie’s causes of action, and dismissed the case.
Continue Reading AbbVie Trade Secret Claims Fail at Pleading Stage for Lack of Jurisdiction
The Seventh Circuit Court of Appeals recently upheld a preliminary injunction prohibiting a former distributor and its parent company from selling a spine implant device that incorporated trade secret information. Plaintiff Life Spine, Inc. had created a device to correct spinal spacing issues during surgery. Life Spine contracted with Defendant Aegis Spine to distribute the device only to medical facilities nationwide and to keep Life Spine’s confidential information secret and use the confidential information only in furtherance of the business relationship. However, Life Spine alleged that Aegis Spine passed confidential details, such as component dimensions to fractions of a millimeter of the device, to Aegis Spine’s parent company, who quickly developed a similar device that competed against Life Spine’s device. Life Spine sued Aegis Spine and its parent, alleging that Aegis Spine misappropriated its trade secrets, as well as other contractual and tort claims, and sought a preliminary injunction. Based on findings of trade secret misappropriation and breach of contract, the Northern District of Illinois entered a preliminary injunction against Aegis Spine and its business partners from making, marketing, distributing, selling, or obtaining intellectual property rights in the competing device to Life Spine’s device.
Continue Reading Seventh Circuit Affirms Trade Secret Protection of Patented Spinal Implant Device
A recently introduced U.S. Senate bill demonstrates both the United States’ continued focus on foreign government-sponsored trade secret misappropriation and the International Trade Commission’s (“ITC”) potential untapped ability to swiftly protect intellectual property (“IP”) owners against this illegal conduct under Section 337.
This summer, U.S. Senators John Cornyn (R-Tex.), Christopher Coons (D-Del.), and Todd Young (R-Ind.) introduced the “Stopping and Excluding Chinese Rip-offs and Exports with United States Trade Secrets Act of 2021,” also known as the “SECRETS Act of 2021.” If passed, the bill would amend the Tariff Act of 1930 to fortify the ITC’s power to protect IP owners against trade secret misappropriation as well as work to expedite the investigatory and exclusionary processes.
Continue Reading Legislation Would Bolster ITC Power Against Foreign Government-Sponsored Trade Secret Misappropriation