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.
Sooooo I am just a wee bit late with this one. 
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, 
You would think that evidence of the improper downloading of 5,000 files by a former employee who then invokes his Fifth Amendment privilege against self-incrimination, coupled with the remarkable similarity between inventions (see the picture alongside) would be enough to demonstrate circumstantial evidence of the misappropriation of trade secrets. If you thought so, you would be wrong. In one of the highest profile trade secret case since 
A lot has been written about the havoc that COVID-19 has wrought on courts and the changes it has caused in the way we litigate and try cases. Unlike more conventional litigation, which ultimately seeks damages in trials that go before a jury, trade secret litigation frequently revolves around a trade secret owner’s request for an injunction, fast-moving legal proceedings that are generally decided by judges rather than juries. So what has been the impact of COVID-19 on trade secret cases? Perhaps the easiest way to analyze the pandemic’s impact is to break it down into three components: (1) administrative, (2) procedural and (3) substantive.
