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Category Archives: Protecting Trade Secrets and Other Business Information

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Protect Your Business: What You Need to Know About the New Defend Trade Secrets Act

Posted in New Legislation, Protecting Trade Secrets and Other Business Information

By Sherry Bragg Businesses at every level – from Fortune 500 companies to solo-inventor enterprises – rely on trade secret protections to safeguard their intellectual property trade secrets. American companies and innovators now have additional protections for their valuable intellectual property assets in the newly enacted federal Defend Trade Secrets Act (DTSA). This legislation represents… Continue Reading

Two Things You Can Do To Reduce the Likelihood That Your Company Will Be Found Liable For Conspiring Or Aiding And Abetting In An Employee’s Breach of Duty To A Former Employer

Posted in Breach of Fiduciary Duty/Duty of Loyalty, Covenants Not to Compete in California, Covenants Not to Compete in Other Jurisdictions, Employee Raids, Hiring a Competitor’s Employees, Other Restrictive Covenants, Protecting Trade Secrets and Other Business Information, Unfair Competition

When companies sue their former employees for theft they often claim that the former employee’s new employer has conspired with the former employee to misappropriate trade secrets, or that that new employer has aided and abetted the former employee’s breach of duty he/she owed to his/her former employer. Like Woodward and Bernstein, liability “follows the… Continue Reading

Senate and House of Representatives Pass the Defend Trade Secrets Act

Posted in Covenants Not to Compete in California, Covenants Not to Compete in Other Jurisdictions, Employee Raids, Hiring a Competitor’s Employees, New Legislation, Other Restrictive Covenants, Protecting Trade Secrets and Other Business Information, Unfair Competition

Senate and House of Representatives Pass the Defend Trade Secrets Act (DTSA).  First federal trade secret bill awaiting presidential signature.  More details can be found at the following Forbes article:  “The New Defend Trade Secrets Act is the Biggest IP Development in Years,” dated April 28, 2016.

California Court Confirms No Absolute Public Policy Against Non-Competes Entered into by Partners

Posted in Covenants Not to Compete in California, Other Restrictive Covenants, Protecting Trade Secrets and Other Business Information, Unfair Competition

California’s prohibition on non-competition agreements is less than absolute.  For example, non-compete agreements may be enforced against partners or sellers of businesses.  Additionally, in SingerLewak LLP v. Andrew Gantman (2015) 241 Cal.App.4th 610, a California Appellate Court affirmed an arbitration award that would be considered by most to be a misapplication of California’s non-competition law…. Continue Reading

Are “No Rehire” Provisions in Settlement Agreements at Risk?

Posted in Breach of Fiduciary Duty/Duty of Loyalty, Covenants Not to Compete in California, Covenants Not to Compete in Other Jurisdictions, Hiring a Competitor’s Employees, Protecting Trade Secrets and Other Business Information, Unfair Competition

The use of “No Rehire” Provisions in settlement agreements between employers and their former employees allow employers to protect themselves against “boomerang” lawsuits.  For instance, a former employee who claims he/she was terminated because of discrimination would be prevented from later submitting a new job application and then suing the employer again claiming he/she was… Continue Reading

Tech Companies Reach New Settlement in Anti-Poaching Cases

Posted in Covenants Not to Compete in California, Hiring a Competitor’s Employees, Other Restrictive Covenants, Protecting Trade Secrets and Other Business Information, Unfair Competition

This blog has previously reported on the anti-poaching cases involving various tech companies in Silicon Valley.  The cases arise out of alleged agreements between various tech companies not to recruit each other’s employees.  The U.S. Department of Justice brought antitrust actions as a result of these alleged agreements which resulted in the companies entering into… Continue Reading

A Noncompete To Go With Your Sandwich?

Posted in Covenants Not to Compete in California, Covenants Not to Compete in Other Jurisdictions, Protecting Trade Secrets and Other Business Information

A few months ago, this blog noted that there was press coverage about the nationwide increase in the use of noncompete agreements in various industries.  A story that has made the rounds in the past week illustrates this point clearly.  Jimmy Johns, a “gourmet sandwich” franchise, has apparently been inserting noncompete provisions in its employment… Continue Reading

“No-Poaching” Lawsuits Come to Hollywood

Posted in Covenants Not to Compete in California, Hiring a Competitor’s Employees, Protecting Trade Secrets and Other Business Information, Unfair Competition

Readers of this blog are familiar with our coverage of the various cases involving high tech firms in Silicon Valley such as Google and Adobe involving alleged “no poaching” agreements that they would not solicit each other’s employees for possible employment.  Both the U.S. Government and plaintiff class action attorneys have alleged that such conduct… Continue Reading

California Businessman Sentenced to 15 Years for Trade Secret Theft

Posted in Protecting Trade Secrets and Other Business Information, Unfair Competition

A California businessman, Walter Liew, was recently sentenced to 15 years in federal prison after being found guilty by a jury on charges of trade secret theft, economic espionage, witness tampering and making false statements.  Mr. Liew, who had contracts with a Chinese company Pangang Group, was charged with stealing trade secrets from DuPont that… Continue Reading

Court of Appeal Affirms Trial Court Award of “Bad Faith” Attorney’s Fees

Posted in Protecting Trade Secrets and Other Business Information

Readers of this blog may recall our discussion of a “bad faith” attorney’s fees award made by the trial court in the Aerotek v. The Johnson Group case.   To view a copy of our previous post, click here.  As a refresher, Aerotek sued its former employee and that former employer’s new employer claiming misappropriation… Continue Reading

Attorney Fee Awards in Trade Secret Cases and “Local Community” Rates

Posted in Protecting Trade Secrets and Other Business Information

As readers of this blog may know, a party prevailing in a trade secret misappropriation case may be entitled to reasonable attorney’s fees if that party can show either that the claim was brought by the plaintiff in bad faith or that the defendant was guilty of willful and malicious misappropriation. The award of attorney’s… Continue Reading

The Truth About the “Exceptional” Remedy

Posted in Injunctions, Protecting Trade Secrets and Other Business Information, Unfair Competition

It is a truism that preliminary injunctions are “rare” and “exceptional” remedies.  But rarity is context specific.  As a percentage of cars made, Cobra GTs are rare.  If you are standing in the plant where they are made, however, they are anything but rare.  So, while it may well be true that preliminary injunctions, as… Continue Reading

Downloading is Not Necessarily Misappropriating

Posted in Computer "Crimes", Protecting Trade Secrets and Other Business Information, Unfair Competition

One of the key pieces of evidence a plaintiff in a trade secret case usually looks for is the downloading of company information from its computers prior to a former employee departing and joining a competitor.  Generally, this “smoking gun” type of evidence shows that the employee on his or her last day accesses and… Continue Reading

Another Non-Compete Held Unenforceable

Posted in Covenants Not to Compete in California, Injunctions, Protecting Trade Secrets and Other Business Information

Under California law, non-compete provisions with an employee are generally unenforceable.  Statutory exceptions to this rule include the seller of a business’s goodwill or a membership interest in an LLC.  Courts have also recognized a judicial exception to this rule: where the non-compete is necessary to protect an employer’s trade secret information.  This judicial exception… Continue Reading

Trade Secrets and “Susceptibility” to Reverse Engineering

Posted in Protecting Trade Secrets and Other Business Information

Sometimes a defendant accused of trade secret misappropriation can defend on the basis that it has “reversed engineered” the alleged trade secret information and therefore did not misappropriate it.  For instance, a defendant may be able to establish that it examined plaintiff’s product and then using its own know-how, time, energy and independent resources was… Continue Reading

Trade Secrets and Other Preemption Doctrines

Posted in Protecting Trade Secrets and Other Business Information

Readers of this blog know that we frequently discuss the doctrine of preemption under the California Uniform Trade Secrets Information Act.  That is, a claim for trade secret misappropriation will preempt any other common law claims based on the “same nucleus of facts.”  However, a recent decision in Jobscience, Inc. v CVPartners, Inc., N.D. Cal…. Continue Reading

Trade Secret Theft Gets One Year in Prison

Posted in Protecting Trade Secrets and Other Business Information, Unfair Competition

An employee of a Bay Areas executive recruiting firm who left to start his own firm was sentenced to one year in prison after being found guilty of trade secret theft and unauthorized computer access crimes.  David Nosal was a former managing director at Korn/Ferry International and left in 2004 to start his own firm. … Continue Reading

Attorneys’ Fees For “Bad Faith” Trade Secret Claims: How Pre-Discovery Disclosures Can Help

Posted in Protecting Trade Secrets and Other Business Information

A central issue in all trade secret litigation is the adequacy of a plaintiff’s pre-discovery disclosure of the alleged trade secrets required by California Code of Civil Procedure section 2019.210.  Section 2019.210 provides that a plaintiff suing for misappropriation of trade secrets must identify the alleged trade secrets with “reasonable particularity” before commencing discovery.  The disclosure requirements… Continue Reading

Covenants Not To Compete: Restraining a Seller/Employee Against Competition – Not As Easy As it Looks

Posted in Covenants Not to Compete in California, Protecting Trade Secrets and Other Business Information, Uncategorized, Unfair Competition

Section 16601 of the California Business and Professions Code provides a well-known exception to California’s statutory refusal to enforce contractual commitments not to compete.  Under that section, Courts will enforce “reasonable” restrictions on the seller of a business to engage in competition against the buyer of that business.  This is a commonsense approach: a buyer… Continue Reading

Trade Secret Defendants Beware: The Danger of Stipulated Injunctions

Posted in Covenants Not to Compete in California, Hiring a Competitor’s Employees, Injunctions, Protecting Trade Secrets and Other Business Information, Uncategorized, Unfair Competition

The Cruel Lessons of Wanke, Industrial, Commercial, Residential, Inc. v. Keck  (2012) 209 Cal.App.4th 1151 By:      Charles L. Post Defendants in trade secret and unfair competition cases often have fewer resources than the plaintiff companies that bring them.  This is often the case in “classic” trade secret misappropriation scenarios: former employees form a new company… Continue Reading

REFRESHER: When is a Customer List or Customer Information Trade Secret?

Posted in Protecting Trade Secrets and Other Business Information

Courts are reluctant to protect customer lists when they consist of information from public sources (such as business directories).  (Morelife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1521-1527.)  On the other hand, where the employer has expended time and effort identifying customers with particular needs or characteristics, courts will prohibit former employees from using this… Continue Reading

Employers: Act Fast or Weaken Your Trade Secret Case

Posted in Hiring a Competitor’s Employees, Protecting Trade Secrets and Other Business Information, Unfair Competition

When one or more of your key employees leaves to join a competitor and begins soliciting your customers, one of your strongest weapons under California’s trade secret laws is the ability to obtain an immediate temporary restraining order to stop your former employee and his or new employer from unlawfully competing against you.  Many trade… Continue Reading

Employee Theft of Employer Confidential Information is Widespread

Posted in Hiring a Competitor’s Employees, Protecting Trade Secrets and Other Business Information

A recent study by Symantec shows that employee theft of employer confidential information is widespread. A summary of the survey is available at www4.symantec.com/marketinginfo/data.  The survey was conducted by a private research institute.  Some of the more alarming results of the study include: Approximately 50% of the employees who left or lost their jobs in… Continue Reading