Trade Secret Theft

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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

Trade secrets are always at risk when engaging in corporate deals that require the disclosure of confidential information. Though there is no sure-fire solution to protecting a company’s trade secrets, if handled properly, there is legal recourse to help mitigate any loss and deter trade secret theft. In a recent decision, the 8th Circuit affirmed the grant of a motion to dismiss a breach of contract action between a company and its financial advising firm. The facts, as presented in the District Court’s September 29, 2020 decision (19-cv-03125-JRT-HC, EFC No. 73), are instructive:

Protégé specializes in researching and developing blood-clotting products and maintains its work as trade secrets. In late 2017, looking to sell its business, Protégé entered into an Engagement Agreement with Duff & Phelps. The Engagement Agreement required Duff & Phelps to keep confidential any of Protégé’s non-public information, as well as provided immunity for certain corporate and individual liability and disclaimed a fiduciary duty. Smith reached out to Doug Schillinger, a Managing Director at a private equity firm, and board member at Z-Medica, which is also in the blood-clotting products space, to coordinate a meeting between Z-Medica and Protégé. …
Continue Reading An NDA Leads to the Loss of Trade Secrets, a Failed Deal and No Recourse

In addition to conventional warfare, it was recently confirmed by an arm of the Ukraine Ministry of Defense that it hacked trade secrets from a Russian state nuclear utility, and then leaked the trade secrets to a public website to harm the utility’s commercial prospects. Such “hack and leak” operations have been done before by nation-affiliated hackers to attempt to influence political activities of other nations, but this may be the first operation of this type concerning technical trade secrets during warfare. Although the economic impact from this particular operation may be difficult to gauge at this time, this hack and leak of nation state-affiliated company trade secrets may be a sign of things to come in future armed conflicts.
Continue Reading A New Battlefront: Ukraine Resistance Includes Leaks of Russian Trade Secrets

The Sedona Conference, Working Group 12 on Trade Secrets, has issued guidance on protecting trade secrets in litigation about them. This important Commentary recommends courts:

  • Balance the risk of disclosure and harm to the producing party with the need for the other party and to have the information to prepare its case when determining a

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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.
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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 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

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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

In a recent order, a judge in the Western District of North Carolina held that even though Plaintiff filed for a preliminary injunction in the United States, it may also arbitrate the dispute in Switzerland.  This highlights that even with an arbitration agreement in place, trade secret litigation can occur on multiple fronts.
Continue Reading Multi-Front Trade Secret Protection: Moving for Injunction in U.S. Court Does Not Stop Plaintiff from Arbitrating in Switzerland