The recent decision by the U.S. Court of Appeals, Sixth Circuit, Caudill Seed & Warehouse Co. v. Jarrow Formulas, Inc., illustrates the flexible approach taken by courts when considering the calculation of compensatory damages in trade secrets cases. No. 21-5345, 2022 WL 16846585 (6th Cir. Nov. 10, 2022) There, the Sixth Circuit affirmed a jury’s compensatory damages verdict which awarded the plaintiff its research and development costs for its misappropriated trade secret even though the underlying trade secret was not destroyed through disclosure or other means. Id. at *15.
Continue Reading Reap What You Sow – Sixth Circuit Affirms Recovery of Research and Development Costs to Agricultural Company in Trade Secret Case
Protection
One Bad Apple Won’t Spoil the Rest of the Bunch’s Ability to Fairly Compete in Matthews International Corp. v. Lombardi
The tension between encouraging free and fair competition and protecting competitive advantages derived from hard work and ingenuity is at the very heart of trade secrets law. Among other things, this tension manifests itself in the gray areas endemic to any legal analysis of what information may constitute a “trade secret.” In comparison, assessing the behavior of those accused of misappropriating trade secrets can sometimes be a much more straightforward exercise. And it seems that the more egregious (and less “gray”) the behavior, the more likely a court is to exercise its limited discretion to restrain competition at the preliminary relief stage to prevent disclosure and use of misappropriated trade secrets. The 3rd Circuit’s recent decision in Matthews International Corp. v. Lombardi(October 12, 2022) is a timely example of this principle.
Continue Reading One Bad Apple Won’t Spoil the Rest of the Bunch’s Ability to Fairly Compete in Matthews International Corp. v. Lombardi
Insufficient Evidence: Fifth Circuit Affirms Denial of Preliminary Injunction for Trade Secret Misappropriation
While preliminary injunctions are not uncommon in trade secrets misappropriation cases, a recent Fifth Circuit decision highlighted the importance that the movant put forth colorable evidence of misappropriator “use” of the trade secrets in preliminary injunction cases. In CAE INTEGRATED, L.L.C.; Capital Asset Exchange and Trading, L.L.C. v. MOOV TECHNOLOGIES, INCORPORATED; Nicholas Meissner — F.5th — (2022) 2022 WL 3210358 , the Fifth Circuit affirmed denial of a preliminary injunction for the lack of evidence showing such use. In this case, CAE sued Meissner, a former employee, and MOOV, his subsequent employer, for trade secret misappropriation in the Western District of Texas under the Defend Trade Secrets Act (DTSA) and the Texas Uniform Trade Secrets Act (TUTSA). CAE also moved for a preliminary injunction, which was denied. CAE appealed that denial in the Fifth Circuit.
Continue Reading Insufficient Evidence: Fifth Circuit Affirms Denial of Preliminary Injunction for Trade Secret Misappropriation
What Employers Need to Know About Newly Proposed Non-Compete Legislation in New Jersey
Following a nationwide trend, New Jersey recently joined a growing list of states seeking to limit the use of non-compete and non-solicitation agreements by employers.
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Void vs. Voidable: The Distinction That Can Make or Break a Tortious Interference Claim in Light of the Great Resignation
Over the past two years, employee mobility seems to be at an all-time high. In fact, the labor market is so fluid that pundits and experts often refer to it as the “Great Resignation.” Although employee mobility can be a great opportunity for both employees and prospective employers, employers hiring new employees should always beware of potential problems such as restrictive covenants, which may follow an employee to a new job.
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Signed, Sealed, Delivered? Fifth Circuit Finds Sealing of Sensitive Information Requires Far More Than a Protective Order
Trade secret litigation presents a variety of procedural and practical complexities at every stage of the proceeding. One of the most important—yet often overlooked—issues in these cases can be summarized by the following question:
Continue Reading Signed, Sealed, Delivered? Fifth Circuit Finds Sealing of Sensitive Information Requires Far More Than a Protective Order
Dairy, LLC v. Milk Moovement, Inc.: Identifying Software Trade Secrets With Particularity to State a Claim for Trade Secret Misappropriation
A recent decision from the Eastern District of California illustrates the sometimes fine line between the need for plaintiffs to allege a claim for trade secret misappropriation in sufficient detail,…
Continue Reading Dairy, LLC v. Milk Moovement, Inc.: Identifying Software Trade Secrets With Particularity to State a Claim for Trade Secret Misappropriation
Ninth Circuit Upholds Application of California Labor Code To Contractual Forum-Selection and Choice-of-Law Clause To Keep Dispute Over Non-Compete Clause in California
This month, the Ninth Circuit’s decision in DePuy Synthes Sales v. Howmedica Osteonics held that a U.S. district court in California properly invalidated a foreign choice-of-law and forum selection provision under California Labor Code § 925, and denied a motion to transfer the case to a different venue. While this might seem at first blush like a technical issue of federalism and contractual interpretation, the decision indicates that federal courts in the Ninth Circuit will also apply California’s partial prohibition on the use of foreign forum-selection and choice-of-law clauses as to employees.
Continue Reading Ninth Circuit Upholds Application of California Labor Code To Contractual Forum-Selection and Choice-of-Law Clause To Keep Dispute Over Non-Compete Clause in California
Federal Circuit Deems Algorithm Potentially Valid Trade Secret Notwithstanding Prior Publication
On January 24, 2022, the Federal Circuit affirmed the grant of a preliminary injunction blocking the publication of a patent application on the basis that it contained the plaintiff, Masimo Corp.’s trade secrets. Masimo Corp. v. True Wearables, Inc., No. 2021-2146, 2022 WL 205485 (Fed. Cir. Jan. 24, 2022). The Court of Appeals did so despite evidence that a widely circulated and cited paper on statistics had disclosed an equivalent algorithm, because the defendant failed to show that others in Masimo’s particular field (or a related field) were aware of the paper.
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A Cautionary Tale on Including an Expiration Date in NDAs
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.
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Ninth Circuit Denies Sherman Act Challenge To No-Poach Provision
In an important decision on August 19, 2021, the Ninth Circuit Court of Appeals in Aya Healthcare Services, Inc. v. AMN Healthcare, Inc. affirmed the grant of summary judgment in favor of AMN, finding that the non-solicitation provision in the parties’ agreement was not an unreasonable restraint in violation of the federal antitrust law known as the “Sherman Act.” Instead, the Court ruled that the non-solicitation provision was “reasonably necessary to the parties’ pro-competitive collaboration” and that Aya failed to show the non-solicitation provision had a “substantial anticompetitive effect.”[1]
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