A Kansas District Court judge recently dismissed a trade secrets misappropriation action between two competing livestock nutrition companies.

In Biomin Am. Inc. v. Lesaffre Yeast Corp., Plaintiff Biomin America, Inc. (“Biomin”) sued competitor Lesaffre Yeast Corporation (“Lesaffre”) and two former Biomin employees who now work for Lesaffre, asserting trade secret misappropriation under the Federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 (“DTSA”) as well as a handful of state law claims, including breach of contract, tortious interference, civil conspiracy, and unfair competition.

Specifically, Biomin alleged that the two employees misappropriated trade secrets and violated restrictive covenants contained within their Biomin employment agreements by soliciting Biomin employees and customers and marketing Lesaffre’s competing products at a lower price. Continue Reading Livestock Feed Trade Secrets Case Put Out to Pasture

During these unprecedented times, some people are itching to get back to “normal.” As evidenced by the excitement over the recent re-opening of some states and cities, there is an obvious desire to return to the way of life we remember. However, this likely won’t be fully possible without the development of a vaccine, which, along with health-treatment drugs, is understandably the subject of intensive development efforts.

There are lurking intellectual property (“IP”) law issues in this rush to develop a vaccine. Most notable are the potential issues surrounding possible patent infringement, and sharing (or misappropriation) of trade secrets. Drug manufacturers are racing to find treatment drugs that they can mass-produce and make a sizable profit on. But, should these manufacturers rely on patents or trade secrets to protect their drugs and vaccines? Considerations to be weighed include: Continue Reading IP and the Novel Coronavirus: Developing a Vaccine

A trade secrets spat between rival self-driving car companies WeRide Corp. and AllRide.AI Inc. has ended in settlement, but not before the Northern District of California imposed terminating sanctions against the defendant AllRide for its “staggering” spoliation of evidence when it intentionally purged emails and email accounts, wiped laptops and servers, and corrupted key source code.

The suit began in late 2018, when WeRide brought claims against Jing Wang (its former CEO), Kun Huang (its former Head of Hardware Technology), and AllRide, the competing company started by Wang and Huang. The claims included trade secrets allegations under the Defend Trade Secrets Act and the California Uniform Trade Secrets Act, along with claims for defamation and intentional interference with prospective economic advantage. WeRide accused Wang, who left WeRide to launch AllRide, of soliciting Huang to join him at his new company, and accused both of stealing WeRide’s trade secrets and immediately using them at AllRide. In April 2019 the Court granted WeRide a preliminary injunction that specifically prohibited Wang, Huang, and AllRide from destroying relevant documents, and ordered Huang to make several electronic devices available for inspection by WeRide. But in October 2019, WeRide moved the Court for sanctions, claiming that AllRide had destroyed emails and key source code. Central to WeRide’s motion was the accusation that AllRide had allowed its email system to continue to implement a 90-day automatic deletion policy, resulting in the destruction of thousands of potentially relevant emails. WeRide also accused AllRide of deleting six email accounts and the source code it supposedly developed to compete with WeRide. Continue Reading Autonomous Vehicle Competitors Resolve Trade Secrets Case Colored by “Staggering” Spoliation

One of the more challenging questions in many complex trade secret cases is: When should a plaintiff be required to identify its alleged trade secrets, and with what level of specificity? This question is not answered by the Defend Trade Secrets Act or (in most instances) state trade secret statutes, and case law on this topic varies across the country. This uncertainty creates risk, delay, and expense.

Perhaps a common set of local rules for identification in trade secret cases would help? The Sedona Conference proposes just that in Commentary on the Proper Identification of Asserted Trade Secrets in Misappropriation Cases, which was recently published for public comment. The Commentary sets out four guiding principles: (1) the identification of an asserted trade secret during a lawsuit is not an adjudication of the merits and is not a substitute for discovery; (2) the party claiming misappropriation of a trade secret should identify in writing the asserted trade secret at an early state of the case; (3) the party claiming the existence of a trade secret must identify the asserted trade secret at a level of particularity that is reasonable under the circumstances; and (4) the identification of an asserted trade secret may be amended as the case proceeds.

We encourage companies with trade secrets and practitioners to review the Commentary carefully. It is available for download here.

The Commentary requests that all comments be submitted by August 1, 2020, to comments@sedonaconference.org.

Plaintiffs wishing to sue for patent, copyright, or trademark infringement all have one thing in common: they must prove they own the IP at issue. Not so for trade secrets. Last month, the United States Court of Appeals for the Third Circuit held that the Pennsylvania Uniform Trade Secrets Act only requires a plaintiff to lawfully possess, rather than formally own, the trade secrets it wishes to vindicate. With this opinion, the Third Circuit affirmed a district court decision awarding $3.5 million in damages and fees to NASA subcontractor Applied Fluid Systems Inc. (“AFS”) in its suit for trade secret misappropriation.

The “sorry story of disloyalty and deception piled upon deception” began in 2009, when AFS entered into a three-year contract with the Virginia Commonwealth Space Flight Authority (the “Authority”) to build, install, and maintain a hydraulic system for a NASA rocket launch facility. However, the Authority experienced financial difficulty, and eventually had to cede control of the launch system to a private entity, Orbital Sciences Corp. (“Orbital”). Through this acquisition, Orbital inherited the AFS contract. Importantly, the initial contract between AFS and the Authority made any materials generated by AFS for the Authority the property of the Authority. Continue Reading A Story of Disloyalty and Deception: The Third Circuit Chimes in on Ownership Requirements in Trade Secrets Act Cases

On May 6, 2020, the U.S. District Court for the District of Maine denied plaintiff Alcom’s request for a temporary restraining order (“TRO”), which sought to enjoin a competitor’s alleged misappropriation of trade secrets. The court denied the request for a TRO, holding that Alcom’s speculation about the potential harm it would suffer absent the TRO was not enough to show a likelihood of irreparable harm, as required to obtain a TRO. The case serves as a reminder that when proving irreparable harm, courts require more than just speculation.

In 2015, Alcom (a trailer manufacturer) hired Mr. Temple (defendant) as a sales representative for its horse and livestock trailers. As the sole salesperson in North America for the Frontier line of trailers, Mr. Temple gained significant responsibilities including developing and maintaining sales leads, as well as growing Alcom’s customer base for those trailers. Mr. Temple signed various agreements as conditions to his employment, including (i) confidentiality agreement, (ii) non-disclosure agreement, (iii) non-compete agreement, and (iv) a non-solicitation agreement. Alcom required Mr. Temple to sign the agreements as a precondition for accessing highly valuable and confidential company information relating to customer incentive program details, sales and marketing information, and unique insights into the needs and operational requirements of the trailer dealers he solicited. Continue Reading Under Alcom v. Temple, Speculative Harm Does Not Meet the Irreparable Harm Requirement

The COVID-19 crisis has presented an array of novel issues for companies, including new and unexpected cybersecurity threats. In addition to the now well-known security limitations of video platforms such as Zoom, we are seeing cyber-attacks in the form of COVID-19 related phishing attempts and ransomware attacks. In at least some of these attempted hacks, cybercriminals are hoping to steal trade secrets.

  • Cybercriminals are taking advantage of the novel at-home working environment and the increased fear and uncertainty surrounding the pandemic to launch malware and phishing attacks related to COVID-19.
  • Employees may be more likely to click a link or open an attachment, even though they would never consider doing so in a normal situation at work.
  • Therefore, malware may pose more of a danger than it did when employees primarily accessed their email over their employers’ traditionally more protected systems.
  • Companies should consider putting employees on notice about the COVID-19 related phishing attempts and provide examples of common scams.

Continue Reading COVID-19 and the Unique Opportunity for Phishing

Crowell & Moring invites you to attend the fifth installment of our Trade Secrets Webinar Series – The Revolving Door of Autonomous Vehicle Talent: Managing Employee Access to Trade Secrets & Facilitating Robust Investigation of Safety Issues, taking place on Tuesday, May 12th at 02:00 pm (EDT).

Autonomous Vehicle (“AV”) developers have been aggressively working to safeguard their vital design documents and data, and have increasingly relied on lawsuits to protect their proprietary information and to prevent such information from reaching their competitors as human talent continues to revolve through the AV industry. Given the increasing popularity of self-driving technology, AV developers should remain vigilant in protecting the trade secrets governing their autonomous vehicle programs and should be sure to implement sound policies for retrieving data upon employee departure.

Join Crowell & Moring attorneys Cheryl Falvey, Rukiya Mohamed, and Paul Mathis for a live discussion on trade secret and liability issues unique to AV developers as well as best practices.

To register, please click here. Continue Reading Please Join Us for the Fifth Installment of our 2020 Webinar Series: The Revolving Door of Autonomous Vehicle Talent

The COVID-19 pandemic is shining a new light on the risk of trade secret theft to businesses worldwide from greater employee mobility associated with rising unemployment and a looming recession, cyberattacks by opportunistic hackers, and a growing remote workforce with technological threats from increased use of smart devices that may leave little to no data trail.

Companies should not only consider what to do to safeguard their trade secrets now, as explored in our earlier post on Trade Secret Protection During the COVID-19 Pandemic, but how best to create and communicate the plan for responding to any discovery of trade secret misappropriation. Continue Reading Are You Ready to Respond to Trade Secret Theft in the COVID-19 Age?

Are non-competes still enforceable in middle of the unprecedented economic disruption caused by COVID-19? Many employers have reacted to the business impact of COVID-19 by downsizing and laying off employees, some of whom signed non-compete agreements or restrictive covenants to protect the employer’s legitimate business interests, including its trade secrets and confidential information. Those same businesses now are left wondering whether those non-compete agreements are enforceable in the wake of massive unemployment triggered by the pandemic.

The answer to this question is complex, and depends on state law, public policy, and the terms of the specific agreements. Each state scrutinizes non-competes and restrictive covenants differently and, therefore, the answer may be different depending on where the business and employee are located or the agreement’s choice of law provision. Continue Reading Non-Compete Agreements and Restrictive Covenants During COVID-19