Here are the noteworthy trade secret, restrictive covenant and cybersecurity posts from the past month or so:

The Defend Trade Secrets Act

  • The U.S. District Court for the Eastern District of Texas has found that certain deer registry information qualified as a combination trade secret under the DTSA and Oklahoma’s version of the UTSA, as explained by Michael Weil and Tierra Piens for Orrick’s Trade Secrets Watch blog.
  • The issue of whether the DTSA applies to misappropriation that may have taken place prior to the DTSA’s enactment has been one of the more frequent areas of litigation under the DTSA.  Jonathan Shapiro of Epstein Becker has a summary on these cases for Law360.

Continue Reading Monthly Wrap Up (July 31, 2017): Noteworthy Trade Secret and Non-Compete Posts From Around the Web

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as one or two that I missed over the past couple of weeks:

Trade Secret and Non-Compete Cases. Posts and Articles:

  • “Seagate Technology Recoups $630 Million Trade-Secrets Award” reports Business Week.  A Minnesota state appeals court has ruled that an arbitrator didn’t exceed his authority in awarding Seagate $525 million (and an additional $105 million in interest) in its trade secret dispute with Western Digital and a former Seagate employee. The arbitrator had found that some of the defendants’ evidence was fabricated regarding three of the trade secrets at issue and entered judgment against Western and the employee, Sining Mao, as a sanction.
  • “Even Preparing To Compete In Texas May Be Prohibited During A Non-Competition Covenant Period” advises Paul Freehling for Seyfarth Shaw’s Trading Secrets Blog.  Rob Radcliff also has a post on this decision, “Anti-Planning Provisions – A New Non-Compete Weapon?” in his Smooth Transitions Blog.
  • And speaking of Texas, “Physician Noncompetition Agreements May Be Challenged More Often After Recent Texas Appellate Decision” warns Randy Bruchmiller for Seyfarth Shaw’s Trading Secrets Blog.
  • “Five Year Non-Compete Enforced In Indiana” reports Peter Steinmeyer for Epstein Becker’s Trade Secrets & Noncompete Blog.
  • For the latest on non-compete legislation in Massachusetts, see “Massachusetts Noncompete Bill – Hearing Date” by Russell Beck in his Fair Competition Law Blog.  Seyfarth Shaw’s Erik Weibust also has a post on the legislation.
  • The Southern District of New York has recently held “Marketing Concepts Are Not Trade Secrets” advises Eric Ostroff in his Trade Secrets Protection Blog.
  • In “Don’t Chase Your Tail in Pursuit of the “Perfect Non-Compete,” Michael Greco offers some sound and practical advice in Fisher & Phillips’ Non-Compete and Trade Secrets Blog.
  • “The Line Between Trade Secrets and Patents: Getting Dual IP Coverage on the Same Technology” recommends Matthew Poppe and Morvarid Metanat for Orrick’s Trade Secrets Watch Blog.
  • “Myriad’s Trade Secret Trump Card: The Myriad Database of Genetic Variants” reports Courtenay Brinckerhoff of Foley & Lardner for JDSupra Law News.
  • “The next controversy in genetic testing: clinical data as trade secrets?” ask Robert Cook-Deegan, John M. Conley, James P Evans and Daniel Vorhaus for The European Journal of Human Genetics.
  • “The Business End Of The ‘Snowden Lessons'” reports Anne Sutton of Dentons and Erik Laykin of Duff & Phelps Corp. for Law360.
  • “More Answers To Your Noncompete Questions” provides Donna Ballman for her Screw You Guys, I am Going Home Blog.
  • “Texas Public Information Act: Shielding Your Company from the Open Records Sword” advises Jack Skaggs of Jackson Walker for JDSupra Law News.
  • In “Trade Secrets Whistleblower SLAPPed In Effort to Dismiss Lawsuit,” Ken Vanko reports on the recent dismissal of a whistleblower claim brought against Anhueser-Busch in his Legal Developments in Non-Competition Agreements Blog.  For more on this case, see my post from the spring.

Cybersecurity Posts and Articles:

  • Looking to limit others from digitally eavesdropping you?  Then check out “Digital Tools to Curb Snooping” by Somni Semgupta for The New York Times Bigs Blog.
  • “U.S. Cybersecurity Plan Not Designed To Increase Regulation, Officials Say” claims Bloomberg BNA.
  • “How America Is Fighting Back Against Chinese Hackers” advises Adam Clark Estes for Gizomodo.

Computer Fraud & Abuse Act Posts and Articles:

  • “MIT Intervenes In Release Of Aaron Swartz Case Details” reports Gerry Smith for The Huffington Post.

01042013The corrected version of today’s Thursday Wrap-Up post is posted below. A technical glitch caused the post to inadvertently launch last night so we apologize to our subscribers. We appreciate your loyalty and work hard to deliver valuable content. Thank you for your patience. 

Now, to the noteworthy trade secret, non-compete and cybersecurity stories from the past week:

Trade Secret and Non-Compete Cases, Posts and Articles:

  • For you sports fans, a budding dispute is emerging in the NBA over the enforceability of Boston Celtics coach Doc Rivers’ non-compete. Rivers, one of the more highly regarded NBA coaches, has been approached by the Los Angeles Clippers but a non-compete in his contract may prevent his move. For their take on the situation, check out Rob Dean’s post, “Calling Foul on Doc Rivers’ Non-Compete Contract,” for Frith & Ellerman’s Virginia Non-Compete Blog as well as Kenneth Vanko’s post in his Legal Developments in Non-Competition Agreements Blog.
  • Wondering how the U.S. Supreme Court’s Myriad decision may affect the use of trade secrets? Then check out “In Setting Genes Free, Supreme Court Decision Will Put Greater Emphasis on Trade Secret Protection in Biotech,” by Michael Baniak for Seyfarth Shaw’s Trading Secrets Blog.
  • For the latest on the high profile prosecution of Walter Liew and the Pangang Group, see “Trade Secrets Charges Survive Dismissal Bid In DuPont Case,” reports Law360.
  • “Creators of 5-hour ENERGY file complaint against DOJ for requesting ‘trade secrets,'” advises Joyce DeWitt for the Statesman Journal Blog.
  • In a surprisingly sympathetic article about Sergey Aleynikov’s legal travails entitled “Questions Linger in Case of Copied Code,” Reed Albergotti expresses concern about the most recent prosecution in The Wall Street Journal.
  • “Google, Judges Duck Latest Version of Trade Secrets Case,” reports Law360.
  • Looking for a “Broker Update” on trade secret and non-compete disputes in the financial industry? Then check out Rob Radcliff’s post in his Smooth Transitions Blog.
  • “Enforceability of a Noncompete Agreement will Often Depend Upon Context,” advises Jason Shinn for the Michigan Employment Law Advisor Blog.
  • “No, No, No – Your Independent Contractor Cannot Sign a Noncompete. Never. Ever,” exclaims Tiffany Hildreth for Strasburger’s Noncompete Blog.
  • “No Sanctions For Text Message Deletion,” advises Christopher Brif for the IT-Lex Blog.
  • Trade Secret Suit Against Defense Co. Sent To Arbitration,” reports Law360.
  • “The New Prior User Rights Defense: How Often Will It Be Asserted?” ask Robert A. Pollock and Matthew R. Van Eman for Finnegan’s America Invents Act Blog.

Cybersecurity Posts and Articles:

  • “Why The NSA Leaks Will Lead To More Economic Espionage Against American Companies,” warns John Villasenor for Forbes Tech.
  • “Why Your CEO Is a Security Risk,” cautions Rohyt Belani  for the Harvard Business Review Network Blog.
  • Looking for a concise summary of all the pending federal cybersecurity and trade secrets legislation? Then check out “Pols Gone Wild: Congress Discovers Trade Secret Theft and Cybersecurity are Problems; We Sort Through the Explosion of Legislation,” by Sophie Yu and Gabriel M. Ramsey for Orrick’s Trade Secrets Watch Blog.
  • “5 Data Breach Risks You Can Prevent,” proclaim Clark Schweers and Jeffrey Hall for Law Technology News.
  • “The Public/Private Cooperation We Need on Cyber Security,” advises Harry D. Raduege, Jr. for the Harvard Business Review Network Blog.
  • “After Profits, Defense Contractor Faces the Pitfalls of Cybersecurity,” reports The New York Times.

Computer Fraud & Abuse Act Articles, Cases and Posts:

  • “Minnesota Federal Court Dismisses Computer Fraud and Abuse Act Claim Based on Departing Employee’s Downloading of Customer List,” reports Erik von Zeipel for Seyfarth Shaw’s Trading Secrets Blog.
  • For more on the recent decision denying a motion to dismiss the CFAA claim in the AMD trade secret case, see Erik Ostroff’s post “Computer Fraud and Abuse Act Applied Narrowly In AMD Case,” for his Protecting Trade Secrets Blog.

01042013Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as one or two that I missed over the past couple of weeks:

Trade Secret and Non-Compete Posts and Articles:

  • Bloomberg has received withering criticism for allowing the presumably confidential information of its customers to be viewed (and most likely used) by its reporters. Last week, Bloomberg said it had now restricted its journalists from accessing information about terminal subscribers, including when they last logged on, when they subscribed and how often they accessed features like news or the chat function. CNBC, The New York Times and The Wall Street Journal all have comprehensive articles on the scandal. Bloomberg’s troubles underscore the challenges of maintaining ethical screens and walls between business units who have potentially divergent interests over confidential information. 
  • “Credit Suisse says ex VP stole trade secrets in move to Goldman,” reports Reuters
  • “5th Circ. Affirms $44M Wellogix Jury Award In Trade Secret Spat,” reports Law360.
  • “Trade Secret ‘Watch List’: Bill Would Establish Monitoring List of Countries Engaging in Cybertheft, and Make U.S. Intelligence Czar the Point Person,” reports Robert Isaackson for Orrick’s Trade Secrets Watch.
  • “New Massachusetts Superior Court Noncompete Decision Discusses the ‘Material Change’ Defense and Shows the Benefit to Employers of Having a ‘Material Change’ Clause in Noncompete Agreements,” advises Brian Bialas for Foley & Hoag’s Massachusetts Noncompete Law Blog.
  • Josh Durham reports on the latest non-compete involving a doctor, “NC Court of Appeals Orders Injunction In OB-GYN Covenant Not To Compete Case,” for Poyner Spruill’s Under Lock & Key Blog.
  • And while we are talking about physician non-competes, the recent $39 million “Tuomey verdict could make hospitals more cautious in doctor contracts,” advises Adam Kerlin for Reuters.
  • “Florida Court Discusses Trade Secrets in Discovery,” reports Solomon Genet for the Trade Secrets Law Blog.
  • “Show Me the Money – Injunctions are Not Cheap,” warns Rob Radcliff in his Smooth Transitions Blog.
  • “You Can’t Reverse Blue-Pencil a Non-Compete,” advises Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • “Trade Secrets Law Still Murky in Georgia Courts,” reports Alyson Palmer for Corporate Counsel.
  • Fracking and trade secrets remain a combustible combination, as Law 360 reports that, “Enviros Must Show Need To Get Trade Secret Docs: Pa. Court.”
  • For an excellent summary of the key points of the new Texas Uniform Trade Secrets Act, see, “Texas Trade Secrets Law Gets Business-Friendly Upgrade,” by Jesse Davis for Law360.
  • A recent study finds that over 90% of innovative products are never patented, reports Eric Ostroff in a recent post for his Trade Secrets Law Blog. According to Eric, the study looked at the “R&D 100 Awards” to reach its conclusions. The results of this study of course reinforce the importance of making sure your trade secret protections are adequate.
  • Attention eBay shoppers: “Coca Cola’s secret formula for sale for 15 million dollars,” reports DailyBhaskar.com

Cybersecurity Posts and Articles:

  • The theft of nearly $45 billion was from New York banks by cyberthieves was widely reported in the past week. For an analysis of the legal fallout, see, “Lessons From the New York ATM Heist,” by Jason Weinsten for Steptoe’s Cyberblog.
  • “Legal Showdown on Cybersecurity: Hotelier Wyndham Challenges FTC’s Authority to Police Corporate Data Practices,” reports The Wall Street Journal.
  • “Cyberattacks Against U.S. Corporations Are on the Rise,” reports The New York Times.
  • “‘Bring Your Own Device’ is Evolving from a Trend to a Requirement,” advises Arik Hesseldahl for All Things Digital
  • “Hacking back: Digital revenge is sweet but risky,” advises Melissa Riofrio for PCWorld.  

Computer Fraud and Abuse Act Posts and Cases:

  • “No Damages? Illinois Federal Court Tosses Computer Fraud and Abuse Act Claim Alleging Hacking of Law Firm Network,” reports Paul Freehling for Seyfarth Shaw’s Trading Secrets Blog.
  • “Should Lying About Your Age Online Be a Federal Crime?” asks Peter Torren in an article for Corporate Counsel.

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as one or two that I missed over the past couple of weeks:

Trade Secret and Non-Compete Posts and Articles:

  • Does a law firm have to reveal its client’s non-compete to the client’s business partners? In “Texas Firm Beats Fraud Suit For Keeping Mum On Noncompete,” Law360 reports that the answer is “no.” The Texas Court of Appeals held that there was no duty to disclose the client’s non-compete by the law firm and its attorney when they negotiated legal documents with those third parties.
  • “Non-Compete Fight in the World of Surgical Robotics: MAKO Surgical Sues Competitor, Former Employee,” advises Jonathan Pollard for the non-compete blog.
  • “FBI arrests NASA contractor employee trying to flee to China,” reports The Washington Examiner.
  • “Stryker Exec Who Jumped Ship Must Hand Over Trade Secrets,” reports Law360.
  • “Protecting Trade Secrets with a Mobile Workforce and Telecommuters,” reports Cliff Atlas for Jackson & Lewis’ Non-Compete & Trade Secrets Report.
  • Even The Economist is writing about the importance of trade secrets, asking, “Can you keep a secret? To patent an idea, you must publish it. Many firms prefer secrecy.”
  • “Mediating Non-Competes in the Medical Device Industry,” explains Michael Greco for Fisher & Phillips’ Non-Compete and Trade Secrets Blog.
  • Will the ability to preserve an invention as a trade secret lead patentholders to withhold the best mode of that invention in their patent applications? In “Patent law’s ‘best mode’ requirement a conundrum for attorneys,” Erin Geiger Smith warns that could be the case for Bloomberg.
  • “5 ways in-house lawyers can support innovation at their companies: Inside counsel have a duty to help drive innovation to success, within the limits of existing law and policy,” advises Eric Esperne in Inside Counsel.
  • Want to enforce a non-compete against a Chinese employee? You need to read, “China Employee Non-Competes. Do Not Try This At Home,” by Dan Harris for his China Law Blog.

Cybersecurity Posts and Articles:

  • “After a Data Breach, Do You Need an Investigator or a Lawyer?” asks Catherine Dunn for Corporate Counsel.
  • “Take Chinese Hacking to the WTO,” urges James P. Farwell for The National Interest.
  • “Infographic: How Criminals Guess Your PIN,” warns Gina Smith for Tech Page One.

Computer Fraud and Abuse Act Posts and Cases:

  • “U.S. v. Nosal: Back In the District Court, the Defendant Isn’t as Fortunate,” reports Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • “The Split in the Circuit Courts Over the Proper Interpretation of the Computer Fraud and Abuse Act Actually Goes Three Ways,” updates Brian Bialas for Foley & Hoag’s Massachusetts Noncompete Law Blog.
  • Is journalist Matthew Keys the latest Aaron Swartz? asks Garance Burke in his article for The Huffington Post entitled, “Matthew Keys’ LA Times Hack: Security Breach Or Harmless Prank?”
  • And in another high profile CFAA prosecution, Orin Kerr writes, “United States v. Auernheimer, and Why I Am Representing Auernheimer Pro Bono on Appeal Before the Third Circuit,” for The Volokh Conspiracy.

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as one or two that I missed over the past couple of weeks:

Trade Secret and Non-Compete Posts and Articles:

  • Add Illinois to the list of states considering legislation over their non-compete laws, as Kenneth Vanko advises in “A Brief Commentary on Illinois’ Proposed Noncompete Agreement Act” in his Legal Developments in Non-Competition Agreements Blog. Ken reports that, unlike the legislation in Minnesota, Michigan and Massachusetts which seeks to scale back or limit non-competes, the proposed legislation would tend to benefit employers.
  • “Schwab Says Ex-Advisers Diverted $47M In Accounts To Rival,” reports Law360.  Epstein Becker’s Peter Altieri has a post about the dispute as well.
  • “DuPont Trade-Secret Prosecutors Add Charges Against Liew,” reports Bloomberg.
  • “Recent Non-Compete Case Highlights Pennsylvania’s ‘Worthless Employee Doctrine’ advises Jonathan Pollard for the non-compete blog. This poorly-named doctrine holds that an employer cannot enforce a non-compete against an employee that it just terminated for poor performance.
  • The Unintellectual Property Blog has a post about a recent software trade secret dispute in Delaware against Cisco. In ExpertUniverse v. Cisco, the court applied the California Uniform Trade Secret Act and dismissed ExpertUniverse’s claims because it failed to adequately describe its trade secrets and demonstrate misappropriation.
  • “Want to avoid a prosecution under the Economic Espionage Act? You might want to consult “Economic Espionage Act: Seven Tips to Close a Fast-Growing Compliance Gap” by Lauren M. Papenhausen and Benjamin Franklin of McDermott, Will & Emery, LLP for Bloomberg Law.
  • Looking for a primer on forensic computer examinations?  Then check out “Nuts and Bolts for Terms Commonly Used in Trade Secret Computer Forensic Investigations” by Jonathan Karchmer for Seyfarth Shaw’s Trading Secrets Blog.
  • “It takes a village to protect trade secrets,” advises Naomi Fine of Pro-Tech for Forbes.
  • “Protecting Your Closely Held Business,” recommends Peter Vilmos for Burr & Forman’s Trade Secrets Non-Compete Blog.
  • In “Trade Secrets for Sale,” Douglas Alexander proposes a robust and aggressive trade secret protection program for EBN.
  • In “A Little-Publicized Change in Patent Law on Secret Prior Art,” Paul F. Prestia details changes in the America Invents Act that may permit an inventor to preserve an invention as a trade secret indefinitely for Corporate Counsel.  For more on this issue of the newly revised section §102(a)(1), see my post last fall.

Cybersecurity Posts and Articles:

  • Lots of articles on the Obama Administration upping its calls for China to address the reported cybersecurity attacks.  The New York Times is reporting that “Cyberattacks Prominent in Obama Call With New Chinese President.” Also check out “U.S. Demands That China End Hacking and Set Cyber Rules,” also by The Times, and “Obama Aide Demands China Stop Hacking” by The Wall Street Journal.  The Journal also had an op-ed piece this week by John Wohlsetter entitled “Chinese ‘Hackers’ Is a Misnomer. They’re Spies.”  Finally, Todd Sullivan provides his thoughts and takes the Administration to task for taking so long to single out China.
  • “How to avoid being hacked: Strong passwords and other security tips” recommends Anick Jasdenun for SiliconValley.com

Computer Fraud and Abuse Act Posts and Cases:

  • Looking for an update of recent CFAA cases? Then check out Shaw E. Tuma’s excellent summary here.
  • “When leaving your job, make sure you do this if you really want to violate the Computer Fraud and Abuse Act!”, another fine post by Shawn Tuma.

Trade secret claims and patent law frequently intersect, most notably in the patent application context. A recent case out of the U.S. District Court for the Eastern District of Pennsylvania, Foster v. Pitney Bowes, 2013 U.S. Dist. LEXIS 17061 (Feb. 7, 2013), should provide a cautionary tale to any trade secret holder of the risks that accompany a patent application that might reveal those trade secrets. 

In Foster, U.S. District Court Judge Joel Slomsky found that the plaintiff’s patent application caused the information to be made public and extinguished any claim for trade secrecy. (A hat tip to Brian A. Hall for his post on this case in his blog, Unintellectual Property).

Background:  The plaintiff, Frederick Foster, alleged that he had invented a system that, for a fee, would allow users to present personal identification documents to a local U.S. post office that would allow their identity to be verified so that they could receive a virtual post.  Foster described his invention as the Virtual Post Office Box/Internet Passport powered by Global Registration and Verification (VPOBIP).
 
In May 2008, Foster mailed a description of VPOBIP to the U.S. post office and filed a provisional patent application for VPOBIP with the U.S. Patent and Trademark Office (USPTO) shortly afterwards. Curiously, Foster failed to secure a non-disclosure agreement from the U.S. post office for his discussions with the post office over his invention. The post office directed him to consult further with Pitney Bowes, and ultimately negotiations over VPOBIP fizzled. 

In June 2010, the USPTO issued a final rejection of Foster’s patent application for VPOBIP. In another mistake that came back to haunt him, Foster had failed to check off the box in his application to make a non-publication request, so the USPTO published the patent application on December 4, 2008.
 
In early 2011, Pitney Bowes launched a website, at volly.com, that Foster believed directly copied his invention and trade secrets. Foster then sued the U.S. post office and Pitney Bowes, alleging, among other things, that they had misappropriated his trade secrets for VPOBIP.
 
Holding:  Judge Slomsky dismissed Foster’s trade secret claims, reasoning that Foster had failed to adequately safeguard trade secrets because he did not secure a non-disclosure agreement (NDA)from the U.S. post office and because he failed to ask the USPTO not to publish his application. Although Foster claimed that the trade secrets were not disclosed in the patent application, Judge Slomsky found that these failures to safeguard his trade secrets were fatal.

Foster filed the case pro se, so there were some arguments that he could have made that might have salvaged his case, at least at the early stage of the proceeding. For example, at the time that he disclosed the information to the post office, the information had not yet been published by the USPTO. As a result, subsequent public disclosure of the patent application might not have been fatal because he could have argued that it was a trade secret at the time that it was allegedly misappropriated. However, the biggest problem he would have ultimately faced was the lack of a non-disclosure agreement with Pitney Bowes.

The Takeaway:  Foster made two fatal mistakes (1) he failed to get a non-disclosure agreement signed by the post office and Pitney Bowes before disclosing his confidential information; and (2) he failed to request non-publication of his patent application under 37 C.F.R. 1.213(a).

The most important takeaway, however, is that courts will always be suspicious of trade secret claims that arise from an invention that has been publicly disclosed in a patent application, especially now with the enactment of the America Invents Act (AIA). Indeed, in his opinion, Judge Slomsky noted that one of the goals of the AIA was greater emphasis on public disclosures to avoid “submarine” patent applications that might be kept out of view and suddenly emerge to disrupt the marketplace.

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as one or two that I missed over the past couple of weeks:

Trade Secret and Non-Compete Posts and Cases:

  • On Tuesday, the U.S. House of Representatives passed the Trade Secrets Clarification Act, 388 to 4, and the bill now goes to President Obama’s desk, hopefully for his signature, reports Robert Milligan and Jessica Mendelson for Seyfarth Shaw’s Trading Secrets Blog (Gene Quinn’s IPWatchdog also has a post on the bill). According to Robert, Jessica and Gene, the House can suspend its rules to address uncontroversial changes to law, provided 2/3 vote can be mustered. The Act was passed unanimously last month by the Senate in response to the U.S. Court of Appeals for the Second Circuit’s holding in U.S. v. Aleynikov (for more, see my posts on the Act and the Aleynikov decision).   
  • Speaking of Sergey Aleynikov, he has moved one step closer to getting his $2.4 million in attorneys fees reimbursed from the very employer from whom he was charged with stealing. According to Law360, U.S. District Court Judge Kevin McNulty expressed sympathy for Aleynikov’s position and denied motions for summary judgment filed by both sides, concluding that discovery was still needed. Employers may want to re-check their indemnification bylaws and rules and ensure that legal fees for defending against charges of theft from the company are carved out. Alison Frankel also has a post on the case in her On The Case Blog for Reuters. 
  • “Texas High Court Will Hear Russian Trade Secret Theft Case” reports Law360. The plaintiff, Moncrief Oil International, is asking the Texas Supreme Court to reverse the trial court’s dismissal of the case on personal jurisdiction grounds.
  • “Medical Device Industry Remains a Hotbed for NonCompete Cases,” reports Susan M. Guerette for Fisher & Phillips’ Trade Secrets and Non-Compete Blog.
  • Looking for a brush up on “Non-Compete Suits and TROs”? Check out Kenneth Vanko’s recent post in Legal Developments for Non-Competition Agreements.
  • “Microsoft, Motorola Want More Docs Sealed In Patent Row” citing trade secrets, reports Law360.
  • Another arbitration decision in the non-compete context is out, this time from Wisconsin, reports Epstein Becker’s Trade Secrets & Non-Competes Blog. In Engedal v. Menard, Inc., a Wisconsin Court of Appeals reversed a trial court’s finding that an arbitration provision was unconscionable because it had a non-compete provision.
  • “Ousted ISC Exec Can’t Use Broker’s Client Data, Court Rules,” again from Law360. The Texas Appellate Court found that investment firm ISC Group Inc. was entitled to a broader injunction in a trade secrets case against a former vice president to prevent him from using client data to solicit those clients to his new business.
  • “Indiana Court Reminds Us To Read Our Contracts And Protect Our Trade Secrets” notes Josh Durham in Poyner Spruill’s Under Lock & Key Blog.

Cybersecurity Articles and Posts:

  • “Find the Weakest Software Link Before Hackers Do” warns Judy Selby for Corporate Counsel.
  • “Defending against cyber-attacks: Can companies “hack back” against their attackers?” asks Todd Taylor for Inside Counsel.
  • “Ex-IBM privacy officer on preparing for the future of cybersecurity” writes Catherine Dunn for Corporate Counsel.
  • “The Legal Implications of BYOD: Preparing Personal Device Use Policies” from the Information Law Group.

News You Can Use:

  • “What Instagram’s New Terms of Service Mean for You” advises The New York Times Bits Blog.

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well one or two that I missed over the past couple of weeks:

 
Noteworthy Trade Secret and Non-Compete Posts and Cases: 

  • A California federal jury has ordered Best Buy Co. Inc. to pay $22 million for unjust enrichment after finding the retailer willfully stole TechForward Inc.’s trade secrets and breached a confidentiality agreement concerning an electronics buy-back program, reports Law360. Best Buy’s efforts at an electronic buy-back program had been unsuccessful, so it approached TechForward, signing a NDA in 2008, and collaborated on a pilot program that rolled out in April 2010 in a dozen Best Buy stores in southern California. Several months after the pilot launch, however, Best Buy allegedly ended the relationship “hastily and unexpectedly,” saying it planned to move forward on a buy-back program by itself, according to TechForward. When Best Buy unveiled its national program in January 2011, it was “nearly identical in its key components to TechForward’s,” the suit said.
  • The arbitratability of non-compete and trade secret disputes are in the news this week.  Josh Salinas has an excellent post for Seyfarth Shaw’s Trading Secrets Blog on a recent federal decision out of California affirming that an arbitration provision may properly exclude injunctive relief for trade secret and similar emergency proceedings, in my view a correct result. (Anyone who has had to deal with the delays accompanying arbitration should know this and should check out one of my first posts on why companies, especially small companies, should make sure that they carve out injunctions for trade secret and IP disputes from any arbitration provision).
  • Similarly, a non-compete arbitration/case out of Oklahoma has made its way to the U.S. Supreme Court, which has decided that any decision as to the enforceability (or validity) of the non-compete should be made by the arbitrator, not the court. Both Kenneth Vanko’s Legal Developments in Non-Competition Agreements Blog and Epstein Becker’s Trade Secrets & Noncompete Law Blog have posts on this decision. Again, I cannot emphasize this enough: if you truly want to screw up your own trade secret and non-compete case, make sure that you have an arbitration provision that does not clearly carve those disputes out. You have been warned.
  • “Chinese Professor Asserts Chinese Companies are Victims of Unfair Espionage Laws – And Then Argues China Should Adopt Similar Laws To Avoid Victimization,” writes Todd Sullivan’s Trade Secrets & Employee Defections Blog.
  • “Will Tolling Provisions Gain Popularity?”  in non-competes asks Jackson Lewis’ Non-Compete & Trade Secrets Report Blog.
  • In a decision that will have ripple effects in many trade secret and IP disputes, the federal magistrate in the Apple v. Samsung case has ordered that Apple’s license with HTC be produced to Samsung in connection with the discovery for the upcoming permanent injunction hearing.
  • For the latest on IP ownership agreements between employers and employees, check out “Ex-IBM Worker Can’t Get High Court Review In Patent Row” in Law360.
  • Healthcare non-competes appear to be rise, sparking an article “Negotiation Tips For Non-Compete Clauses In Physician Employment Contracts” by the Pennsylvania Medical Society.
  • “How Public Interest May Limit Enforcement of a Non-Compete Agreement” advises John Paul Nefflen for Burr & Forman’s Non-Compete Trade Secrets Blog.
  • For “Common Defenses to Enforcement of a Non-Compete Agreement in Florida,” see Fox Rothschild’s South Florida Trial Practice Blog.
  • Russell Beck’s Fair Competition Law Blog has issued its always superb and comprehensive monthly “Issues and Cases” Update which has a wealth of information. If there is one link to check out this week, it is this one.
  • For more on the recent Trade Secret Clarification Act by the U.S. Senate, see Ryan Davis’ article, “Senate Bill Could Bring More Criminal Trade Secrets Cases” for Law360. My post on the recent bill can be found here.

Computer Fraud & Abuse Act Posts and Articles:

  • Are you in the Fourth Circuit or Ninth Circuit and looking for a federal statute to protect your trade secrets? Then see “An Employee Downloaded Our Trade Secrets. Can I Make A Federal Case Of It, Part II” in Poyner Spruill’s Under Lock & Key Blog. The post analyzes the viability of the EEA and NSPA for potential claims.

Cybersecurity Articles and Posts: 

  • “When It Comes to Security, We’re Back to Feudalism” laments Bruce Schneier for Wired.
  • “Patent trolls and their effect on security” writes Eugene Kaspersky for SC Magazine.
  • For a good summary of President Obama’s recent cybersecurity directive, see The Washington Post’s article, “Obama signs secret directive to help thwart cyberattacks.”
  • “When Banks are Left on the Hook for Cybertheft” reports Joe Palazzolo for The Wall Street Journal’s Law Blog. 

News You Can Use: 

  • “The Rising Science Of Social Influence — How Predictable Is Your Online Behaviour” advises Ferenc Huszár for TechCrunch.

Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well one or two that I missed over the past couple of weeks: 
 
Noteworthy Trade Secret and Non-Compete Posts and Cases: 

  • A Kansas City jury has awarded $31.3 million to Hallmark Cards in a trade secret dispute against Boston-area private equity firm Monitor Clipper Partners LLC, reports Todd Sullivan’s Trade Secrets & Employee Defections Blog. According to Todd, the jury awarded approximately $21.3 million in compensatory damages and $10 million in punitive damages to Hallmark.  Hallmark had claimed that Monitor violated a NDA and misappropriated its trade secrets in connection the private equity firm’s bid for a rival of Hallmark’s.
  • The U.S. Department of Justice (DOJ) is claiming that eBay entered into an improper agreement with Intuit to not compete for the other’s employees, reports The Wall Street Journal.  Kenneth Vanko also has a post on this filing; he reports the DOJ has sued eBay under the Sherman Act, claiming that the no-hire agreement is both illegal under a per se and rule of reason analysis. 
  • The former CBS producers accused of stealing trade secrets from CBS’s “Big Brother” reality show have filed an action seeking a declaration that CBS has waived its right to pursue arbitration against them for their alleged misappropriation.  Alleging that CBS has waged the “legal equivalent of war” against them, the former producers are arguing that CBS waived its arbitration rights when it sought and failed to get a TRO attempting to restrain the producers from launching the show “Glass Houses.”  For more on this dispute, see my earlier post.
  • Does “friending” a customer on Facebook amount to a violation of a non-solicitation agreement? Not according to a Massachusetts Superior Court in Invidia v. DiFonzo, which recently found that merely having friends who are also customers, without more, does not constitute solicitation. Evan Brown’s Internet Cases and Eric Goldman’s Tech & Marketing Blog both have posts on this case. For more on this issue of social media and solicitation, see my post last year on the TEKSystems v. Hammernik case out of Minnesota.
  • Can’t get enough about China being bashed about its theft of trade secrets?  Then check out Press Millen’s post for Womble Carlyle’s Trade Secrets Blog.  Press cites to a recent article from Foreign Affairs that concludes that China is the number one purveyor of corporate espionage today.
  • The Trade Secrets Institute has a nice post about whether the increasing number of disputes arising out of the supposed misappropriation of “ideas” for television reality shows should include trade secrets claims.
  • “How to Fight a Non-Compete Agreement” advises Pamela Chung for the upcounsel blog.
  • Anticipating a dispute with a California employee over a non-compete? Then you should check out the post entitled “Enforcing Non-Compete Agreements Against California Employees — Part 1” by Shepard Davidson and Renee Inomata for The In-House Advisor.
  • Two of my favorite trade secret/non-compete bloggers, Kenneth Vanko and Rob Dean, have combined for a Podcast that can be found on Kenneth’s Legal Developments in Non-Competition Agreements Blog.
IP and Technology Posts and Articles of Note: 
  • Criticism of the U.S. patent system continues to swell.  Wired had an opinion piece aptly named “The Patent Problem.”  And in Forbes, Robert Jordan has penned an article, “The New Patent Law: End of Entrepreneurship?” that expresses concern that large companies will be favored under the new “first to file” patent system because they have the resources to muscle through more patent applications than smaller innovators.
Cybersecurity Articles and Posts: 
  • In a cover story for Wired, Mat Honan argues that the password is effectively useless.  In “Kill the Password: Why a String of Characters Can’t Protect Us Anymore,” Mat details how hackers disrupted his life last summer.  On a similar topic, Mat also has criticized The New York Times in an article entitled, “The New York Times Is Wrong: Strong Passwords Can’t Save Us.”  The Times article in question, “How to Devise Passwords that Drive Hackers Away,” had apparently been its most popular of the past week.
  • “Security researcher found guilty of conspiracy and identity fraud in ‘hackless’ AT&T iPad hack” reports The Verge.
  • “Your Phone Has Been Hacked. Here’s What You Need to Know” advises Elise Ackerman for Forbes.
  • “Send Document, Get Breached? Tightening Security in Document Exchanges” reports Charlie Magilato for the attorney at work blog.
  • “Cybersecurity Act of 2012 Dies Again in the Senate” reports Misty Blair for Seyfarth Shaw’s Trading Secrets Blog.
News You Can Use: 
  • Want to make good decisions at critical junctures? Then check out Joel Peterson’s recent article, “Decide or Perish: How to make the right call” for Forbes.