It was a busy August, so here are the highlights:

Noteworthy Defend Trade Secrets Act Cases, Federal Trade Secrets Opinions and Related Commentary:

  • Can a trade secret owner plead a claim of inevitable disclosure under the DTSA?  In Idexx Laboratories, Inc. v. Graham Bilbrough, Magistrate Nivoson of the U.S. District Court of Maine dismissed that claim, reasoning the majority of courts have rejected that theory based on the language and history of the DTSA.  Readers of this blog will remember that language was added to the DTSA near the end of legislative negotiations to placate concerns of California Senator Dianne Feinstein about the use of this doctrine, which is prohibited in California.  However, it is worth noting that multiple courts, including federal courts in Illinois and Pennsylvania, have allowed the doctrine to be pleaded under a pendent state law claim if that state recognizes the inevitable disclosure doctrine.  For a good primer on past decisions regarding the inevitable disclosure doctrine and the DTSA, check out this post from Orrick’s Trade Secrets Watch.
  • In a high profile case brought by NBA star Zion Williamson against his former agent, Williamson v. Prime Sports Marketing LLC et al., the U.S. District Court of North Carolina has ruled in his favor, holding that the concept of marketing Zion as the next Lebron James did not qualify as a trade secret.  Astor Heaven and Emily Tucker summarize the decision in Crowell’s Trade Secrets Trends Blog.
  • Avoided costs can qualify as damages for a trade secret claim says the U.S. Court of Appeals for the Third Circuit.  Eileen McDermott has a summary of the Third Circuit’s ruling in a post for the IP Watchdog.
  • Does a trade secret complaint’s allegations of misappropriation present facial plausibility or are they merely consistent with liability? Yes, that is lawyerspeak at its finest, but it’s an important question because it may determine whether your trade secret complaint will survive a motion to dismiss. As Federal Rule 12(b)(6) has become a more prominent tool for defendants in trade secret cases, the U.S. Court of Appeals for the Tenth Circuit provides a roadmap for plaintiffs and defendants alike for framing their arguments in connection pleading/attacking a trade secret or restrictive covenant claim.  In LS3 Inc. v. Cherokee Nation Strategic Programs, LLC, the Tenth Circuit applied this test to a dispute over the poaching of employees, holding that the breach of fiduciary duty and misappropriate of trade secret claims survived Rule 12(b)(6)’s standards but that the breach of contract claims were insufficient as a matter of law.
  • In the latest installment of lawyers behaving badly, Littler and Polsinelli continue to square off about whether a client development toolkit assembled at Littler qualifies as a trade secret and whether it was misappropriated when a lawyer and staff left to start a competing practice at Polsinelli.  The parties are sparring over the scope of discovery and Littler has now withdrawn its request for a TRO.  A summary of the arguments and related developments as reported by Law360 can be found here.
  • The Motorola v. Hytera case, the high-profile case I have written about pending in Chicago, has some interesting developments.  First, readers of this blog will know that Motorola prevailed in the case and is supposed to be receiving a sizable court-ordered royalty payment from Hytera; however, Hytera claims it can’t pay, so Motorola has filed a motion for contempt and is asking the district court to enter the injunction it previously denied (see this article summarizing the motion practice in Radio Research Mission Critical Communications).  Second, Hytera has been granted leave to assert antitrust counterclaims against Motorola.  These claims are rare in the trade secret context, so it will be interesting to see how they unfold.  Stay tuned.
  • I wrote about the Seventh Circuit’s opinion in Rexxa, Inc. v. Chester last month and there are two posts with different takes on the opinion worth reading.  Sheppard Mullins’ Mikela Sutrina and Jenna Crawford emphasize that the 11-year wait by the plaintiff Rexxa undermined its trade secret claim because certain aspects of the alleged trade secret had become widely known by the time of the lawsuit.  And Holland & Knight has a thorough client alert analyzing both the district court’s initial opinion and the Seventh Circuit affirming opinion; that post focuses on Rexxa’s failure to adequately identify the trade secrets as the key to the opinion dismissing the case.
  • There are multiple decisions addressing attorneys’ fees sought by successful litigants this past month.  U.S. District Court Judge Gray Miller ordered IBM to pay $21 million in attorneys’ fees after the $1.6 billion dollar verdict against it.  And Law360 is reporting on a $3.9  million award to Munck Wilson for its fees in a trade secrets case pending in the U.S. District Court for the Eastern District of Texas; the decision enforced a contractual indemnity as the basis for those fees.  Finally, Marcus Mintz and Robyn Marsh note that an unsuccessful plaintiff dodged a bad faith finding in a post for Seyfarth’s Trading Secrets Blog.  In Transperfect Global, Inc. v. Lionbridge Technologies, Inc., U.S. District Court Judge Denise Cote of the Southern District of New York, denied that request, although she chastised the plaintiff for pursuing that claim after it should known they were without merit, characterizing its litigation conduct as “unsavory business.”


Continue Reading Monthly Wrap Up (September 7, 2022): Noteworthy Trade Secret and Restrictive Covenant Cases, Developments and Posts

There is a significant amount of activity going on in the trade secret and restrictive covenant space, so I am going to do my best to resume my monthly wrap up posts, after a long (although some might say not long enough) hiatus.  Without further ado, here are the noteworthy developments of the past month:

Noteworthy Defend Trade Secrets Act Cases, Federal Trade Secret Opinions and Related Commentary:

  • The Motorola v. Hytera litigation in the U.S. District Court for the Northern District of Illinois has generated a number of noteworthy developments, including a seminal opinion affirming the DTSA’s extraterritorial reach, as well as a substantial jury verdict ($597 million).  Last month, U.S. District Court Judge Ronald Norgle denied a request to reconsider his denial of Motorola’s request for a permanent injunction (that earlier opinion can be found here December 17, 2020).  The December 17, 2020 opinion provides an excellent analysis of the roadmap courts will likely follow when contemplating a permanent injunction in connection with a significant monetary award (spoiler alert:  a royalty looks like the best option given the reality that the trade secrets have now been monetized).  In his most recent July 5, 2022 ruling, Judge Norgle notes that Hytera’s inability to satisfy the judgment might establish the irreparable injury element necessary for that injunction, but Hytera’s pending appeal forecloses his ability to exercise jurisdiction on that order.  Stay tuned for the Seventh Circuit’s eventual ruling.
  • A recent ruling by the U.S. Court of Appeals for the Tenth Circuit should serve as a reminder to trade secret owners to make sure their claim of misappropriation is sufficiently tied to the proximate cause required for damages.  Kyle Jahner of Bloomberg Law has a summary of that decision, GeoMetWatch Corp. v. Hall, et. al, Case No. 19-4130, in which the Tenth Circuit affirmed the district court’s dismissal of those claims on the grounds their damages were speculative.
  • Are federal courts imposing higher pleading standards on trade secret owners to identify their trade secrets with particularity?  Foley & Hoag’s Jeff Lewis, Paul Downs and Robert Haney Jr. persuasively argue that a consensus for that higher standard is emerging in the U.S. District Court for the Southern District of New York and elsewhere.
  • Is manipulating documents produced in discovery enough to get you sanctioned?  The U.S. Court of Appeals for the Seventh Circuit says “kind of.”  In REXA Inc. v. Chester, the Seventh Circuit reversed an order imposing sanctions on the plaintiff for producing documents in a manner that obscured, among other things, whether the defendant had actually signed an employment agreement.  The Seventh Circuit reasoned that while this discovery misconduct was troubling, the $2.3 million in attorneys’ fees for that misconduct were not sufficiently broken down and remanded for further consideration.
  • If you’re a trade secret owner trying to fend off a motion for summary judgment and get your case to a jury, take a look at U.S. Magistrate Christina Bryan’s Memorandum and Recommendation in Vest Safety v. Arbor Environmental, LLC.  The opinion, which comes out of the U.S. District Court for the Southern District of Texas’ Houston Division, shows how a well-organized and tight trade secret claim — addressing among other things, the §757 of Restatement of Tort’s comment b  six factor test — can survive such a motion.
  • What comes first, a motion to challenge jurisdiction or a preliminary injunction?  In Aquate II v. Jesse Myers, the U.S. District Court of Alabama elected to entertain a motion challenging subject matter jurisdiction rather than the pending motion for preliminary injunction.  Although U.S. District Court of for the Northern District of Alabama Judge Abdul Kallon does not provide a lot of analysis for that choice, the decision provides support that challenges to subject matter jurisdiction can take priority.


Continue Reading Monthly Wrap Up (August 2, 2022): Noteworthy Trade Secret and Restrictive Covenant Cases, Developments and Posts

To establish a trade secret claim, the trade secret owner (usually an employer) must show that it used reasonable measures to protect that information’s secrecy.  As a result, the question of whether that owner’s efforts were sufficiently reasonable is frequently the point of contention in trade secret litigation, as the parties argue over whether the owner did enough to prevent the potential disclosure or use of those trade secrets.  There are a multitude of questions that can arise:  Did the owner limit the access of its employees to the trade secrets on a “need to know” basis?  If the information was stored electronically, did the owner use adequate electronic safeguards such as passwords, encryption or multi-factor authentication?  If the trade secrets are tangible or visible to the eye, were the the trade secrets or the facilities in which they were stored under lock and key and were visitors prohibited?  And perhaps most importantly, did the owner require employees or third parties with access to that information to sign non-disclosure agreements (NDAs) or confidentiality provisions to protect those trade secrets?  The use of NDAs has long been considered a key protection, as courts and juries can readily appreciate a written agreement that sets out the trade secret owner’s expectations about protecting that information.  A recent decision by the U.S. Court of Appeals for the Second Circuit, Turret Labs USA, Inc. v. Cargosprint, LLC, 2022 U.S. App. LEXIS 6070,. Case No. 21-952 (March 9, 2022 2d Cir. 2022), reinforces that courts consider these agreements to be a critical safeguard and that a trade secret’s owner’s failure to have them in place may prove fatal to a trade secret owner’s claims.
Continue Reading Turret Labs USA, Inc. v. CargoSprint, LLC: The Second Circuit Affirms the Importance of Non-Disclosure Agreements in Trade Secret Cases

Most employee restrictive covenant disputes arise as a result of an employer’s concern about the potential loss of customer relationships and customer goodwill.  These disputes generally involve sales representatives or high level business executives that have relationships with key customers; these disputes also frequently involve defenses that the employees had pre-existing business relationships with the customers that should fall outside the non-compete or non-solicitation agreement at issue.  These disputes can be very fact-driven and the subject of very different recollections.  For these reasons, non-solicitation cases can be especially messy.  Unfortunately, a recent case out of the U.S. Court of Appeals for the Sixth Circuit, Hall v. Edgewood Partners Insurance Center, Inc., Case No. 18-3481/3482, highlights a doctrine — that an employee has rights to clients he/she acquired on his/her own time and dime — that may make these cases more complicated, expensive and problematic.
Continue Reading Whose Customer Is It Anyway? The Sixth Circuit Further Clouds New York’s Already Murky Law on Non-Solicitation Agreements

Given the ubiquity of thumb-drives and use of personal devices for work, it should come as no surprise that former employees frequently download and even retain their former employer’s sensitive information on their personal devices.  A Symantec study in 2013 found that ½ of the employees surveyed admitted to keeping confidential corporate data from their previous employer and 40% planned to use it in their new jobs.  However, is the fact that an employee downloaded confidential information, standing alone, enough to trigger a lawsuit and possibly an injunction?  A recent case out of the U.S. District Court for the Southern District of New York, AUA Private Equity Partners, LLC v. Soto, Case No. 1:17-cv-8035 (April 5, 2018), held downloading and refusing to return confidential information was enough to give rise to a claim under the Defend Trade Secrets Act (DTSA) (for more on that case, see William Brian London’s post for Fisher & Phillips’ Non-Compete and Trade Secrets Blog).  As for the other question — whether a court will be willing to enter an injunction based on downloading — the answer is less clear.

Continue Reading Is Downloading Confidential Information Enough For An Injunction Under The Defend Trade Secrets Act?

As you will see, I have changed the format of my monthly wrap up post in two ways.  First, I am going to start including links to noteworthy decisions that I come across or are forwarded to me.  Unfortunately, since neither I nor other bloggers writing in this space can cover everything, this will be a useful feature for those practicing in this area.  Second, I am going to provide more commentary on some posts and cases, in the hope of creating further dialogue on many trade secret and non-compete issues.  Given the hot button nature of some of these issues, I am going to share my thoughts, for whatever they are worth.  Now, on to posts and links from the last month:

Legislative Developments

  • Last week, Democratic Senators Elizabeth Warren, Chris Murphy and Ron Wyden announced their intention to introduce the Workers Mobility Act (WMA) that would abolish non-competes throughout the United States.  As many of you will recall, Senator Murphy previously introduced a similar bill, the Mobility and Opportunity for Vulnerability Employees Act (MOVE) but that bill stalled on the Senate floor.  Russell Beck has a post with a link to the House and Senate bills, along with his well-reasoned concerns about the breadth and scope of the bills.
  • A blog post about legislation over non-competes wouldn’t be complete if there wasn’t some mention of some activity in Massachusetts.  Key features of the latest bill under serious consideration would limit non-competes to 12 months (unless the employee stole trade secrets or breached his fiduciary duty) and finally adopt the UTSA.  For more details, see Russell Beck’s post in his Fair Competition Blog.
  • Idaho (repealing its recent changes in 2016) and Utah (restricting their use against broadcasters) have recently amended their statutes addressing restrictive covenants.  See Russell Beck again.
  • Colorado has modified its law affecting physician non-competes, carving out protections for physicians treating patients with rare genetic disorders to eliminate any interruption of care for those patients.  Peter Greene summarizes the changes in Epstein Becker’s Trade Secrets & Employee Mobility Blog.


Continue Reading Monthly Wrap Up (May 8, 2018): Noteworthy Trade Secret and Non-Compete Cases, Developments and Posts

Employers who want to hire from a competitor frequently have to contend with the potential fallout from the new employee’s non-compete.  Any misstep in that hiring process can easily lead to costly and time-consuming litigation.  If an employer wants to go forward with that hire but try to minimize its risk of litigation, one popular approach is to implement affirmative steps safeguarding the prior employer’s trade secrets and avoiding solicitation of the former employer’s customers (see my previous posts on how that strategy has been used successfully by Hewlett Packard and Google in other cases).  However, there is another more unconventional approach:  paying an employee to sit out the duration of her non-compete (what is known as a “garden leave”) and indemnifying that employee from a future lawsuit so long as she abides by her non-compete.  This approach was successfully implemented in a recent dispute in the highly competitive and apparently lucrative e-discovery market.  The case, Document Technologies, Inc. v. LDiscovery, LLC, 17-2659-cv (2nd Circuit  April 24, 2018), offers a nice case study on the use of indemnity provisions to defuse allegations of breach and provides a roadmap for employers who may have the pocket book to support this approach.

Continue Reading A Well-Drafted Indemnity And Garden Leave Thwart A Non-Compete In New York

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, restrictive covenant and cybersecurity posts from the month of August (warning, there are a lot):

Defend Trade Secrets Act

  • Munger Tolles’ Miriam Kim, Carolyn Hoecker Luedtke and Laura Smolowe have put together another fine summary of the trends they are tracking under the Defend Trade Secrets Act.  There are several interesting findings in the summary.  For example, state courts and state law remain the preferred forum and substantive law for trade secrets claimants, at least at this time.  According to the summary, while 378 DTSA cases have been filed in federal and state courts, more than 515 complaints with trade secret claims have been filed with no DTSA claims in federal and state courts throughout the U.S.  I have to admit that I was surprised by this finding, as I expected that litigants would be eager to secure a federal forum using the DTSA.  I suspect that most of those state law cases involve restrictive covenants and that the plaintiffs are more comfortable with a local judge enforcing a non-compete or want to avoid entanglements arising from the DTSA’s limitations on injunctions.  Or it might be that they simply want to go with the law they know best, which would be the more developed state trade secret law regime.  In any event, a very interesting finding.
  • One of the more recent (and unexpected) developments under the DTSA has been the number of motions to dismiss challenging DTSA claims.  Olga May has a post for Fish & Richardson’s Litigation Blog detailing those decisions on those motions, which range from challenges to the specificity of the trade secrets pleaded to whether the complaint comports with the standards under Twombly and Iqbal.
  • For an update on the modest number of ex parte seizure order filings under the DTSA, see Michael Renuad of Mintz Levn’s article in the National Law Journal.


Continue Reading Monthly Wrap Up (Sept. 8, 2017): Noteworthy Trade Secrets, Non-Compete and Cybersecurity Posts from Around the Web

Thursday Wrap-Up (July 25, 2013): Noteworthy Trade Secret, Covenant Not to Compete and Cybersecurity News from the Web
Continue Reading Thursday Wrap-Up (July 25, 2013): Noteworthy Trade Secret, Covenant Not to Compete and Cybersecurity News from the Web