A recent federal district court ruling serves as an important reminder that a former employee may be held liable for trade secret misappropriation even if the alleged trade secrets are not physically or electronically taken by the departing employee, but instead retained only in memory.Continue Reading Evidence of a Defendant’s Physical or Digital Retention of Trade Secret Information Is Not Required to Prove Trade Secret Misappropriation Under the California Uniform Trade Secrets Act
This is a boom time for trade secret litigation in the U.S. The underlying conditions driving the boom include the growing mobility of the global workforce, the ease with which electronic data can be captured and moved, the emergence of nation-state actors participating in the theft of information in the global marketplace, and the time-limited benefits and uncertainties of patent litigation. Also fueling this rise are the federalization of trade secret laws with the Defend Trade Secrets Act (DTSA), the extraterritorial application of such laws to acts committed outside the U.S., and the availability of robust legal remedies in the U.S. for trade secret misappropriation. For companies seeking remedy against trade secret misappropriation, the United States offers unparalleled advantages as a legal venue: extraterritorial application of its laws combined with a broad range of monetary remedies in U.S. District Courts and the powerful exclusion of goods at the border offered in U.S. International Trade Commission (ITC) Section 337 proceedings. For international companies doing or planning to do business in the U.S., understanding the risks of lawsuit is now critical.Continue Reading The Proliferation of Trade Secret Misappropriation and U.S. Enforcement Choices
Following the Seventh Circuit’s recent decision in Motorola Solutions Inc. v. Hytera Communications Corp. Ltd., the United States may become a destination venue for resolution of global trade secret disputes. The Seventh Circuit held that U.S. trade secret law applies extraterritorially—reaching the theft of trade secrets outside the United States—so long as “an act in furtherance” of the offense was committed in the United States. The court held, for example, that marketing products in the United States qualified as an “act in furtherance” if the products were made using stolen trade secrets. Once an “act in furtherance” is identified, damages can be based on a company’s global sales. Motorola, for example, resulted in an award of $135.8 million in compensatory damages based on Hytera’s worldwide sales. Similar to the global impact of U.S. antitrust and anti-bribery laws, the Seventh Circuit’s decision highlights the critical importance to companies of considering U.S. trade secret laws. For example, if a company suffers the theft of its trade secrets anywhere in the world, it should consider the United States as a possible venue for bringing a legal claim. Conversely, companies should take measures to train employees and ensure compliance with U.S. trade secret laws even if the employees are located outside of the United States.Continue Reading Companies Should Take Notice of the Extraterritorial Reach of U.S. Trade Secret Law
The Virginia Court of Appeals recently issued a consequential trade secrets ruling, reversing a jury’s multi-billion dollar damages award, and finding that the trial court committed several legal errors which improperly led to the largest damages verdict in Virginia’s history. The case, Pegasystems Inc. v. Appian Corp., No. 1399-22-4, involved two companies in the business process management (BPM) industry, each of whom offer platforms that enable third party business customers to build complex software applications using “low-code application development platforms.” Continue Reading Virginia Court of Appeals Reverses Record $2 Billion Verdict, Emphasizing Damages Resulting from Misappropriation Must Actually Be Proved Under Virginia Trade Secrets Law
As we previously reported here in March 2020, the implementation of remote work policies heightens the risk of misappropriation of trade secrets in remote work environments and could require businesses to take additional steps to ensure the security of their trade secrets and confidential information. In the last few years, the Securities and Exchange Commission (“SEC”) has charged several individuals with insider trading after they misappropriated material, nonpublic information obtained as a result of their remote work environment.[1] Most recently, a man was charged with insider trading after misappropriating trade secrets he obtained by listening to his wife’s[2] business calls while the two worked from home. Continue Reading Lesson Learned: Man Charged with Insider Trading After Misappropriating Information from Wife’s Work-From-Home Calls
On August 13, 2021, Governor Pritzker signed into law a bill amending the Illinois Freedom to Work Act governing restrictive covenants and non-competition agreements. On May 30, 2021, the Illinois General Assembly passed a bill codifying existing noncompete law in some respects and modifying it in others. We detailed the Bill in a prior blog here. The Bill is now the law. The amendments become effective on January 1, 2022 and will not apply retroactively.
Continue Reading Illinois Governor Signs Non-Compete Legislation