Episode 12 of Fairly Competing is out and we discuss the high profile Wisk Aero litigation in California.
In this episode, Ben, Russell and I explore the decision by U.S. District Court Judge William Orrick in Wisk Aero LLC v. Archer Aviation Inc. Readers will remember that I wrote about this case last
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
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 Waymo v. Uber, the plaintiff Wisk Aero thought it had its competitor dead to rights after expedited discovery revealed these and other facts. However, U.S. District Court for the Northern District of California Judge William H. Orrick disagreed, rejecting the circumstantial evidence presented by Wisk Aero because it did not tie the alleged trade secrets with the circumstantial evidence of misappropriation. As explained below, this case is the latest in a line of decisions declining to find that evidence of improperly downloaded information may be sufficiently compelling circumstantial evidence of misappropriation. (A copy of the opinion can be found here).
Continue Reading Wisk Aero LLC v. Archer Aviation Inc.: A High Profile Trade Secrets Case Shows the Limits of Circumstantial Evidence
In this episode, Ben Fink, Russell Beck, and I discuss two hot topics in trade secret and noncompete law, particularly during COVID-19: employee surveillance and protecting legitimate business interests when an employee’s employment is terminated without cause.
So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for
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.
Continue Reading How COVID-19 Is Changing the Way We Litigate Trade Secret Cases
Last week, in a significant development in the simmering IP and technology dispute between the U.S. and China, the U.S. Department of Justice unsealed an indictment filed in the U.S. District Court for the Western District of Washington against Chinese telecommunications manufacturer Huawei for the theft of trade secrets from T-Mobile. This salvo is the latest in an increasingly high stakes confrontation between the U.S. and China arising from longstanding concerns in the U.S. about China’s involvement in and support for the theft of trade secrets from U.S. companies. Huawei, which was also the subject of a FBI sting last month in another unrelated trade secret investigation involving a U.S. smartphone screen manufacturer, is now at the center of this international IP superpower row. What’s the international context that led to this indictment, what did Huawei do to trigger the indictment, and what forces are now in play that will shape the prosecution going forward? Read on for my thoughts below.
Continue Reading Tappy’s Revenge: What You Need to Know About the DOJ’s Momentous Trade Secret Indictment of Huawei
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
The 10-year legal brawl between Goldman Sachs and its former programmer Sergey Aleynikov has spilled over into multiple courts — a federal conviction that was overturned, another conviction by a New York state jury still on appeal today, and finally, the fight in two different courts over payment of his defense fees. While the prosecutions have garnered considerable media attention, the civil litigation over Aleynikov’s demand for advancement of his $10 million in legal fees from Goldman is the most relevant for civil litigators. Why? An order granting advancement, which requires the employer to pay for the former employee’s attorneys fees, can fundamentally alter the course of a trade secret litigation. Last week, the U.S. District Court for New Jersey rejected Aleynikov’s claims for advancement, declining to essentially reconsider a Delaware court’s ruling that Aleynikov had failed to demonstrate that he qualified for advancement under Goldman’s bylaws. As I explain below, the ruling is an important reminder for both employers and employees in trade secret disputes of the power of advancement claims, and the determined resistance an employee may face if he or she pursues that claim.
Continue Reading How Sergey Aleynikov’s 10 Year Legal Battle Highlights The Pros and Cons of Advancement Claims in Trade Secret Disputes
The issue of trade secret identification, on its face, seems like an elementary and uncontroversial one. In concept, every trade secret plaintiff should be expected to identify the trade secrets in the lawsuit it brings. After all, the plaintiff knows best what it considers to be a trade secret and what it doesn’t consider to be a trade secret, and the defendant shouldn’t be left to guess what those trade secrets might be. For these and other reasons, California, a key bellwether state for trade secret law, has long required by statute that a party claiming trade secret misappropriation identify those trade secrets with specificity before being permitted to conduct discovery relating to its trade secret claim. However, nothing tests the limits of common sense like the realities of litigation, and plaintiffs in California have complained that this procedure has been misused by defendants to frustrate or derail otherwise meritorious trade secret cases. Perhaps for these reasons, courts outside California remain divided over the so-called California rule as several recent rulings have demonstrated.
Continue Reading Are Other States Following California’s Lead On Trade Secret Identification?
Here are the noteworthy trade secret and restrictive covenant posts from September and some of October: