The Supreme Court’s recent decision in Van Buren v. United States, — S. Ct. —-, 2021 WL 2229206 (2021) resolved a longstanding Circuit split regarding the scope of liability under the Computer Fraud and Abuse Act of 1986 (CFAA), 18 U.S.C. § 1030 et seq. As we previewed last year, Van Buren addressed whether a person “exceeds authorized access” within the meaning of the CFAA when accessing information on a computer for an improper purpose. In an Opinion authored by Justice Barrett, the Supreme Court ruled, 6-3, that the CFAA does not cover those who have improper motives for obtaining computerized information they are otherwise authorized to access.  
Continue Reading Supreme Court Narrows The Scope of Liability Under The Computer Fraud and Abuse Act

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

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

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

Employment agreements with restrictive covenants typically contain both a forum selection clause, which determines the forum where a dispute must be heard, and a choice of law clause, which determines the law that applies to the dispute. As lawyers who regularly litigate post-employment restrictive covenant cases well know, enforcement or restrictive covenants often turns on which court decides the dispute, and what law applies, which is why these provisions are so important.  Often, however, employers consider these provisions as mere drafting afterthoughts.  They shouldn’t be, given the outsized importance they can play in determining enforcement.  Moreover, at the dispute stage – whether seeking to enforce or resist a restrictive covenant – forum selection and choice of law provisions should inform, and often drive, litigation strategy.
Continue Reading Don’t Neglect Forum Selection and Choice of Law Provisions When Drafting or Litigating Restrictive Covenants

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

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