Competitor Misappropriation

A recent decision from the Fifth Circuit showcased the usefulness of the “discovery rule” for trade secret plaintiffs facing statute of limitations issues.  The court reversed the dismissal of a claim for misappropriation of trade secrets because the plaintiff could not have discovered the misappropriation using reasonable diligence within the applicable statute of limitations period.

Continue Reading Fifth Circuit Rules Delayed Discovery of Misappropriation Not A Bar To Suit

As predicted, the trade secrets battle between Olaplex, Inc. and L’Oreal continues – and L’Oreal has scored a fresh victory.  On May 6, 2021, the Federal Circuit Court of Appeals overturned a $66 million judgment against L’Oreal and ordered a new trial – but only on one of Olaplex’s patent claims.  The panel stated that Olaplex had entirely failed to show that its information was eligible for trade-secret protection, and that no reasonable jury could find otherwise.
Continue Reading Partial Victory for L’Oreal In Hair Coloring Fight

A Complaint recently filed in the Southern District of New York may shed light on courts’ willingness to apply a broad interpretation of “misappropriation” in trade secrets cases. Plaintiff Greenpoint Capital Management, which grants loans to law firms to fund high-stakes litigation, has accused Apollo Hybrid Value Management LP and Apollo Hybrid Value Management GP

On October 2, 2020, a federal judge for the Central District of California denied a motion for a temporary restraining order (“TRO”) to enjoin the Discovery Channel from airing “The Lost Lincoln,” a documentary about an allegedly long-lost photograph of Abraham Lincoln on his deathbed.  Only 130 photographs of Lincoln are known to exist.

Plaintiffs Jerry Spolar and Terry Williamson own the photograph, known as an ambrotype, and spent years researching and authenticating it.  In 2018, they partnered with Whitny and James Braun to make a documentary about the photo and shared the details of their authentication efforts with the Brauns pursuant to non-disclosure agreements.  The project fell through at first, but late last month, Plaintiffs learned that their former partners had created a documentary about the photograph for the Discovery Channel.
Continue Reading Court Denies TRO in “The Lost Lincoln” Misappropriation Case

A new lawsuit in the medical marijuana industry raises questions about the enforceability of noncompetes under Massachusetts’ new statute. On August 26, 2020, Alternative Compassion Services, Inc., (“ACS”) filed a federal lawsuit against its former Chief Operating Officer, Defendant Matthew Radebach (“Radebach”).
Continue Reading Pot Got Your Tongue? Company Alleges Former COO Disclosed Trade Secrets to Competitors

On July 21, 2020, the First Circuit clarified the high burden that a plaintiff faces when asserting that certain types of business materials are protected trade secrets. In TLS Mgmt. & Mktg. Servs., LLC v. Rodriguez-Toledo, No. 19-1104, 2020 WL 4187246, at *6 (1st Cir. July 21, 2020), the court reversed a district court’s bench trial verdict in favor of the plaintiff in a trade secret misappropriation case on the ground that the business materials at issue did not constitute trade secrets. Plaintiff TLS Management and Marketing Services, LLC, a Puerto Rico-based tax planning and consulting firm, argued that the defendants misappropriated two of its protectable trade secrets: (1) a portion of its “Capital Preservation Reports,” which contained tax recommendations specific to an individual TLS client based on an analysis of applicable statutes and regulations; and (2) its “U.S. Possession Strategy,” which consisted of a scheme that would allow Plaintiff’s clients to take advantage of a lower tax rate on outsourced services by contracting with Plaintiff and buying its shares.

Defendant Rodriguez-Toledo was the founder of Plaintiff’s competitor, Defendant ASG Accounting Solutions Group, Inc., and for some time worked for Plaintiff TLS as a Managing Director under a subcontract between Plaintiff and ASG. After departing from TLS, Rodriguez-Toledo provided tax advice to Plaintiff’s former clients regarding how to avoid certain tax penalties triggered by terminating their relationships with TLS, which TLS’s U.S. Possession Strategy was also intended to avoid. Rodriguez-Toledo also allegedly downloaded the Capital Preservation Reports from TLS’s Dropbox account without authorization before he left TLS. TLS filed suit against both ASG and Rodriguez-Toledo for misappropriation of the two trade secrets and violation of a nondisclosure agreement. The district court found they had misappropriated both trade secrets following a bench trial, and the defendants appealed.

Continue Reading First Circuit Reverses Misappropriation Verdict, Citing Lack of Specificity

On May 22, the Eleventh Circuit clarified trade secrets misappropriation analysis under the Florida Uniform Trade Secrets Act (“FUTSA”), strengthening the trade secret protection offered by the statute. The decision vacated a magistrate judge’s finding that the defendants had not misappropriated trade secretes following a bench trial in the Compulife Software Inc. v. Newman et al. matter (No. 18-12004). The court found error in the magistrate’s failure to “consider the several alternative varieties of misappropriation” contemplated by FUTSA and the magistrate’s reasoning that the public availability of life insurance quotes on the plaintiff’s website “automatically precluded a finding that scraping those quotes constituted misappropriation.”

“At its essence, it’s a case about high-tech corporate espionage,” Circuit Judge Kevin C. Newsom’s opinion begins. The plaintiff, Compulife Software Inc. (“Compulife”), sells access to its online database of insurance premium information, which synthesizes publicly available insurers’ rate tables using Compulife’s proprietary method and formula. Compulife also provides life insurance quotes sourced from its online database. The database itself is valuable because it consistently updates with current information about life insurers’ rate tables and allows for direct comparison across dozens of providers. Compulife licenses access to the database to its customers—primarily insurance agents who in turn seek to provide reliable insurance rate estimates to policyholders. In direct competition with Compulife, the defendants likewise generate life insurance quotes through their various websites.


Continue Reading Eleventh Circuit Solidifies Protection of Trade Secrets Threatened By “High-Tech Corporate Espionage” Under Florida’s Trade Secret Law

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

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

We continue our coverage of English Confidentiality Protections in Trade Secret and IP Cases by exploring a recent decision involving access of party experts to confidential information and trade secrets as part of confidentiality rings.

In Infederation Limited v Google LLC & Ors [2020] EWHC 657 (Ch), Infederation Limited a/k/a Foundem – a provider of online shopping comparison services – brought a case against Google alleging Google’s search result algorithms purportedly reduced its “ranking” in violation of competition law. The parties agreed to three confidentiality rings: (1) a top “confidential” ring including the founding members of Foundem, external solicitors, counsel, and economic experts; (2) an external solicitors, counsel, and economic experts ring (the legal eyes only or “LEO” ring); and (3) a further restricted “RLEO” ring, which was 10 named external solicitors and counsel. Google made an application to strike some of Foundem’s claims in part relying on evidence related to search algorithms designated as confidential, LEO, or RLEO. In order to review and evaluate these specially designated exhibits, Foundem requested that its search engine optimization (“SEO”) expert Mr. Klöckner, who was already part of the outer confidentiality ring, be added to the LEO and RLEO rings. Google pushed back, claiming that how it ranks search results should be kept confidential or its value would be lost and that it was unlikely that Mr. Klöckner could keep the knowledge he gained from his role in the proceedings separated from his independent work as an SEO consultant. Infederation Limited v Google LLC & Ors [2020] EWHC 657 (Ch) [24-26].
Continue Reading English Trade Secrets Proceedings: Experts May Be Permitted Access to Information In Confidentiality Rings