Here are the noteworthy trade secret and restrictive covenant posts from September and some of October:

Legislative Developments
  • Massachusetts is once again contemplating multiple bills regarding non-competes as well as a possible adoption of what appears to be the DTSA advises Russell Beck in his Fair Competition Blog.  Russell and his team also have summaries of legislative activity in Maryland, Maine, Michigan, New York, Oregon, Pennsylvania, Washington and West Virginia, among others.

Continue Reading Monthly Wrap Up (October 27, 2017): Noteworthy Trade Secret and Restrictive Covenant 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:

  • “Connecticut Governor Vetoes Noncompete Statute Passed By Legislature,” reports Daniel P. Hart for Seyfarth Shaw’s Trading Secrets Blog. Last Friday, Governor Dannel P. Malloy vetoed Public Act No. 13-309, sending the bill to the legislature with a letter noting his concerns about a lack of clarity in the final version of the bill. The bill essentially required employers to provide some reasonable notice of a non-compete to an employee or prospective employee.  David Popick has a post for Epstein Becker’s Trade Secrets & Noncompete Blog, as does Russell Beck in his Fair Competition Blog.
  • “Texas Appeals Court Guts $40M Energy Trade Secret Verdict” against Southwestern Energy Group, reports Law360.
  • “Elevator Sales Company and Former Employee in Interesting Non-Compete Fight,” reports Jonathan Pollard in the non-compete blog.
  • “Are WWE Wrestling Results Trade Secrets?” asks Eric Ostroff in his Trade Secrets Protection Blog.
  • “Recent Conflicting Decisions Make It Potentially Easier and Harder to Enforce Non-Competition and Non-Solicitation Covenants,” advises Choate Hall & Stewart’s Employment and Benefit Group for JDSupra.
  • “Using Covenants Not to Compete in the Health Care Industry Part 1 – Understand the Basics,” advises Lee A. Spinks from Poyner Spruill.
  • And while on the topic of non-competes and doctors, “Judges giving departing doctors new leverage,” reports Claire Bushey for Crain’s Chicago Business.
  • “Restaurant Wars: Restrictive Covenants for Chefs & Tandoori Chicken Tikka,” reports Daniel Schwartz for the Connecticut Employment Law Blog.
  • “California officials wrestle with handling trade secrets on fracking,” reports The Los Angeles Times.
  • “Benefits of Early Discovery in Defending Trade Secret Misappropriation Claims,” advise Brent J. Gurney, Joshua T. Ferrentino and Alexander B. White for The New York Law Journal.
  • “Factors to Consider in Cross-Border Trade Secret Protection,” recommends The IP Exporter.
  • “Smoking Gun or Blowing Smoke? Five Tips to Make Sure That Computer Forensic Evidence of Trade Secret Theft Is What You Think It Is,” advise Thomas Gray and Elizabeth McBride for Orrick’s Trade Secrets Watch.
  • “My Issue With PRATSA: The Rule of Lenity,” argues Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • “Please, Do Not Trust Your New Employer to Interpret Your Non-Compete Clause,” pleads Laura Ellerman for Frith & Ellerman’s Virginia Non-Compete Law Blog.
  • “Money, Money, Money: Top 10 Trade Secret Verdicts,” reports Rob Shwartz and Cam Pham for Orrick’s Trade Secrets Watch.
  • “Five Things to Consider When Hiring an Employee From a Competitor,” recommends Benjamin Fink for Berman Fink Van Horn’s Georgia Non-Compete & Trade Secrets Report Blog.

Cybersecurity Posts and Articles:

  • “U.S., Firms Draw a Bead on Chinese Cyberspies,” reports The Wall Street Journal. This fascinating articles details the recent cooperation between the Obama Administration and various technology and internet companies.
  • “Nations Buying as Hackers Sell Computer Flaws,” reports The New York Times.
  • “Cybersecurity Pros Call For Federal Breach Notification Law,” advises Law360.

05022013Here 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:

  • “Can Business Relationships Be Trade Secrets? VA Federal Court Says No” advises Eric Ostroff in his Protecting Trade Secrets Blog. In Cablecom Tax Services v. Shenandoah Telecomms. Co., U.S. District Court Judge Michael Urbanski dismissed a tax consultant’s trade secrets claim against its telecommunications customers, reasoning that the consultant’s alleged relationships with tax authorities, a  tax-law “accounting system,” and its ability to negotiate property tax discounts did not qualify as protectable trade secrets under Virginia’s Uniform Trade Secrets Act. Scott A. Schaefers also has a post on this case for Seyfarth Shaw’s Trading Secrets Blog.
  • And while we are on the topic of trade secrets cases in Virginia, are you looking for a primer on the epic DuPont v. Kolon case? Then check out the superb post analyzing DuPont’s case by Eulonda Skyles and Michael Spillner for Orrick’s Trade Secrets Watch Blog.
  • Speaking of DuPont and Kolon, “Kolon Succeeds in Getting Its Trade Secret Theft Arraignment Postponed,” advises Todd Sullivan in Sullivan’s Trade Secrets Blog.
  • “Ex-Advanced Micro Workers Can’t Shake Trade Secrets Suit,” reports Law360 and Bloomberg. For more on the AMD trade secrets dispute, see my post from last month on the recent preliminary injunction restraining those same employees from misappropriating AMD’s trade secrets.
  • “Newscaster tripped up by Non-Compete,” reports Dan Frith for Frith & Ellerman’s Virginia Non-Compete Law Blog.
  • “It’s Not Just for Patents Anymore: Using the ITC to Combat Theft of Trade Secrets,” recommends Mark Memelstein and Misasha C. Suzuki for Orrick’s Trade Secrets Watch Blog.
  • “Hey, I Thought We Had An Agreement: California Appellate Court Allows Party To Seek Attorney’s Fees In Trade Secret Case,” exclaims Paul Henson in a guest post for Seyfarth Shaw’s Trading Secrets Blog.
  • Jason Cornell of Fox Rothschild has another post comparing different state’s non-compete laws, this time “A Comparison Of Illinois And Florida Law Governing Non-Compete Agreements,” for Mondaq.
  • “UK Supreme Court Rules on Case Involving Misuse of Trade Secrets by Former Employee,” reports Ezra Steinhardt for Covington’s Inside TechMedia Blog.
  • Jay Yurkiw of Porter Wright continues to churn out fine posts on e-discovery issues relevant to trade secret and non-compete disputes. For his latest, see “Court Relies on Proportionality to Deny Inspection of Defendant’s Computers, Cell Phones and Email Accounts” for Porter Wright’s Technology Law Source Blog.
  • “Deter Cyber Theft Act Would Augment Federal Policy Against Industrial Espionage,” advises Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • Interested in the interplay between “Liquidated Damages and Non-Competes”? Then check out Devin C. Dolive’s post for Burr & Forman’s Non-Compete Trade Secrets Law Blog. 

Cybersecurity Posts and Articles:

  • “Outside Law Firm Cybersecurity Under Scrutiny,” advises Catherine Dunn for Corporate Counsel.
  • “China’s Cyber Stonewall: Beijing won’t stop until it pays a price for its Internet thievery,” thunders The Wall Street Journal.
  • “How Vulnerable is Your Company to a Cyber Breach?” ask Clark Schweers and Jeffrey Hall for Corporate Counsel.
  • “What If China Hacks the NSA’s Massive Data Trove?” ponders Conor Freidersdorf for The Atlantic.
  • “Could Overreaction to Cybersecurity Threats Hurt Transparency at Home?” worries David S. Levine for Slate.

Computer Fraud and Abuse Act Posts and Cases:

  • In an initial skirmish that will inevitably lead to a lawsuit against the prosecutors in the Aaron Swartz CFAA case, “Judge Rejects Aaron Swartz’s Estate’s Request to Release Names of Individuals Involved in his Prosecution,” reports Hayes Hunt in the From the Sidebar Blog.

01102013Here 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:

  • In yet another non-compete case involving a physician, an Illinois appellate court has affirmed a trial court’s rejection of a covenant not to compete because the employer, a medical clinic, lacked a protectible interest in the patient base at issue. Jeff Glass reports on the case, Gastroenterology Consultants of the North Shore, S.C. v. Meiselman, M.D., et al., for SmithAmundsen’s Labor and Employment Law Update. According to Jeff, the following facts caused the court to side with the doctor: prior to forming the corporation, he practiced for a decade in the area; after forming the clinic, he continued treating these patients and personally billed them, as opposed to the clinic; the clinic did not help him with advertising or marketing; and finally, his compensation depended on his independent practice.
  • “U.S., China Aim To Curb IP Theft Standoff With Talks” reports Law360.
  • Looking to protect your trade secrets under Chinese law? Then consult “Chinese Translation: Protecting Trade Secrets in China Requires Knowing Complex Layers of Laws and Practices,” by Mimiao Hu, Shelley Zang and Xiang Wang for Orrick’s Trade Secrets Watch.
  • “Former engineer at Bergen County based company charged with stealing trade secrets,” reports NewJersey.com. Ketankumar “Ketan” Maniar planned to relocate to India with trade secrets stolen from his employer, Becton, Dickinson and Company, U.S. Attorney Paul J. Fishman said.
  • For companies looking for a trade secrets lawyer, Kenneth Vanko has some fine practical advice, “The Employee’s First Client Meeting,” in his Legal Developments in Non-Competition Agreements Blog.
  • In the sad but true column, “(Practically) No Comment: White House Plea for Public Input on Trade Secret Theft Draws 13 Responses advise L. Kieran Kieckhefer and Warrington Parker for Orrick’s Trade Secrets Watch Blog. For 2 of the 13 responses, see Peter Torren’s opinion here and my submission here.
  • “New Oklahoma Law Clarifies Enforceability of Non-Solicitation of Employee Covenants” reports Daniel Joshua Salinas for Seyfarth Shaw’s Trading Secrets Blog.
  • Jason Cornell of Fox Rothschild provides “A Comparison Of New York And Florida Law Governing Non-Compete Agreements” for Mondaq.
  • “Can My Employer Enforce A Noncompete When We Get Our Customers Through Bidding?” asks Donna Ballman in her Screw You Guys, I’m Going Home Blog.
  • A New York Federal “Court Finds Potential Liability For Sending Cease And Desist Letter reports Lauri Rasnick for Epstein Becker’s Trade Secrets & Noncompete Blog. For more on the risks of a claim of intentional interference from a cease and desist letter, see my post here.
  • “District of Connecticut Addresses Trade Secret Act Preemption advises Eric Ostroff in his Protecting Trade Secrets Blog.
  • “Why Non-Competes are bad for the economy,” advises Laura Ellerman for Frith & Ellerman’s Virginia Non-Compete Law Blog.
  • “Public Policy Trumps Non-Compete in North Carolina,” reports Eric Welsh for Parker Poe’s Trade Secrets & Unfair Competition Reporter Blog.
  • “Medical Device Manufacturer Bound By The Restrictive Covenants It Implemented,” reports Zachary Jackson for Epstein Becker’s Trade Secrets & Non-Compete Blog.

Cybersecurity Posts and Articles:

  • In an interesting Op-Ed piece for The New York Times entitled “Elizabethan Cyberwar,” Jordan Chandler Hersch and Sam Adelsberg liken the current cyber conflict between China and the U.S. to the battle for the seas between Elizabethan England and Spain, arguing that China is sponsoring cyber-pirates to level the playing field with the U.S.
  • “Facebook Urges Cooperation To Tackle Mobile Security Risks,” reports Law360.
  • “Mobile Device Forensics – Are You in the Know?” asks James Whitehead in a guest post for Seyfarth Shaw’s Trading Secrets Blog.
  • The IP Commission’s adoption of the “hack back” defense continues to stir controversy. GCN’s William Jackson asks “The hack-back vs. the rule of law: Who wins?” and Lisa Shuchman expresses concern in “IP Theft Report Offers Over-the-Top Solutions” for Corporate Counsel.
  • And The Wall Street Journal’s Christopher Matthews chimes in as well, in “Support Grows to Let Cybertheft Victims ‘Hack Back.'”
  • Public Interest “Group Backs FTC Authority In Wyndham Data Breach Case,” reports Law360.

Computer Fraud and Abuse Act Posts and Cases:

  • “Recent Alleged Cyberattack By Ex-Employee Demonstrates Importance of Employer Diligence On Protecting Network Passwords,” advises Robert Milligan for Seyfarth Shaw’s Trading 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.

05022013Here 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:

  • Good advice from Josh Durham: “Use Covenants Not To Compete To Protect Legitimate Business Interests, Not Just Because You’re Scared Of A Little Competition.” In his post for Poyner Spruill’s Under Lock & Key Blog, Josh recounts the holding of a recent North Carolina case, Phelps Staffing LLC v. CT Phelps, Inc., in which the court found that a non-compete involving temporary staffing employeees lacked a legitimate business interest to justify the restraint. It is an important reminder to companies to ensure that their non-competes be narrowly tailored to protect interests that actually arise from the former employee’s employment.
  • Sergey Aleynikov will stand trial a second time, this time in New York State’s Supreme Court, for the alleged theft of Goldman Sachs’ trade secrets, reports The Wall Street Journal and Law360. Judge Ronald Zweibel ruled that the state charges were not barred by the dismissal of his federal conviction under the Economic Espionage Act last year by the U.S. Court of Appeals for the Second Circuit. (For more on the Aleynikov saga, see my posts here and here).
  • For more on the Ohio Supreme Court’s recent holding that rental payments are trade secret, see Todd Sullivan’s take in his Trade Secrets Blog. Todd notes the incongruity in the Court’s reasoning that disclosure of the trade secrets would lead to a “poisonous” tenant environment, despite the fact that it noted later in its opinion that the landlord’s expert said tenants were incentivized not to share rental information. (My post on the case can be found here).
  • “Pushing Back Against Restrictive Covenants in Physician Agreements” advocates Mark Gisler as he questions whether non-competes violate the American Medical Association’s code of ethics.
  • “Illinois Federal Court Issues Preliminary Injunction Prohibiting Use Of Misappropriated Trade Secrets But Rejects Request For Expanded Injunction Based On Alleged “Inevitable Disclosure” reports Paul Frehling for Seyfarth Shaw’s Trading Secrets Blog.
  • “Florida Court Reverses Preliminary Injunction on Restrictive Covenant,” reports Peter Vilmos for Burr & Forman’s Non-Compete Trade Secrets Law Blog.  Eric Ostroff also has a post on the case in his Trade Secrets Law Blog.
  • “When a Restriction on Soliciting “Prospective” Customers Is Unreasonable (and How to Fix It),” recommends Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • “Never Bring a Knife to a Gun Fight: One Simple Weapon to Fight Economic Espionage in a Cyberspace World,” warns Hayden J. Silver III for Womble Carlyle for The Compass.
  • “Why intellectual property theft is everyone’s problem,” remind Texas U.S. Attorneys Sarah Saldana and John M. Bales for The Dallas Morning News.
  • “Does social media change the meaning of “solicitation”? How to prevent ex-employees from using social networks to lure employees or customers” recommends Jon Hyman for Inside Counsel. 
  • “Why Abuse of Discretion Matters to Employers (Non-Compete),” advises Rob Radcliff for his Smooth Transitions Blog.
  • “Trade Secret “Inevitable Disclosure” Doctrine Taking Shape in North Carolina,” advises Betsy Cook Lanzen of Womble Carlyle for The National Law Journal.

Cybersecurity Posts and Articles:

  • “Reflections On Recent Cybersecurity Developments,” ponder David N. Fagan, John K. Veroneau, Robert Nichols and Kristen E. Eichensehr of Covington & Burling LLP for Law360.
  • “The War On Cybercrime: How Far Can You Go?” posits Gabriel Ramsey, Mark Mermelstein and James Hsaio of Orrick for Corporate Counsel.
  • “Is the Specter of a Cyber Cold War Real?” asks James McGregor for The Atlantic.
  • “Law firm fell victim to phishing scam, precipitating $336K overseas wire transfer, bank suit alleges,” reports Debra Cassens Weis for The ABA Journal’s Law News Now.
  • “Looking at the Future of Cybersecurity,” predicts Sue Reisinger for Corporate Counsel.

Computer Fraud and Abuse Act Posts and Cases:

  • Looking for a post-mortem on the recent CFAA trial of David Nosal? Then check out “In Executive’s Trade Secret Prosecution, a Company’s Outsized Role,” by Vanessa Blum who covered the trial for The Recorder, Venkat Balasubrumani’s post in the Technology & Marketing Law Blog and Daniel Joshua Salinas’ post for Seyfarth Shaw’s Trading Secrets Blog.
  • Earlier this week, The Washington Post ran a front-page story, “As cyberthreats mount, hacker’s conviction underscores criticism of government overreach,” detailing the prosecution of hacker Andrew Auernheimer.
  • Similarly, The ABA Journal has drawn attention to efforts to reform the CFAA, in an article “Hacker’s Hell: Many want to narrow the Computer Fraud and Abuse Act,” by Stephanie Francis Ward.

Wow, it was a busy week. 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:

  • Federal prosecutors were dealt a severe blow in the Economic Espionage Act case brought against affiliates of the Pangang Group (a company with ties to the Chinese government), as U.S. District Court Judge Jeffrey White quashed summons against them in the U.S. v. Liew case.  As reported by Bloomberg and Law360, this is the second time that summons have been quashed and it increasingly appears that the government will not be able to serve, let alone prosecute, these companies for their alleged role in the theft of DuPont’s titanium dioxide trade secrets.
  • “New Jersey Legislators Propose Banning Non-Compete Agreements With Employees Who Can Claim Unemployment,” reports Jessica Mendelson for Seyfarth Shaw’s Trading Secrets Blog. Also see Law360’s article, “NJ Bill Targets Noncompete Restrictions On Unemployed.”
  • Honey, I stole the trade secrets!  “Can an Employee Use a Spouse to Circumvent Restrictive Covenants? Georgia Court of Appeals Says ‘No,'” advises Amy Dehnel for Berman Fink Van Horn’s Georgia Non-Compete and Trade Secret News.
  • “Merrill Lynch Says Ex-Advisers Stole Client Info,” reports Law360, when they joined competitor Wells Fargo.
  • “Wisconsin Researcher Accused of Economic Spying for China,” reports Bloomberg.
  • “Plaintiff’s Foreign Operations Result in ‘Lessened’ Deference to Choice of Home Forum in Trade Secret Misappropriation Case,” advises John C. Law, Ph.D. of McDermott Will & Emery for the National Law Review.
  • “Frisby-Eaton Whistleblower Settles with Frisby, Tolling Agreement Persists with Eaton,” advises Alison Grant for The Plain Dealer and Todd Sullivan for his Trade Secrets Blog.
  • “Get Smart About Noncompetes,” advises Alan Bush for The Texas Lawyer.
  • Don’t forget the importance of “Trade Secrets and Due Diligence,” a reminder by Eric Ostroff for his Trade Secrets Law Blog.
  • For a recent non-compete case out of Florida’s Fifth District Court of Appeal, see “A Court’s Order Must Comply With The Restrictive Covenant It Seeks To Enforce,” by Kain & Associates’ ComplexIP.com.
  • “Enforcing a Non-Compete Agreement in Florida: What Evidence is Relevant?” asks Jason Cornell for Fox Rothschild’s South Florida Trial Practice Blog.
  • “Non-competes: HR’s version of the Prenup,” proclaims Steve Boese for Fistful of Talent.
  • “5 Privacy and Data Security Measures That Can Protect Your Company Against Trade Secret Theft,” recommends Lindsey Tonsager for Covington’s Inside Privacy Blog.
  • Kenneth Vanko has the first of three posts on why certain non-compete and trade secrets cases may not settle for his Legal Developments in Non-Competition Agreements Blog.
  • And for the litigators, “Don’t Forget about E-Discovery When Moving to The Cloud,” advises Jay Yurkiw for Porter Wright’s Technology Law Source Blog.

Cybersecurity Posts and Articles:

  • As many of you may have noticed last week, The Wall Street Journal launched a Risk & Compliance Reporter that will cover, among other things, developments in cybersecurity.  It is worth bookmarking. To that end, here is one of the introductory posts, “Three Tactics for Cyber defense” by Mark G. Graff.
  • “How To Mitigate The IP Risks Of Data Breaches,” advises Carol Anne Been and Andy Blair of Dentons for Law360.
  • In an op-ed piece for The New York Times “Closing the Door on Hackers,” Marc Maifret, CTO for BeyondTrust wonders whether software companies are incentivized to allow hacking.
  • “Insider Theft: the Real Cyber Threat?” asks The Wall Street Journal’s Corruption Currents Blog.  The post quotes Mike Dubose of Kroll as estimating the average time between an internal breach and its discovery is 32 months.
  • “As more hackers target lawyers, here’s how to protect client data,” recommends Rachel Zahorsky for the ABA’s Techshow.
  • “U.S. Undersecretary to Discuss Hacking With Chinese Officials,” reports Bloomberg.
  • “Silicon Valley Fights Restrictions on Chinese Tech,” reports The Wall Street Journal.
  • “A Different Approach To Foiling Hackers? Let Them In, Then Lie To Them,” recommends Andy Greenberg for Forbes. (And don’t forget to at least buy them a drink).

Computer Fraud & Abuse Act Posts and Cases:

  • The trial in the prosecution of David Nosal is underway in San Francisco and expected to go about 12 days. Here are some of the articles covering it: “In High-Tech Hacking Trial, a Battle of Low-Tech Openings,” notes Max Taves, who is covering the Nosal trial, for The Recorder. Also check out Vanessa Blum’s article, “Amid Calls for Reform, a Rare Trial of Hacking Law,” also for The Recorder.
  • “Here are eight cyber crooks who got less prison time than Andrew Auernheimer,” advises Dan Kaplan for SC Magazine.
  • “NY Times Reporter Jenna Wortham Accidentally Reveals How She Violated Both The CFAA & The DMCA,” reports Techdirt.
  • “7th Circ. Won’t Resurrect Employer Email Hack Suit,” reports Law360, as the plaintiff was unable to demonstrate that the alleged invasion of privacy cost him more than $5,000.

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: 

  • In an unusual ruling, the U.S. Court of Appeals for the Sixth Circuit upheld the convictions of two engineers for stealing Goodyear’s trade secrets, but vacated the sentences, essentially holding that they were too lenient, reports Law 360. Both Todd Sullivan and Kenneth Vanko provide their takes on the decision.
  • In what may be the final installment of the trade secret case that will live in infamy, the U.S. Court of Appeals affirmed a district court’s finding that train equipment manufacturer Wabtec Corp. copied rival Faiveley Transport USA Inc.’s trade secrets involving braking technology used in New York City’s subway system, but knocked the jury’s damages award down to $15 million. This case caused great consternation in the trade secret community several years ago when the Second Circuit inexplicably reversed an injunction and held that a defendant could use a plaintiff’s trade secrets so long as it did not disclose them.
  • Recent California Supreme Court Decision Stokes Debate Over Scope of Trade Secret Preemption” advises James D. McNairy for Seyfarth Shaw’s Trading Secrets Blog.
  • “Court Finds Common Law Causes of Action Not Preempted by New Jersey Trade Secrets Act” writes Michael Kessel for Littler’s Unfair Competition & Trade Secrets Counsel Blog.
  • “Orrick wins $23 million award vs MGA, Bratz maker sues to vacate” advises Alison Frankel’s On The Case Blog.
  • “A Surge In Trade Secret Misappropriation Cases at ITC” report Jeffrey Telep and Taryn Williams of King & Spalding for Law360.
  • “Failing to Trust the Public: The Process of Submission of the Enabling Amendment to the Georgia Constitution for the Restrictive Covenant Act Was Unconstitutional” writes David Pardue for his Trade Secrets and IP Today Blog.
  • Jonathan Pollard has a post about an interesting non-compete case in the broadcast industry that was recently filed in Alabama.
  • “Florida Appellate Court Says: “’Independent Contractor’ Still an Employee for Purposes of Enforcing Non-Compete Agreement” advises Peter Vilmos for Burr & Forman’s Trade Secrets Noncompete Blog.
  • “Calif. Noncompete Clauses — Still Unenforceable” reports David Bloom of Milbank Tweed for Law360.
  • “IBM Suit Over Corporate Raiding Illustrates Use of Social Media Evidence” advises Kenneth Vanko in his Legal Developments in Non-Competition Agreements Blog.
  • “10 Steps to Take When Hiring from a Competitor” recommends Peter Steinmeyer for Epstein Becker’s Trade Secrets & Noncompete Blog.

Computer Fraud and Abuse Act Posts and Cases:

  • For those looking for the latest on Aaron’s Law, see “Congresswoman Posts Revamped ‘Aaron’s Law’ on Reddit” as reported in Mashable.
  • “Employment Agreement Restrictions Determined Whether Employees Exceeded Authorized Access Under Computer Fraud and Abuse Act” advises Shawn Tuma about a recent federal decision out of Oklahoma that elected not to follow the reasoning of U.S. v. Nosal.
  • “How ‘Aaron’s Law’ Is Good for Business” advises Doc Searls for the Harvard Business Review.
  • “We Need to Think Beyond the Aaron in ‘Aaron’s Law” writes Micah Schaeffer for Wired.

 Cybersecurity Posts and Articles:

  • The big cybersecurity story this week were the reports by The Washington PostThe New York Times and The Wall Street Journal that they believed Chinese hackers had penetrated their defenses to spy on their communications with critics of the Chinese government.
  • “Here a Hack, There a Hack, Everywhere a Cyber Attack” laments Arik Hesseldahl for All Things Digital.
  • “Calling General Counsel to the Front Lines of Cybersecurity” reports Sue Reisinger for Corporate Counsel.

01032013Last week, I reported on Nos. 10 through 8 of the Trade Secret Litigator’s Top 10 Trade Secret and Non-Compete of 2012.  Here are Nos. 4 through 7, with the top three to follow this weekend:

7.  PhoneDog v. Kravitz (U.S. Dist. Ct. for Northern Dist. of Cal.), Eagle v. Morgan (U.S. Dist. Ct. for Eastern Dist. of Penn.) and Christou v. Beatport (U.S. Dist. Ct. Col. May 2012).  As employers continue to grapple with managing their employees’ use of social media, these three cases illustrate the  consequences that can flow from uncertainty over who owns social media property such as a Twitter handle, a LinkedIn account or password log-in information.  As trade secret claims are tougher and tougher to assert because of the inherent visibility of social media information, employers can be expected to rely more on traditional claims of ownership for social media as a result of these cases.

PhoneDog v. Kravitz and Eagle v. Morgan have both received considerable media attention as they are among the first cases to address ownership of LinkedIn and Twitter accounts.  However, because they arose in situations where the employers failed to have formal policies or written agreements establishing the parameters for the ownership of social media, the employers were unable to secure conclusive determinations and forced to litigate the cases.  Indeed, in the PhoneDog case, the employee was able to keep the disputed Twitter handle as part of the settlement.  Ultimately, disputes like these will be less frequent as employers recognize the importance of policies and written agreements in ensuring that their social media accounts and log-in information remain their property.  For more on these cases, please see my posts here and here.

6. Acordia of Ohio v. Fishel (Supreme Court of Ohio) and DePuy Orthopaedics, Inc. v. Waxman (1st App. Dist. Florida).  In a year in which it became more difficult to enforce non-compete agreements, these decisions stood out because they held that in the context of a merger, non-compete provisions would survive and be enforced to the benefit of the new company.  The Acordia of Ohio case raised eyebrows here in Ohio because the Ohio Supreme Court initially declined to enforce the non-compete on the grounds that the covenants at issue did not specifically provide for assignment or have language establishing that they would benefit any successor or assign of the employer.  However, in a highly unusual development, the Ohio Supreme Court agreed to reconsider the decision and reversed itself in October.

5. U.S. v. Liew (U.S. Dist. Ct. for Northern Dist. of Cal.).  Why is a criminal case that has not even gone to trial and in which one of the major defendants was dismissed No. 5 in the Trade Secret Litigator’s Top 10?  The timing of this case and the willingness of the U.S. Department of Justice to indict a company (Pangang Group) owned by officials of the Chinese government are the reasons for its inclusion, as this case may ultimately be remembered as the tipping point in cementing the perception that China was a threat to the trade secrets of American companies.

It is important to remember that the unprecedented indictment of Pangang Group took place in February when Chinese Vice President Chair Xi Jinping was visiting the United States.  Prior to that visit, complaints about the misappropriation of the trade secrets were largely perceived as anecdotal.  In my view, there seemed to be a hesitancy on the part of many to complain about the perceived lack of protection of trade secrets in China, perhaps because raising these concerns might result in retaliation or that those raising them might be accused of racism.

However, about the time of that visit, leading media, including The Wall Street Journal and The New York Times ran a number of articles highlighting the complaints of many U.S. companies about the failure (or in some cases, the active participation) of the Chinese Government in cases of trade secret theft.  During that visit, Vice President Joe Biden and Senator John Kerry both were reported to have expressed concern about, among other things, the complaints of their constituents about the theft of trade secrets. 

In this context, the announcement of the indictment of Pangang Group signified an acknowledgement of the federal government to not only recognize the problem but take forceful action to combat it.  It also served as a catalyst for media attention, which in turn brought concerns about protection of trade secrets in China to the surface.

4.  American Chemical Society v. Leadscope (Ohio Supreme Court), SASCO v. Rosendin Electric (California 4th App. Dist.), MPI Release, LLC v. Loparex LLC (U.S. Dist Ct. for Southern Dist. of Indiana), and Best Medical Int’l v. Spellman (U.S. Dist. Ct. for Eastern Dist. of Pa.).  These four cases highlight the increasing dangers that can arise from an ill-advised trade secret case as they all involved awards against plaintiffs who were essentially found to have brought their trade secret cases in bad faith.  

The American Chemical Society case resulted in a jury verdict of over $26.5 million in compensatory and punitive damages in favor of the defendants, former employees who counterclaimed and successfully argued the underlying trade secret litigation against them was brought maliciously to destroy their company (it ultimately settled for about $20 million).  In SASCO, a California appellate court affirmed a significant award of attorneys fees after a plaintiff dismissed a weak trade secrets case.

The increasing frequency of these cases should serve as a powerful reminder that companies considering trade secret claims need to carefully evaluate those claims and remember the power of the “David v. Goliath” narrative in trade secret cases.

Stay tuned for Nos. 1 through 3 this weekend.

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.