A recent decision by the Ninth Circuit Court of Appeals in BladeRoom Group Limited v. Emerson Electric Co. further stresses the importance of carefully crafting the terms and conditions in a non-disclosure agreement (“NDA”), and ensuring there is no ambiguity as to when the NDA’s confidentiality protections expire.  The Court in Bladeroom reversed a multi-million dollar judgment for the plaintiff, based largely on the Court’s differing interpretation of the duration of the confidentiality obligations under the NDA.

Continue Reading A Cautionary Tale on Including an Expiration Date in NDAs

On July 9, 2021 President Joe Biden issued an Executive Order on Promoting Competition in the American Economy, which urges the Attorney General and Federal Trade Commission (FTC) to curb the use of non-compete and no-poach agreements.  The Executive Order aims  to foster a “fair, open, and competitive marketplace,” and calls for a “whole-of-government” approach to reverse trends of industry consolidation and anticompetitive practices. The Order indicates these trends have harmed employees’ wages, work conditions, and mobility.  It further targets what it characterizes as the “overuse” of non-compete agreements and other barriers to entry in certain markets.

Continue Reading President’s Executive Order Aims to Foster a Competitive Marketplace

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

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

Trade secrets and other proprietary information can be among a business’ most valuable assets and drive its competitive advantage.  It is therefore ordinarily critical that employees be bound by an enforceable agreement that prohibits them from misusing or otherwise harming the value of the employer’s confidential information.  The recent California Court of Appeal decision, Brown v. TGS Management Co., LLC (2020) 57 Cal.App.5th 303, should be of concern to employers because it holds that an employee confidentiality agreement may be voided as a de facto unlawful non-compete agreement if it has the effect of preventing the employee from working in the industry.   
Continue Reading California Court Strikes Down Overbroad Confidentiality Agreement as a de facto Non-Compete

On September 21, 2020, in a published 2-1 opinion in Doe v. Google Inc., the California Court of Appeal (Dist. 1, Div. 4), permitted three current and former Google employees to proceed with their challenge of Google’s confidentiality agreement as unlawfully overbroad and anti-competitive under the California Private Attorneys General Act (“PAGA”) (Lab. Code § 2698 et seq.).  In doing so, the Court of Appeal reversed the trial court’s order sustaining Google’s demurrer on the basis of preemption by the National Labor Relations Act (“NLRA”) (29 U.S.C. § 151 et seq.) under San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244–245 (1959).  The court held that while the plaintiffs’ claims relate to conduct arguably within the scope of the NLRA, they fall within the local interest exception to Garmon preemption and may therefore go forward.  It remains to be seen whether plaintiffs will be able to sustain their challenges to Google’s confidentiality policies on the merits.  However, Doe serves as a reminder to employers to carefully craft robust confidentiality agreements, particularly in the technology sector, in anticipation of potential challenges employees may make to those agreements.
Continue Reading California Court of Appeal Rules that Challenge to Google’s Confidentiality Agreements May Proceed Past the Pleading Stage

Business-to-business contracts often concern trade secrets. Contracts such as NDAs, joint development agreements, license agreements, vendor agreements, and other commercial agreements commonly contain restrictive covenants relating to the protection of trade secrets or other protectible interests. But when do these terms constitute an illicit restraint of trade under California law? The California Supreme Court just addressed this very question in Ixchel Pharma v. Biogen , holding that most B2B agreements are governed by the common law rule of reason, instead of the flat prohibition on noncompetes applicable to the employment context.
Continue Reading Ixchel v. Biogen: California B2B Noncompetes Do Not Per Se Violate B&P Section 16600, and Are Instead Subject to Rule of Reason

Given the prevalence of trade secret misappropriation litigation among members of the fashion, beauty, and retail industry, those in that industry should (1) take care to protect their trade secrets from misuse by others and (2) consider steps to try to reduce the risk of misappropriation claims against them by others.  Both situations – loss of a valuable trade secret and burdensome litigation – can be devastating to a business.  We offer here some potential measures that businesses can take to attempt to avoid such undesirable situations.
Continue Reading Members Of The Fashion and Retail Industry: Trade Secret Claims Are In Vogue These Days

Non-compete, proprietary information, and confidentiality agreements often contain forum selection provisions, which specify where any related litigation must be brought.  But what is to happen when the underlying agreements contain different forum selection provisions?  A United States District Court for the Southern District of Indiana recently addressed this very issue, and held that in such cases, a court must decide for itself which proposed forum has the greater connection to the underlying dispute by focusing on just the facts.  See High Tech Nat’l, LLC v. Wiener, No. 119-CV-02489-SEB-MJD (S.D. Ind. Nov. 26, 2019).
Continue Reading Trade Secrets and Conflicting Forum Selection Provisions – Focus on the Facts!

Reprinted with permission from the May 21, 2020 issue of The Recorder. © 2020 ALM Media Properties, LLC. Further duplication without permission is prohibited.  All rights reserved.

Video conferencing has been available for years but given its new popularity in these COVID-19 times,[1] it behooves businesses to take care to protect their trade secrets during video conferencing.  Here, we address some potential risks to trade secrets from video conferencing –including hidden ones – and offer some potential measures to limit them.
Continue Reading Who’s Watching? Hidden Dangers To Trade Secrets From Video Conferencing