You may be able to bring a misappropriation of trade secrets claim even if you do not actually own the misappropriated trade secret. A growing number of federal cases indicate ownership of a trade secret may not be required in order for a plaintiff to sue for misappropriation; possession alone may be enough to confer standing.
Continue Reading Is Lawful Possession of a Trade Secret Enough for Standing to Sue for Misappropriation?
When filing a claim for trade secret misappropriation under the Defend Trade Secrets Act (DTSA) or a state’s Uniform Trade Secrets Act (UTSA), it is essential to strike the proper balance between sufficiently describing an underlying trade secret and avoiding disclosure of any details that would destroy its secrecy. A federal court decision issued earlier this month in the Northern District of California, MBS Engineering Inc., et al. v. Black Hemp Box, LLC, et al., No. 20-cv-02825-JD, 2021 WL 2458370 (N.D. Cal. June 16, 2021), highlights this “obvious tension between the right of public access to court proceedings and the ‘secret’ part of a trade secret” and provides a useful example of the factors used by courts to assess an appropriately alleged trade secret claim.
Continue Reading Striking the Balance Between Detailed Description and Unnecessary Disclosure of the “Secret” in Trade Secret Litigation Pleadings
Amidst long-simmering diplomatic tensions between China and the United States, disputes arising out of Chinese companies’ alleged theft of technological trade secrets from rival American companies[1] have found their way to federal courtrooms. This stems, in part, from the availability of worldwide injunctive relief under the Defend Trade Secrets Act (“DTSA”), which provides American companies with a robust tool to combat trade secret misappropriation by foreign entities in cases where “an act in furtherance of the offense was committed in the United States.” 18 U.S.C. § 1837(2).
Continue Reading Illinois Court Finds China Inadequate Forum For Trade Secret Misappropriation Claims Against Chinese Tech Company
When trade secret lawyers advise executives transitioning to a job with a competitor, they typically tell them to “take nothing with you” on the way out – meaning that no
Continue Reading Practice What You Preach: Trade Secret Rules (Of Course) Apply to Lawyers
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
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
During the Obama Administration, American foreign policy made a strategic “pivot” to Asia with the goal of establishing a more balanced economic, diplomatic, and security-focused approach and relationship between the U.S. and the region that would serve as a bulwark against growing Chinese influence (see, e.g., the Trans-Pacific Partnership).
Continue Reading The China Pivot: Closing the “Back Door” to Trade Secret and IP Theft
The Defend Trade Secrets Act (“DTSA”), enacted in 2016, created a federal right of action for misappropriation of trade secrets. The Ninth Circuit recently addressed for the first time whether a DTSA claim may be brought against misconduct predating the enactment of the DTSA. The Ninth Circuit held that it could, so long as the misappropriation continued until after the enactment of the DTSA. See Attia v. Google LLC, — F.3d —, 2020 WL 7380256 (9th Cir. 2020).
Continue Reading Ninth Circuit Applies the “Continued Use” Doctrine to the Defend Trade Secrets Act
Courts often require a plaintiff to identify a trade secret with reasonable particularity before commencing discovery (and it is a statutory obligation in California). But frequently a trade-secret plaintiff does not know precisely which trade secrets have been taken by the defendant before discovery commences. In the recent Ninth Circuit decision InteliClear v. ETC Global Holdings (9th Cir. Oct. 15, 2020), the appellate court held that, under its particular circumstances, a plaintiff who had not adequately specified its trade secrets at issue should nevertheless be permitted to engage in discovery for this purpose, where the plaintiff had shown discovery could provide the necessary information. (Disclaimer: Sheppard Mullin served as co-counsel to the successful appellant-plaintiff in this case.)
Continue Reading Trade Secret Takeaways from the Ninth Circuit’s Decision in InteliClear, LLC v. ETC Global Holdings, Inc.
Why should companies considering trade secret litigation consider their patent portfolios? After all, trade secrets, by definition, are secret. They have value in the marketplace by virtue of not being disclosed. And like the formula for Coca-Cola, that value can continue perpetually as long as the secrecy of trade secrets is maintained. Patents, on the other hand, represent a limited monopoly granted to the patent-holder in exchange for an enabling disclosure of the patented invention, a disclosure sufficient to enable those skilled in the art to practice the invention. Of course, this public disclosure requirement for patentability destroys secrecy. This means that once the invention is disclosed in a published patent or application, it cannot be subject to trade secret protection. In the context of a litigation concerning whether a claimed trade secret is covered by a patent, the interface between trade secret protection and patent protection can become existential. The defendant may contend that once the claimed trade secrets found their way into the patent’s enabling disclosure, they lost any trade secret protection. The plaintiff will try to delineate sharply between technology covered by the patent and its disclosures, and technology that remains undisclosed and thus properly subject to trade secret protection. So a proper understanding of the interplay between trade secret protection and patent protection can be critical to the outcome in a trade secret case.
Continue Reading Why Patents Can Matter In Trade Secret Cases