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 regular readers of this blog certainly remember the usual suspects of trade secret misappropriation are employees, former employees, and self-employed consultants. In our series of blog posts about international trade secret misappropriation and trade secret enforcement under the Belgian Trade Secrets Act, we also explained that actions based on trade secrets misappropriation are in principle heard by the Enterprise Court. However, if the defendant is an employee or an ex-employee suspected of trade secret misappropriation during the course of employment, then the labor court has jurisdiction. Continue Reading International Issues in Trade Secret Law Series: Longer Statute of Limitations Confirmed in Cases of Trade Secrets Misappropriation by Former Employees
The Sedona Conference, Working Group 12 on Trade Secrets, has issued guidance on protecting trade secrets throughout the employment life cycle. This significant Commentary analyzes the tension between an employer’s interest in protecting its trade secrets and an employee’s interest in engaging in future employment. Continue Reading The Sedona Conference Issues Commentary on Protecting Trade Secrets Throughout the Employment Life Cycle
Earlier this month, the Second Circuit clarified the requirements for alleging a trade secret misappropriation claim under the Defend Trade Secrets Act (“DTSA”). The decision affirmed the Eastern District of New York’s dismissal of a trade secret misappropriation lawsuit against a formerly licensed software user. In short, the Second Circuit’s decision affirmed a more stringent view of DTSA requirements to find that a trade-secret plaintiff alleging misappropriation of software functionality must have direct allegations it had confidentiality and non-disclosure agreements with software’s vendors and end users. Continue Reading Second Circuit Rejects DTSA Claim Due to Weak Software Licensing Agreement
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 party’s access to trade secrets;
- Consider the public’s qualified right of access to documents filed with a court, but exercise discretion to deny public access in compelling circumstances; and
- Determine whether a party has credibly identified the existence of a trade secret before ordering appropriate protections.
Sedona Conference materials are often relied upon by courts. Trade secret litigants need to be aware of the risks that their trade secrets could be disclosed in litigation and of the legal framework to persuade courts to order appropriate protections. Thus, this Commentary is required reading for trade secret holders.
The US Department of Justice (“DOJ”) recently filed a Statement of Interest in connection with a pending case in Nevada State Court, Samuel Beck, et al. v. Pickert Medical Group, P.C. et al., further highlighting the DOJ’s heightened scrutiny of post-employment restrictive covenants under the antitrust laws and their effects on competition. In this noteworthy Statement of Interest, the DOJ takes the position that post-employment restrictive covenants may constitute both horizontal and vertical restraints of trade that violate the Sherman Antitrust Act. The Statement of Interest follows the DOJ and FTC’s 2017 Antitrust Guidance for Human Resources Professionals which addressed how antitrust law can apply to employee hiring and compensation and a December 2021 DOJ and FTC workshop that addressed how contractual restraints on trade can harm labor markets, as well as recent executive orders and statements by the Biden administration limiting and criticizing the use of noncompetition agreements with employees. The DOJ’s Statement of Interest thus represents yet another step up in pressure by the federal government signaling it will continue taking more action to discourage the use of contractual restraints on trade in employment-related agreements. Continue Reading Enforceability of Non-Compete Agreements; Recent Input from the DOJ
Last week, the Western District of Washington concluded that a multi-level marketing beauty company sufficiently alleged that it exercised reasonable efforts to maintain the secrecy of its training materials, and network salespeople and contact lists, despite the salespeople using their personal Facebook accounts, and despite making the training materials available to a Facebook group comprising thousands of members. Accordingly, the court denied defendants’ motion to dismiss with respect to defendants’ alleged trade secret misappropriation in violation of the Defend Trade Secrets Act.
Plaintiff, Tori Belle Cosmetics LLC (“Belle Cosmetics”), sells its cosmetics and false eyelashes through a network of salespeople, allowing each salesperson to earn a portion of any revenue generated by any salespeople they recruit to join their sales network, i.e., a multi-level marketing business. Defendants are five former network salespeople of Belle Cosmetics, who plaintiff alleges, helped design and launch a competing product line for a company called Juvanae LLC. Belle Cosmetics alleges its trade secrets include, inter alia, lists containing contact information of customers and network salespeople including in the form of social media contacts, and training materials in the form of videos, photos, informational posts, webinars and other instructional materials that it makes available to thousands of its network salespeople through a Facebook group called “Team Lash Out.” Continue Reading Multi-Level Marketing Company Sufficiently Alleges Reasonable Efforts Despite Posting Trade Secret Materials to Thousands
Tangibly launched in February as a solution for companies to manage their trade secrets. Tangibly offers two distinct products: (1) a cloud-based platform that provides a dashboard where users can manage their assets and associated people and (2) a platform designed to make it easy for companies to execute and track NDAs.
Tangibly’s founder and CEO Tom Londergan said that Tangibly is architected around five questions companies should be able to answer regarding their trade secrets: Continue Reading New Platform Launches to Manage a Company’s Trade Secrets
Crowell & Moring presented a webinar discussing the most influential trade secret cases from 2021 along with new legal developments, including non-compete legislation and trade secret maintenance.
Partner Astor Heaven and Counsel Raija Horstman kicked off the conversation to discuss modern trade secret protection under the DTSA and the biggest damages from jury verdicts in 2021. Counsel Christine Hawes gave an overview of recent federal and state non-compete legislation, and Associate Dalton Hughes wrapped up the webinar by covering new legal implications for maintaining and identifying trade secrets. Continue Reading Crowell & Moring Webinar Recap: “2021 Trade Secrets Year in Review and What Lies Ahead”
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.