Category Archives: Trade Secrets

California Case Highlights Need to Look Before You Leap . . . and File Suit

Late last month, the California Court of Appeal upheld a $180,000 award of sanctions against an employer for bringing a baseless trade secret misappropriation suit. While this case arose in California and involved California law, it involves concepts that have been recognized by Massachusetts judges and shows the possible consequences of the common impulse to file a lawsuit quickly and ask questions later.

In the California case, Cypress Semiconductor Corp.… More

Is a Federal Trade Secrets Act on the Horizon?

Late last month, Senators Chris Coons (D-Del.) and Orrin Hatch (R-Utah) filed the Defend Trade Secrets Act, a bill that would create a federal trade secrets cause of action for civil litigants.  Currently, trade secrets litigation is a state law matter, meaning that most trade secrets litigation takes place in state courts, with their different statutes and court procedures.  But if this new Act passed, trade secrets protections would be enforced by a uniform law in the federal court system,… More

If You Have a Trade Secret, You Better Protect It

            Late last month, Judge Cornelius J. Moriarty of the Massachusetts Superior Court granted summary judgment for a defendant company and two individual defendants on a trade secret misappropriation claim because the plaintiff company did nothing to protect what it claimed were trade secrets.  One element of a trade secret claim is that the plaintiff must demonstrate that it took sufficient actions to protect its trade secret from unauthorized disclosure. … More

Update on Noncompete Legislation in Massachusetts

Earlier this month, the Joint Committee on Labor and Workforce Development of the Massachusetts state legislature held a hearing during which it discussed a proposal to limit the enforcement of noncompetes.  The bill, in both its House and Senate versions, provides, with certain exceptions relating to acts by the employee, a presumption that noncompetes for no longer than six months are reasonable (and enforceable), but noncompetes that are longer than six months are presumed to be unreasonable (and not enforceable to the extent they last longer than six months). … More

U.S. District Judge in Massachusetts Explains Employee Solicitation, Concludes That the Actual Use of a Trade Secret Is Not Necessary to Get a Preliminary Injunction, and May Have Extended the “Inevitable Disclosure” Doctrine Beyond Noncompete Scenarios

            Last week, Judge Timothy S. Hillman of the U.S. District Court of Massachusetts allowed a plaintiff’s motion for a preliminary injunction against three defendants who allegedly stole trade secrets from their former employer, even though there was no evidence that the defendants used that information when they went to a competing company.  Judge Hillman also provided useful guidelines for determining when a defendant directly or indirectly solicits another employee to leave the company,… More

Massachusetts Federal Court Takes Jurisdiction Over “One-Man” Georgia Corporation Whose Agent Allegedly Stole Trade Secrets in Massachusetts

            In a decision from March that has only recently garnered media attention, Judge Rya Zobel of the U.S. District Court in Massachusetts concluded that a Georgia corporation whose agent allegedly stole trade-secret information from a company’s office in Waltham, Massachusetts could face a lawsuit in Massachusetts.  The plaintiff, BGI Inc., is a Massachusetts corporation that makes environmental monitoring equipment such as air samplers and airflow meters.  Its former president,… More

Survey: Employees Pose Most Significant Threat to a Company’s Trade Secrets

Much attention has been focused in recent months on the threat to U.S. businesses posed by so-called “cyber-espionage”:  attacks on IT systems and thefts of confidential information from foreign governments and criminal/terrorist organizations.  Certainly, these threats are growing.  However, employers should not lose sight of the disheartening fact that the most significant threat to a company’s confidential information continues to be its own employees.  This point was brought home by the results of a survey issued several weeks ago by Symantec,… More

10 Important Pieces of Noncompete, Trade Secret, and Computer Fraud News

During this past fall and much of the winter, I was serving as a Special Assistant District Attorney in Norfolk County, Massachusetts, which didn’t give me much time to blog. So, to steal a technique that John Marsh uses every week to supplement his excellent posts on the Trade Secret Litigator blog, here are some short discussions of interesting cases and articles I came across over the past few months.… More

“Bring Your Own Disaster” Policy?

Law360 reports on a panel event held by the Association of Corporate Counsel on Tuesday to discuss the perils of allowing employees to use their own mobile devices for work purposes.  Soren Burkhart of McGladrey LLP argued that “Bring Your Own Device” policies, which I have written about herehere, and here, should be called “Bring Your Own Disaster”… More

How to Protect Your Personal Device (and Personal Information) from Discovery

Once a lawsuit over trade secrets or a noncompete begins, “discovery” is usually the next step in the case.  This is the phase of a lawsuit where each party asks for documents and conducts depositions to obtain relevant information from the other side.  As any employment litigator can tell you, discovery usually involves tricky issues regarding what information is relevant to the lawsuit (and thus should be disclosed) and what is the personal information of an employee or other person that has little to do with the case.… More

“Clouds, Mobile Devices and the Workplace”

Margaret A. Keane has written an interesting article on the growing use of “Bring Your Own Device” (BYOD) policies by employers whose employees use mobile devices for work purposes.  These policies trade support for employee mobile devices from the employer’s IT organization for, among other things, regulation of “the use of mobile devices in ways that may implicate . . . workplace policies, such as data privacy and security,… More

The Trend Toward Requiring Plaintiffs to Identify Trade Secrets Early in Litigation

A good article in BNA by Eric W. Schweibenz and Lisa M. Mandrusiak argues that the recent trend in trade secret litigation has been to require plaintiffs to state with specificity early in litigation what trade secrets they claim the defendants stole.  This prevents “fishing expeditions,” where plaintiffs bring vague claims for misappropriation of trade secrets in the hope that they’ll find something solid when they obtain documents and other information from defendants in discovery. … More

The Key to Protecting Confidential Information from Being Taken by a Departing Employee to a Competitor: Planning

BNA has published a good article by David A. McManus, Prashanth Jayachandran, and Jason Burns on how an employer can protect its confidential information from being taken by a departing employee to a competitor.  The key is to have a plan.  Some of their more interesting points include:

  • In addition to having certain employees sign non-disclosure agreements, an employer should have employees who use their own electronic devices to access company information sign a separate agreement permitting the employer to inspect the devices and delete company information upon termination of employment.…
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“Employee Non-Compete Agreements, Trade Secrets and Job Creation: The Status of Law Reform” at the Boston Bar Association

On Tuesday, July 24, the Boston Bar Association will be hosting a symposium on noncompete and trade secret legislation in Massachusetts.  State Representatives Brownsberger and Ehrlich, the leaders of the movement to substantially limit the enforceability of noncompetes in Massachusetts, will be in attendance.  Mike and I plan to be there, too, and will report back.  Stay tuned. More

New U.S. District Court Decision from Massachusetts Makes “Inevitable Disclosure” Arguments Effective Only When Noncompetes are Involved

Massachusetts Lawyers Weekly reports on a new decision from the U.S. District Court for the District of Massachusetts by Judge Casper that makes “inevitable disclosure” arguments effective only in cases involving noncompetition agreements. I’m quoted in the text of the article.  (For those of you without a subscription to Massachusetts Lawyers Weekly, I’ll post a copy of the article once I receive reprint permission.) The article does a good job of describing the facts and holding,… More

“Social Media: A Danger to Company IP”

Law360 has posted a useful article by Ben Quarmby about the dangers of employee use of social media to a company’s patents, trade secrets, and copyrights.  The big danger for trade secrets is disclosure.  Trade secrets must remain secret if they are to be protected by the law, and “[o]nce the secret has been disclosed on a social media public platform, it is difficult to place it back under wraps.” … More

If You’re Going to File a Trade-Secret Lawsuit, You Better be Able to Identify the Trade Secret

Sometimes a big problem for plaintiffs in trade-secret lawsuits is identifying precisely what was stolen.  In a recent case out of California, a plaintiff employer sued a former employee who was hired by a competitor for misappropriation of trade secrets.  The employee had backed up his company laptop on a hard drive, and he did not return the hard drive after switching jobs.  The hard drive contained over 4,000 files that the employer alleged contained trade secrets. … More

Update on the Brocade Case: Court Dismisses Claims Based on Information from Settlement Discussions

Last month, I wrote about a trade-secret case in which a defendant employee, David Cheung, asked the court to order the plaintiff employer, Brocade Communications, to pay his attorney’s fees because the claims against him were frivolous.  Last Wednesday, the court agreed to dismiss the case because the only evidence Brocade had against Cheung was gleaned in settlement discussions with him, evidence which would be inadmissible at a trial under the rules of evidence. … More

Defendant Asks Court to Make Plaintiff Pay His Attorney’s Fees in Trade Secret Case

A few weeks ago, I wrote about a law firm that was sued by two former employees of the firm’s former client for filing a trade-secret lawsuit against them, allegedly without having any good-faith reason to do so. Last Monday, a former employee similarly asked the U.S. District Court for the Northern District of California in a different case to force his former employer to pay his attorney’s fees spent defending himself against a lawsuit brought by his former employer for trade-secret theft.… More

Executives (and One Law Firm) Allegedly Behaving Badly

A number of cases involving former executives have received national attention recently and serve as a good reminder that trade-secret, non-solicitation, and non-competition controversies can arise at the highest level of a company. Another recent case also serves as a reminder that trade-secret claims should be filed only when there is a good-faith basis to do so. Consider the following:

  • In In re: High-Tech Employee Antitrust Litigation,…
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Survey Reveals Generation Gap in Employee Attitudes Relating to Employer Confidential Information

A recent survey of 2,625 adult Americans reveals some interesting attitudes towards employer confidential information, including different attitudes depending on a person’s age. Over two-thirds (68%) of 18-34 year olds responded that it is acceptable to remove confidential information from their place of employment. This contrasts with just half (50%) of those 55 or older believing such behavior is acceptable.

In fact, 86% of those 55 and over believe someone should be fired for taking confidential information,… More

Former Intel Employee Pleads Guilty to Theft of $1 Billion in Trade Secrets

A former Intel computer hardware engineer recently agreed to plead guilty to five counts of wire fraud in Massachusetts federal court stemming from his theft of 13 secret documents from Intel’s facility in Hudson, Massachusetts while he was an employee there in June 2008. Biswamohan Pani became an employee of Intel in May 2003 and began looking for a new job in February 2008. He started working at Advanced Micro Devices,… More

Can You Keep a Secret?: Dispute Remains Over Secrecy of Marketing Information in Trade Secret Case

An interesting case decided on April 3 in Florida confirms the axiom that information that is not secret cannot be a trade secret. In Godwin Pumps of America, Inc. v. Ramer, Godwin sued its former employee, Ramer, for, among other things, trade secret misappropriation under Florida’s Uniform Trade Secret Act (see here for more on the Act). Godwin argued that there was nothing in dispute for a jury to hear on Ramer’s liability and moved for the judge to enter summary judgment against Ramer. … More

Will Massachusetts Adopt the Uniform Trade Secrets Act?

At my last Massachusetts Bar Association (MBA) Civil Litigation Section meeting, I learned about a bill to adopt the Uniform Trade Secrets Act (UTSA) that has been floating around the Massachusetts Legislature since late January. Forms of the UTSA have been adopted in 46 states in addition to the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Only New York, Texas, North Carolina, and Massachusetts have not adopted it.… More

New Case Highlights Split of Authority Interpreting the Computer Fraud and Abuse Act

Below is a cross-post with the Security, Privacy and the Law blog.

Employers increasingly are suing former employees who have left to join or form competing companies using the civil remedies available under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030. They use the CFAA to prevent their former employees from using sensitive information obtained from the former employer’s computer system. The scope of the CFAA,… More

Federal Court Denies Injunction on Procedural and Substantive Grounds

This decision from the United States District Court in Boston, denying a request for a preliminary injunction to enforce non-competition and other restrictive covenants, is notable for a few reasons. First, the federal court in Massachusetts issues relatively few decisions involving requests to enforce noncompete and/or nonsolicitation agreements; a published decision from a federal judge — in this case from Judge George A. O’Toole, Jr. — is inherently of interest. More importantly,… More

Report: Employee Theft of Information is Pervasive

Multiple media outlets (see here  and here, for example) have been covering an alarming report jointly issued recently by the Ponemon Institute, an Arizona-based research group, and Symantec Corp., that data theft is common among departing employees. As reported in the Washington Post, the most significant finding of a joint survey of employees who left a job in 2008 was that almost 60% of ex-employees admitted to taking company data of one sort or another. The most commonly identified kinds of records taken were “email lists,”… More

Recent Decision Highlights Risks of the “No-Noncompete” Situation

While some in the business community continue to focus on whether the ability to enforce noncompetes in Massachusetts places the state at a competitive disadvantage vis-à-vis Silicon Valley, a recent decision from the Massachusetts Superior Court’s Business Litigation Session — Network Systems Architects Corp. v. Dimitruk — highlights the difficulties departing employees and their future employers can face even in the absence of a contract restricting post-employment activities. … More

Employee’s Remote Computer Access Undermines Employer’s injunction Request

Your valuable sales employee abruptly departs and begins working at your direct competitor.  Soon, some of your customers follow the departed employee and other customers cancel meetings you have scheduled with them.  Now you are suspicious, so you scrutinize your former employee’s computer activity and discover that just prior to his departure, he emailed to himself or downloaded valuable customer information and other data.  Can you get an immediate injunction stopping your former employee’s conduct?… More