Grounded in California’s recognized hostility against restraints on competition, a recently published opinion from the California Court of Appeal, Hooked Media Grp., Inc. v. Apple Inc.[1], held that to establish trade secret misappropriation under California law,[2] it is not enough to show that the defendant has knowledge of the plaintiff’s trade secrets. Rather, in addition to proving that the subject information constitutes a trade secret,[3] the plaintiff must prove that the defendant improperly acquired or actually used the information. The ruling should be of interest to both former and new employers, as we explain below.
Continue Reading As A Reminder That California Has Rejected The Doctrine Of Inevitable Disclosure, Court of Appeal Rules Knowledge Of Former Employer’s Trade Secret Information Does Not By Itself Constitute Misappropriation

On September 2, 2020, the Fifth Circuit declined to void a fee award of nearly $2.3 million in favor of an employer that had prevailed on its trade secret theft claim against its former employee, because the employee willfully failed to comply with the bankruptcy court’s “extremely explicit” order regarding his objections to the award.
Continue Reading Fifth Circuit Affirms Attorney’s Fee Award of $2.3 million in Misappropriation Case Against Former Employee who Failed to Comply with Court’s Objections Order

The United States Court of Appeals for the Third Circuit recently affirmed a District Court opinion awarding punitive damages against a former employee who stole confidential information from his former employer, even though the employer did not “own” the stolen information.  Advanced Fluid Sys., Inc. v. Huber, 958 F.3d 168 (3rd Cir. 2020).  This is a first of its kind decision in the federal circuit courts.  The Third Circuit held that the non-owner employer still had the right to bring trade secret claims because it had possessed and taken appropriate safeguards to keep that information secret from its competitors and the public prior to the theft.  The Court of Appeals further determined that the employer could recover damages, including punitive damages, against the former employee who stole that information for the benefit of a competitor.  The case is further detailed below.
Continue Reading Federal Court of Appeals Rules That Ownership of Trade Secret Not Necessary to Recover Punitive Damages for Its Theft

On April 23, 2020, the California Court of Appeals affirmed a trial court decision refusing to order payment of a “reasonable royalty” as damages for misappropriation of a trade secret.  For the first time in a published California appellate decision, the Ajaxo court applied a test used to determine royalties in patent cases to a trade secret misappropriation case. Ajaxo, Inc. v. E*Trade Financial Corporation, 261 Cal. Rptr. 3d 583 (Cal. Ct. App. 2020).

Continue Reading What’s the Value? California Court Applies Patent Royalties Test To Trade Secret Claim