Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well as perhaps one or two that I missed over the past few weeks:
Noteworthy Trade Secret and Non-Compete Posts and Cases:
- Fuhu, Inc., a child-focused software developer has sued Toys “R” Us Inc. in federal court in San Diego, claiming the retailer stole its strategy for selling an Android-powered computer tablet for kids, reports The Wall Street Journal. Toys “R” Us has announced plans to sell a proprietary tablet for children called the Tabeo, a product Fuhu alleges closely resembles its own device, the Nabi. Each product features a Wi-Fi-enabled tablet with a soft protective frame. It is unclear exactly what trade secrets were stolen, however, and it appears that Fuhu is peeved that it had a marketing agreement with Toys “R” Us that was ignored for a year while it decided to launch its own competitive product. Both Todd Sullivan and Poyner Spruill’s new Under Lock & Key Blog have posts about the recent filing.
- The malicious trade secret prosecution case brought against Latham & Watkins earlier this year has been dismissed as untimely, Law360 is reporting. In June 2008, a Santa Barbara judge ruled that a trade secrets case filed by Latham on behalf of Flir Systems Inc. against former employees William Parrish and Timothy Fitzgibbons was brought in bad faith for an anti-competitive motive. The court in the second case against Latham concluded that the statute for malicious prosecution was one year and that the time to bring the claim expired in August 2010.
- Georgia’s Supreme Court has issued an important preemption decision under the Georgia Uniform Trade Secrets Act, advises Neil Wienrich in Berman Fink Van Horn’s Georgia Non-Compete & Trade Secret News Blog. In Robbins v. Supermarket Equipment Sales, LLC, 290 Ga. 462, 722 S.E.2d 55 (2012), the court found that a general injunction arising out of the same facts as a dismised claim under Georgia’s UTSA was preempted by that statute, and that in the absence of a trade secret claim, the injunction was improper.
- Todd Sullivan is reporting that a split panel for the U.S. Court of Appeals for the Fourth Circuit has stayed Judge Payne’s twenty-year injunction forbidding Kolon from manufacturing Heracron. In its motion seeking a stay of the injunction, Kolon argued, among other things, that the injunction would effectively kill Kolon’s Heracron business, forcing it to shut down production lines and cease sales across the globe. Law360 quotes Kolon as having argued that “The district court took nearly a year to decide whether to issue a permanent injunction. A comparable stay to allow for this court’s orderly consideration of the appeal is clearly warranted. The alternative would be the death knell for Kolon’s Heracron business, even if Kolon ultimately prevails on appeal.”
- A new sheriff is in town, reports Corporate Counsel, as Yahoo’s General Counsel Ron Bell is making clear to employees that leaking confidential information is not only “uncool” but a violation that can get an employee fired and even prosecuted.
- Morgan Stanley must pay Fidelity in a solicitation dispute, reports Reuters. In a recent FINRA arbitration, Morgan Stanley and two brokers it hired from Fidelity were ordered to pay over $500,000 in damages and attorneys fees, including nearly $82,000 in punitive damages.
- “Access to Courts: Federal Circuit Issues Preliminary Rejection of Judge Koh’s Stance on Open Access to Trial Documents” notes a post in the Patently-O Blog.
- “Hiring an Employee Who Has a Non-Compete: Proceed With Caution!” warns Neal Buethe for Minnesota Employer.com.
- Poyner Spruill’s has launched its new trade secrets blog, Under Lock & Key. The new blog has plenty of new posts that range from practical advice concerning NDAs to breaking news (as detailed above) about new trade secret filings. I would encourage readers to bookmark it.
Computer Fraud and Abuse Act Posts and Articles:
- Shawn Tuma’s Computer Data Privacy and Social Media Law Blog reports on a case out of the U.S. District Court for the Southern District of Ohio, Freedom Banc Mortgage Services, Inc. v. O’Harra, 2:11-cv-01073 (S.D. Ohio Sept. 5, 2012), applying some straightforward rules under the CFAA. Most notably, U.S. District Court Judge Gregory Frost held that observing data constitutes “obtaining data” under the statute. Brian Hall, writing for Porter Wright Morris & Arthur’s Employer Law Report Blog, also has a post on the decision.
Cybersecurity Posts and Articles:
- The Steptoe Cyberblog has a thought-provoking post on cybersecurity, positing that the best defense is a good offense. In “Rethinking Cybersecurity, Retribution and the Role of the Private Sector,” Stewart Baker persuasively argues that a defense-based strategy is doomed to fail and that the best approach is one focused on identifying and punishing the culprits.
- “Chinese-made laptops’ latest feature: Pre-installed viruses” warns RT.
- “Insider threat behavior not just actions” writes Dan Velez, director of defense programs for Raytheon Oakley Systems, for SC Magazine. Dan advises that improved security technology provides an illusory sense of accomplishment, and that until companies fully understand the human component (motivation, behavior, etc.), their approach to security will remain flawed and incomplete.
- “10 Recommended Steps for Reducing Cyber Risk” from Reed Smith’s Global Regulatory Enforcement Blog.
News You Can Use:
- “For the Absent-Minded, a Few Forget-Me-Nots” from The New York Times Personal Tech Blog.