Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well one or two that I missed from the previous week:
Noteworthy Trade Secret and Non-Compete Articles, Cases and Posts:
- A San Jose jury has awarded $112 million to networking equipment supplier Brocade Communications Systems Inc., finding that A10 Networks Inc. stole its trade secrets and infringed its intellectual property to start a competing business with ex-Brocade workers, reports Law360. Brocade’s press release also indicated that Brocade had asserted claims for patent and copyright infringement that covered all of A10’s AX Series load balancing server products.
- In a high profile healthcare dispute, Renown Heath has reached an agreement with the Federal Trade Commission and the Nevada Attorney General’s office over its non-competes with 10 staff cardiologists it formerly employed in Nevada. Renown had cornered about 97% of the cardiology market and its acquisition of previously independent cardiology groups was perceived as likely to result in price increases to health plans and individuals paying for cardiology services in the area. The settlements will allow those cardiologists to join competing practices without penalty.
- Many settlement agreements and consent decrees have non-disparagement provisions, but are those provisions enforceable? According to Berman Fink Van Horns’ Georgia Non-Compete and Trade Secret News Blog, they may not. In Sesolinc Group, Inc. v. Metal-con Inc., 2012 WL 2119768 (S.D. Ga. June 11, 2012), a Georgia federal court declined to approve a consent decree presented by the parties because it might entangle the court in First Amendment issues such as potentially enforcing an order forbidding constitutionally-protected commercial speech.
- What are holdover clauses and are they enforceable? Kenneth Vanko answers both questions in his recent post on the South Carolina Supreme Court’s decision in Milliken & Co. v. Morin upholding the enforceability of these provisions, which are designed to protect the ownership and assignability of inventions created with an employer’s confidential information after an employee’s departure.
- Another court has signalled that circumstantial evidence of misappropriation is insufficient to overcome an employee’s denials, advises Epstein Becker’s Trade Secrets & Noncompete Blog. In a Georgia appellate decision, Contract Furniture Refinishing & Maintenance Corp. of Georgia d/b/a The Refinishing Touch v. Remanufacturing & Design Group, the court ruled that while the plaintiff TRT produced strong circumstantial evidence that the defendant Deutsch may have misappropriated or disclosed its trade secrets, the “evidence is also consistent with the direct evidence that Deutsch did not in fact do so. The circumstantial evidence therefore has no probative value, and TRT cannot demonstrate a genuine issue of fact with regard to its misappropriation of trade secrets claim.”
- Indiana businesses better have reasonable time, subject matter and geographic limitations in their confidentiality agreements or they may not be enforceable, warns Seyfarth Shaw’s Trading Secrets Blog.
- If you have clients in the financial and investment communities, you should read “For some firms, brokerage-hiring protocol no longer holds value” by Dan Jamieson for Investment News.
- Interested in the “State of Texas Non-Competes”? Consult Rob Radcliffe’s Smooth Transitions Blog, where he has posted an article he recently wrote on the matter (the news is good for employers).
- E. Patrick Ellisen and Daniel T. McCloskey have advice for “Protecting Confidential Information and IP Amid Employee Mobility” in an article for Corporate Counsel.
- At long last, something upon which members of Congress can agree. Last week, the U.S. House of Representatives voted to approve H.R. 6029, the Foreign and Economic Espionage Penalty Enhancement Act of 2012, which increases the penalties under the Economic Espionage Act from the statutory maximum for economic espionage and the theft of trade secrets for the benefit of a foreign entity to 20 years from 15, raises the fine that can be imposed to a maximum of $5 million from $500,000, and adds criminal penalties for passing trade secret information that would benefit a foreign government. A companion bill, S. 678, with similar language is under review by the Senate.
Computer Fraud and Abuse Act Posts:
- Foley & Lardner’s Privacy & Security Source Blog is not happy about the recent decisions in Nosal and WEC Carolina in its post “De-CFAA-nating Federal Law: Recent Appeals Courts Decisions Weaken Statutory Protections Against Unauthorized Use of Electronic Data.” For the views of other trade secrets blogs on the WEC Carolina decision, see Seyfarth Shaw’s post, Fisher & Phillips’ post, Epstein Becker’s post and Littler’s post (my take can be found here).
- A California federal court has allowed a CFAA claim arising out of the violation of a computer use policy to go forward because the policy limited the access of the former employee, reports Eric Goldman in his Technology & Marketing Law Blog. In Weingand v. Harland Financial Solutions, C 11 3109 EMC (N.D. Cal.; June 19, 2012), the Northern District found that the reasoning in U.S. v. Nosal did not apply because the policy in question prohibited the access at issue.
Cybersecurity Posts and Articles:
- For those interested in finding out what sank the Cybersecurity Act of 2012, there are plenty of opinions from which to choose. Steptoe & Johnson’s Cyberblog and Peter S. Vogel share their thoughts. Shockingly, The New York Times blames the Republicans while The Wall Street Journal blames the Democrats. And, as always, Catherine Dunn of Corporate Counsel has a fine piece entitled, “A Long, Hot Summer for Corporate Cybersecurity.”
- “Protect your IP: hashing your passwords” counsels Scott Flaherty of Briggs and Morgan.
- “‘Spearphishing’ Fraud Hooks More Victims: How cybercriminals disguise themselves as your bank, your boss, or even the IRS” advises Jen Weiczner of SmartMoney.
News You Can Use:
And The New York Times Bits Blog provides some advice on “What You Can Do to Better Protect Your Apple Account.”