The Department of Justice, Antitrust Division (“DOJ”) continues to investigate hiring practices in a number of industries for potential antitrust violations as part of its effort to scrutinize, and in some instances, criminally prosecute, companies and individuals who enter into agreements with their competitors regarding hiring, wages, and solicitation of employees.
Continue Reading Taboola the Latest Target of DOJ’s Aggressive Antitrust Scrutiny of Hiring Practices

California Labor Code Section 925 prohibits employers from requiring employees who reside and work primarily in California, as a condition of employment, to agree to any provision that would require the employee to litigate outside California any claim arising in California, or that would deprive the employee of the benefit of California law with respect to any claim arising in California.  Under Section 925, any such provision is voidable by the employee and if the employee exercises her right to void the provision, then any such claim shall be adjudicated in California under California law.[1]
Continue Reading California Labor Code Section 925 and How Employers Can Avoid It

On January 11, 2021, the mayor of the District of Columbia, Muriel Bowser, signed the Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”), which is set to be one of the broadest and most expansive bans on non-competes in the country.  The Act bans provisions in employment agreements that forbid any employee from working for a competitor not only after their employment, but also during their employment.  While the Act does not apply retroactively, any non-compete entered into after the Act’s effective date is void and unenforceable.

The Act was submitted for the requisite 30-day congressional review period and is expected to become law in the coming months.
Continue Reading Employment Agreements: DC’s Recent Ban on Non-Competes is One of the Broadest in the Country

The protection and retention of confidential information and trade secrets permeate nearly every transaction. Employment-law successor liability presents a substantial risk in transactions even when purchase agreements seemingly contain protective language. The general rule that an asset buyer does not assume a seller’s liabilities does not necessarily apply in the employment context, at least not in all cases. Targeted labor and employment diligence helps to identify potential areas of post-acquisition risk. Diligence also helps foster a greater understanding of the seller’s business and its workforce, making for a smoother post-acquisition integration effort. Identifying key underlying trade secrets and efforts to safeguard those trade secrets leading up to the transaction, and ensuring appropriate agreements are in place post-transaction to protect such trade secrets, are critical elements to the due-diligence process.
Continue Reading The Critical Nature of Employment and Trade Secret Diligence in Corporate Transactions

Whether under the federal Defend Trade Secrets Act (“DTSA”) or under state law uniform trade secrets acts (“UTSA”), assessing monetary damages in trade secret misappropriation cases is rarely easy.  By definition, trade secrets lose their value once they lose their secrecy, but the lost value is often difficult to monetize.  Calculating damages for misappropriation should account for the lost value of the trade secret “asset,” but courts often lose sight of this calculus in fixing damages.  Lost profits, unjust enrichment, and reasonable royalties are common measures of damages in trade secret misappropriation cases, but there is another rarely considered measure of damages:  the diminution in value of a plaintiff’s trade secret caused by the misappropriation.  Damages for the diminution in value of a trade secret are a form of compensatory damages, though some courts will grant injunctive relief due to the difficulty in valuing the diminution of trade secrets.  Aerodynamics Inc. v. Caesars Entm’t Operating Co., No. 2:15-cv-01344-JAD-PAL, 2015 U.S. Dist. LEXIS 129588, at *1 (D. Nev. Sep. 24, 2015).  DTSA (and most UTSA statutes), of course, recognize compensatory damages as a viable theory.  18 U.S.C. § 1836(b)(3)(B).  When courts have assessed trade-secret diminution theories, they have emphasized the critical importance of a quality expert and an almost asset-sale like economic valuation of the trade secrets.
Continue Reading Diminution in Value As A Measure of Damages for Trade Secret Misappropriation

Global competition in high-tech industries is as intense as ever, and U.S. administrative agencies continue to find themselves at the center of global disputes between foreign companies seeking to vindicate trade secret and intellectual property rights.  That outlook was confirmed this month in a highly-anticipated ruling by the International Trade Commission (“ITC”) in a trade secret dispute between two South Korean manufacturers of electric vehicle batteries.
Continue Reading LG Chem’s Win In $1 Billion Electric Vehicle Trade Secret Dispute Upheld by International Trade Commission

Courts are increasingly scrutinizing agreements that extend beyond what is necessary to protect bona fide confidential information and trade secrets.  The recent decision in Hamilton v. Juul Labs, Inc., Case No. 3:20-cv-03710-EMC, illustrates this trend.  On January 27, 2021, a California federal judge ruled that an ex-employee’s lawsuit against e-cigarette manufacturer Juul Labs, Inc. regarding Juul’s allegedly over-restrictive non-disclosure agreements (NDAs) may move forward.  The case, filed by Juul’s former Director of Program Management, Marcie Hamilton, is pending before the U.S. District Court for the Northern District of California, Judge Edward M. Chen presiding.
Continue Reading A “Culture Of Concealment” – Scrutinizing Overbroad NDAs

In several recent decisions, district courts have held that liability under the Defend Trade Secrets Act can extend to extraterritorial defendants.  As set forth by Sheppard Mullin’s Tyler Baker in a prior blog post, the extraterritorial reach of the DTSA is rapidly expanding.  Non-U.S. Companies and the DTSA: Parameters of a Developing Reality | Trade Secrets Law Blog (citing vPersonalize Inc. v. Magnetize Consultants Ltd., 437 F. Supp. 3d 860, 878 (W.D. Wash. 2020); Micron Tech. Inc. v. United Microelectronics Corp., No. 17-cv-06932-MMC, 2019 WL 1959487 (N.D. Ca. May 2, 2019); Motorola Solutions Inc. v. Hytera Commc’ns Corp., 436 F.Supp.3d 1150, 1165 (N.D. Ill. 2020); ProV In’tl Inc. v. Lucca, No. 8:19-cv-978-T-23AAS, 2019 WL 5578880 (M.D. Fla. Oct. 29, 2019)).  As Mr. Baker observed, these rulings create a risk for foreign entities regarding trade secret theft, as federal courts have held that foreign actors may be subject to liability under the DTSA if the act in furtherance of the misappropriation occurred in the United States.
Continue Reading The DTSA as a Tool for Foreign Entities’ Enforcement of Trade Secrets: A New Legal Frontier

The recent case of Multimedia Sales & Marketing, Inc. v. Marzullo, et al., — N.E.3d —-, 2020 IL App (1st) 191790 (1st Dist. Dec. 21, 2020), demonstrates the peril that attorney fees sanctions present for litigants who bring trade secret misappropriation claims in bad faith.
Continue Reading Illinois Appellate Court Upholds Sanctions Against Radio Advertiser For Bad Faith Trade Secrets Claims