Articles Posted in Trade Secrets

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Being wise about knowing which clauses to include in a contract will help you in the long run.  This is for reason being that a contract that is not enforceable on some level could run the risks of becoming void and unenforceable.  In turn, that can cost business and profit.  The basic principles of materiality can change from year to year.  An awareness in advance can save.  We are here to help with the following list:

1. Non compete agreements are enforceable to the extent that a business interest is protected.

This has always been at the core of non compete interests.  Having been at the core, means it has also been subject to scrutiny.  There are plenty of court decisions that have considered this more closely which includes the fairness test as espoused in the case of  White v. Mederi Caretenders Visiting Services of Southeast Florida, LLC, Case No. SC16-28 (Fla. Sup. Ct., Sep. 14, 2017).  Is what the employer seeking to protect its investment or is it making it unfair for the employee to use information, relationships or resources that they acquired while employed by a former employer?  That is the question and agreements will be assessed on the management of their exploitative nature. 

2. Forum selection clauses are usually enforceable across the country.

Clauses that choose not to enforce another state’s law are generally enforceable unless the violation of public policy is at stake.  In the case of  Stone Surgical, LLC v. Stryker Corp., Case No. 16-1434 (6th Cir., May 24, 2017), an employee was subject to a non compete with Michigan choice of law and forum clause.  Enforceability of such clauses was challenged when that employee transitioned to work with a competitor of the other jurisdictional state of Louisiana.   It was noted on appeal at the federal level that Michigan law would favor such clauses. Continue reading

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Advertising name-brand products that don’t actually have anything to do with the brand being named is called false advertising. It’s illegal, not only because it causes potential harm to the brand whose name is being abused, but to consumers who are misled as a direct result of the false advertising.

Costco has allegedly been selling diamond engagement rings that were marked “Tiffany” rings, and Costco salespeople allegedly told customers the rings were “Tiffany” rings. Although the wholesale retailer has never sold jewelry from the famous Tiffany & Co., and has never used the company’s trademark blue boxes, the wholesale company does sell diamond rings with a pronged setting, which it claims is commonly known as a “Tiffany” setting.

The problem was that Costco did not call them “Tiffany setting” rings or “Tiffany-style” rings. It just called them “Tiffany” rings, which understandably led to some confusion.

Despite the fact that customers got upset when they realized the rings labeled “Tiffany” were not actually from the famous jewelry store, Costco allegedly still did not see a problem with how they were marketing their generic diamond engagement rings. Tiffany & Co. disagreed and sued the wholesale company for trademark infringement. Continue reading

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In a case of “idea theft,” film industry defendants who argued the right to free speech protected them against a claim of stealing a screenplay that was later made into “The Purge” films were recently slapped down by the Ninth Circuit Court of Appeals (Jordan-Benel v. Universal City Studios Inc., et al., No. 15-56045 (9th Cir., 2017).

In 2011, screenwriter Douglas J. penned a screenplay entitled “Settler’s Day,” depicting a futuristic landscape of lawlessness and chaos, which he registered with the U.S. Copyright Office. Douglas’s agent submitted the screenplay to persons at United Talent Agency (UTA). After saying it would pass on the screenplay, UTA forwarded it to other clients of UTA, who allegedly adapted it into “The Purge.” The film and its sequel were released in 2013 and 2014, produced by Universal City Studios and four other production companies.

In 2015, Douglas filed a complaint for copyright infringement against UTA and the production company defendants, claiming breach of an implied-in-fact contract based on defendants’ implied agreement to compensate and credit him as a writer/creator should his idea be used. He alleged that defendants breached this agreement by using and profiting from his ideas without compensation or credit, seeking declaratory relief. Continue reading

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Since 1975, the ratio of intangible assets (ideas, copyright, intellectual property, etc.) to tangible assets (physical property) in the S&P 500 market value has increased dramatically. In 1975, intangible assets made up just 17% of the market value and have done nothing but increase, reaching 87% in 2015.

As of May 22, 2016, a new federal trade secrets law known as the Defend Trade Secrets Act (DTSA) went into effect and Illinois employers need to be prepared.

Although it’s a federal law that places higher restrictions on protecting intellectual property, it does not block state or local laws, such as the Illinois Trade Secrets Act (ITSA). That means an Illinois employer can file a federal DTSA lawsuit and a simultaneous ITSA lawsuit, which means, even if the federal lawsuit doesn’t go their way, they may still be able to collect damages and/or awards under the ITSA.

Alternatively, businesses can sue under the ITSA if the statue of limitations under the DTSA has expired. Under the DTSA, a lawsuit must be filed within three years of the discovery of the transgression, but the ITSA allows up to five years. Continue reading

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With the economy still unsteady after the recession, more and more people are attracted to the idea of starting their own business. But one of the biggest challenges when doing that is making sure you have something unique to offer the market.

For people who have spent most of their career working at one company, that’s often all they know. If they’re going to try to branch off on their own, they’d better make sure their new operation is significantly different from their employer’s, or at least has a new approach to the industry. Either way, it’s important to note that just copying and pasting your employer’s business is not only unethical – it’s illegal.

According to officials, David Newman, a 34-year-old trader who worked in Chicago, stole more than 400,000 electronic files from his employer. Those files contained all of WH Trading LLC’s proprietary computer code and trading software. Continue reading

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In Silicon Valley, the heart of the technology industry, a company’s greatest asset is its talent. Their brains and the information they have access to are priceless, which is why, for many tech companies, it is imperative for them not to allow their employees to take such invaluable information directly to a competitor. It’s also why Waymo, Google’s self-driving car company, is suing Uber and one of Google’s former employees for allegedly stealing trade secrets.

According to Waymo, Anthony Levandowski, who was working on Google’s self-driving vehicle technology, left the company last year after allegedly stealing 14,000 documents containing trade secrets. Levandowski then started his own self-driving truck company, called Otto, which he sold to Uber earlier this year. Levandowski is now working as the head of Uber’s self-driving department, although Uber and Levandowski claim their technology bears no resemblance to Waymo’s self-driving technology. Continue reading

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There’s no doubt that self-driving cars will be the next big thing in the automobile industry, which is why Google got so upset when a former employee allegedly took trade secrets regarding their self-driving technology to a competitor.

Anthony Levandowski claims he has been working on technology for driverless automobiles since he was in college. He entered a self-driving motorcycle into the Pentagon’s first competition for driverless vehicles in 2004, when he was still a graduate student at the University of California in Berkeley.

In 2007, Levandowski started working for Google on their maps program. When Google gave the go-ahead to start experimenting with self-driving automobiles, Levandowski was one of the first people chosen for the team.

Levandowski left Google early in 2016 to start his own business, a driverless truck company named Otto. That company was bought by Uber, at which point Levandowski became the vice president in charge of Uber’s driverless vehicle project. Continue reading

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While there are many people who dream of becoming an internationally renowned singer/songwriter, the position does have its drawbacks. For starters, many of them don’t own the rights to their own songs for their most lucrative years, and even when the songs’ copyrights have ended, many songwriters still have trouble regaining rights to the music they created.

For example, Sir Paul McCartney, writer and cowriter of some of the most successful songs of all time (including “All You Need Is Love” and “Strawberry Fields Forever”) is currently suing Sony/ATV for allegedly refusing to give up the rights to his songs.

Under the Copyright Act of 1976, authors and creators are allowed to reclaim the rights to their art from publishers after a certain amount of time has passed. Since that amount of time has expired for many of the Beatles’ timeless songs, McCartney should be able to reclaim ownership of his songs, but Sony/ATV has decided to put up a fight. Continue reading

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Some companies will do anything to get their hands on valuable trade secrets from their competitors. According to Olaplex, a startup based in California, L’Oréal allegedly tried everything from poaching employees to allegedly offering to acquire the company in order to gain access to allegedly sensitive, privileged and secret information. What was at stake was a alleged secret formula designed to protect hair from damage during the dyeing process.

Starting around the middle of 2015, L’Oréal allegedly tried to hire Olaplex employees it thought were responsible for creating the revolutionary product. When that didn’t work, L’Oréal allegedly approached Olaplex about possibly acquiring the company.

As a direct result of talks between the two companies to negotiate the terms under which the French-based company might acquire the U.S.-based company, L’Oréal was allegedly given access to confidential and proprietary information that had not yet been made available to the public, including an unpublished application for a patent on a product designed to allow customers to dye their hair without causing damage. Continue reading

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Before now, if an organization had its trade secrets stolen, its only recourse was usually to bring an action against the perpetrator in state court under the Uniform Trade Secrets Act, which was adopted by most states to provide a uniform civil remedy for trade secret theft, or under state criminal laws. The only federal protection for trade secrets was criminal sanction under the Economic Espionage Act of 1996. That changed this May, when President Obama signed into law the Defend Trade Secrets Act, which gives owners of trade secrets a new federal civil cause of action for misappropriation of their proprietary information. The law is intended to provide an alternative to the current patchwork of state laws governing the issue, but not replace them; unlike the federal Copyright Act, for instance, DTSA does not pre-empt state law.

DTSA allows a plaintiff to seek relief in federal court for misappropriation of trade secrets “by improper means” related to a product or service in interstate or foreign commerce. Improper means is defined as theft, robbery, misrepresentation, espionage, or breach of a duty to maintain secrecy. The law establishes civil remedies such as injunctions and damages for actual loss and unjust enrichment, or a “reasonable” royalty where an injunction is not feasible. If a trade secret is “willfully or maliciously” misappropriated, damages may be doubled. Trade secrets are broadly defined to include all forms and types of information that the owner has taken reasonable measures to keep secret, and which derive independent, actual or potential economic value from being unknown to the public. Continue reading