It was another busy week in the trade secret, non-compete and cybersecurity world:

Trade Secrets and Non-Competes:

  • On Tuesday, a federal district court enjoined Merz Pharma GmbH from selling its cosmetic drug, Xeomin, on the eve of its nationwide launch because of Merz’s misappropriation of Allergan’s trade secrets for Botox. Bloomberg is reporting that Central District of California Judge Andrew Guilford cited “dramatic examples of misappropriation” of Allergan’s proprietary information, saying he was troubled that some Allergan employees signed contracts with Merz and then delayed giving final notice to begin e-mailing company data to themselves. Judge Guilford issued the ruling after a nine-day bench trial and indicated he would issue a more detailed opinion and order on March 9 providing his reasoning and further detail on the injunction. 
  • Mattel has filed its appellate brief in its appeal of the $310 award against it in its trade secret dispute with MGA and apparently abandoned its copyright claim against MGA. Instead, Mattel focused on challenging the attorneys fees award, which it characterized as “improper, bloated, excessive, unreasonable or even false” and “unnecessary,” as well as the jury’s calculation of damages for each of the trade secrets it found Mattel misappropriated.
  • Former Dupont engineer Tze Chao pleaded guilty to one charge of conspiracy to commit economic espionage in the unfolding criminal prosecution of the Chinese state-owned company, Pangang Group. Chao, 77 years old, was with DuPont for 36 years before being approached by Pangang and Walter Liew to review blueprints that were apparently stolen from DuPont for a titanium oxide plant. He is expected to cooperate with the prosecutors.  For more information on the indictment of Pangang Group, check out my post from last month.
  • The Virginia Supreme Court has issued a ruling that has good news and bad news for trade secret plaintiffs.  Seyfarth Shaw’s Trading Secrets Blog has a thorough summary of the opinion, Collelo v. Geographic Services, which holds that claims under the Virginia Uniform Trade Secrets Act are not confined to competitors (in this case, a former customer engaged in misappropriation) and which also holds that a plaintiff has to establish different theories or categories of damages if it asserts additional contractual or tort claims.
  • Seyfarth Shaw’s Trading Secrets Blog has a second topical post about a case out of Massachusetts that presents yet another “what not to do” parable with non-competes and employment agreements after a merger.  In Grace Hunt IT Solutions, LLC v. SIS Software, LLC, a Massachusetts Superior Court refused to enforce the non-competes of three former employees because the employer had materially changed their compensation structure after a merger.
  • For those interested in further analysis on the impact of the American Invents Act on trade secrets, check out the IP Watchdog’s recent post “Prior user rights and the incentive to keep innovations secret.”  In a guest post, Nicholas Mattingly of Mattingly & Malur PC argues that “§ 273 realigns this constitutional foundation to one favoring secrecy” because “Prior user rights create an incentive for prior users to keep their technology secret by eliminating any liability on behalf of themselves to a subsequent patentee.” My colleague James Schweickart and I have each written several posts on this issue and my take is that it is way too early to tell whether that incentive is significant enough to truly cause that kind of shift. 


  • The big news this week was the arrest of 5 hackers associated with Anonymous, as well as reports that one of its ringleaders, a fellow known as “Sabu,” had snitched on his partners in crime. The New York Times Bits Blog has a fine update on these developments.
  • In a sobering post entitled “Social Hackers: You Can Only Hope to Contain Them” on Forbes, Patrick Taylor writes on the steps that CIOs and other business professionals can take to minimize social engineering and cyberphishing attacks.
  • FBI Director Robert Muehler is on record now as believing that cyber-threats are becoming the No. 1 threat to U.S. security, surpassing even terrorism.

News You Can Use:

  • To avoid “Six simple online security mistakes,” check out Dave Thiers’ article on Forbes.