07262012Greetings from Rehoboth Beach!  Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week:
Noteworthy Trade Secret and Non-Compete Posts and Cases: 

  • The Northern District of California has ruled that federal authorities have not properly served Chinese defendants in the DuPont/Pangang Group criminal proceeding arising out of the alleged theft of trade secrets for DuPont’s titanium dioxide process. The district court found that service of Pangang’s U.S. subsidiary (of which it owns 75%) did not constitute proper service as there was insufficient evidence that Pangang controlled that affiliate (can’t say that I understand that reasoning but will see if I can get a copy of the court’s opinion). Prosecutors have until Aug. 16 to report back to the court on how they intend to proceed; it is being reported that this is a significant blow to the prosecution. As readers of this blog may recall, this case is one of the highest profile cases yet brought under the Economic Espionage Act because Pangang Group is owned by the Chinese government and one of the parties indicted by the government. (A special thanks to Janet Craycroft of Intel for reporting this development to me). 
  • Speaking of trade secrets and China, a recent survey of Chinese executives shows that 2/3rds of them have non-competes. It would be interesting to see how Chinese courts have responded to efforts to enforce them.
  • Pharmaceutical and medical device companies: Be careful what you share with the FDA as the Medical Device and Diagnostic Industry Blog is reporting that the FDA is now being accused of having improperly released trade secrets that were provided to it in an article, “How FDA Dumped Device Secrets in Cyberspace.” The FDA has also taken a beating for allegedly spying on a number of its whistle blower employees whom it believed were disclosing trade secrets; The New York Times had a recent editorial, “The Spy Hunt for Whistle-Blowers,” criticizing the FDA for those efforts.
  • It’s not all “touchy feely” in the organic dairy market, as the gloves have come off in a trade secrets dispute between Horizon Organic and rival Organic Valley over the hiring of a former employee of Horizon. The employee, Larry Hansen, was dairy operations manager for milk quality and supply at Horizon for four years before taking a similar job at Organic Valley. Horizon claims that Hansen had access to its supplier list, which it keeps confidential, as well as its purchasing price “tolerances and strategies” and sales demand projections, which it also safeguards. Horizon believes that he is violating a non-disclosure agreement that he signed while at Horizon. 
  • What is the status of non-compete reform legislation in Massachusetts? Brian Bialas has an update in Foley & Hoag’s Massachusetts Non-Compete Blog.
  • Memo to Florida employers hiring new employees with non-competes: Do NOT agree to indemnify them for any potential claims or litigation, warns Burr & Forman’s Trade Secrets & Non-compete Blog.
  • For those in Connecticut, Daniel Schwartz’s Connecticut Employment Law Blog has a practical post “Drafting the Restrictive Covenant to Protect Your Interest” under Connecticut law. 
  • Electronic discovery and litigation holds can be a prominent part of any trade secret case, so defendants are breathing a sigh of relief as the U.S. Court of Appeals for the Second Circuit has rejected District Court Judge Scheindlin’s ruling that a failure to issue a litigation hold is reckless per se.  Peter S. Vogel’s Internet, Information Technology and e-Discovery Blog details this recent ruling in Chin v. Port of Authority of New York, overturning a decision by Judge Scheindlin that has been criticized as utopian and impossible to meet.
  • Did the CEO of an Irish pharmaceutical-services company breach a non-disclosure agreement when he publicly stated that a rival was on the block? The Wall Street Journal is reporting this imbroglio in an article entitled, “Study in How Not to Keep a Deal Secret.”

Computer Fraud and Abuse Act Posts:

  • Another district court from Michigan has adopted the reasoning of the Ninth Circuit in U.S. v. Nosal, reports Jessica Mendehlson in Seyfarth Shaw’s Trading Secrets Blog. In Dana Ltd. v. American Axle & Mfg. Holdings, the district court found that several former employees did not exceed their authorized access when they erased a number of files that would have presumably shown that they were taking their employer’s trade secrets with them.  

Cybersecurity Posts and Articles: 

  • For more on the pending cybersecurity bill, see The Wall Street Journal’s article, “Cyber Bill Relies on Voluntary Security.” The article indicates that the Obama administration is not happy with the present bill as Republican House members are resisting giving any further control over cyber issues to the Department of Homeland Security.
  • From The New York Times Bits Blog, “Hackers Demonstrate a Rising Vulnerability of Smartphones” according to experts speaking at the Black Hat security conference in Las Vegas.

News You Can Use:

  • Suffering from “Digital Overload?” The New York Times has some advice on how to take a deep breath and take a step away from your devices. Baby steps, people, baby steps.