Diversity is Important – But Is It A Trade Secret?

7 03 2018

Trade Secret Trends

Mark Romeo and Helen Osun on March 5, 2018

On January 14, 2018, IBM’s Chief Diversity Officer resigned to go work for Microsoft in the same role. The caveat: she had a twelve month non-compete clause.

On February 12, 2018, IBM filed a lawsuit to enjoin its former diversity officer to honor her non-compete agreement with IBM and to recover damages. The suit, filed in Southern District New York court, alleges that the IBM non-compete agreement that the defendant signed has a New York federal and state choice of forum provision and is, therefore, enforceable. In addition to a breach of the non-compete agreement, IBM asserts a claim for misappropriation of its trade secrets. According to IBM, if its former diversity officer “is permitted to work for Microsoft, [she] will inevitably (if inadvertently) use and/or disclose IBM trade secrets for her own benefit and for the benefit of Microsoft.” In addition to injunctive relief (seeking an order requiring its former employee to honor the non-compete agreement), IBM is also seeking compensatory damages. It has also demanded that its former employee remit to them her equity compensation because of this alleged breach of her employment agreement. As to the demand that the employee return the equity compensation she had earned as an employee, IBM’s theory is that the employee is engaging directly in a business which is competitive with IBM. Furthermore, IBM asserts that this is considered a “detrimental activity” under the Long Term Performance Plan agreement in which the employee’s equity awards are governed by and, subject to cancellation and in certain circumstances like this, are subject to repayment.

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The content in this post was found at https://www.crowelltradesecretstrends.com/2018/03/diversity-is-important-but-is-it-a-trade-secret/
Clicking the title link will take you to the source of the post. and was not authored by the moderators of freeforafee.com.

Clicking the title link will take you to the source of the post.

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Waymo-Uber trade secrets trial puts spotlight on tech’s talent war

16 02 2018
JAN 31, 2018
LAT

Should full frontal lobotomies be required of Silicon Valley engineers looking to change jobs?

Uber Technologies Inc. has said with a touch of hyperbole that that’s what the future holds if Waymo wins its lawsuit accusing the ride-hailing giant of stealing trade secrets by hiring engineers who worked at the Alphabet Inc. unit.

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The content in this post was found at http://www.latimes.com/business/la-fi-hy-uber-waymo-20180131-story.html

Clicking the title link will take you to the source of the post. and was not authored by the moderators of privacynnewmedia.com. Clicking the title link will take you to the source of the post.



Webinar Recap! 2017 National Year In Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete, and Computer Fraud Law

27 01 2018

In Seyfarth’s first webinar in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas presented 2017 National Year In Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete, and Computer Fraud Law. The panel reviewed noteworthy cases and other legal developments from across the nation over the last year in the areas of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud. Plus, they provided their predictions for what to watch for in 2018.

As a conclusion to this well-received webinar, we compiled a summary of takeaways:

  • While the Defend Trade Secrets Act provides for an ex parte seizure order, courts have been very unwilling to provide such relief except in extraordinary circumstances.
  • In light of recent state laws and appellate court decisions at both the federal and state level in 2017, choice of venue and choice of law provisions must be carefully considered and strategically implemented.
  • The ABA’s May 4, 2017, Ethics Opinion encourages lawyers to have an open exchange of communication with their clients about the securities measures their firms are taking to safeguard the clients’ confidential information.

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The content in this post was found at https://www.tradesecretslaw.com/2018/01/articles/trade-secrets/webinar-recap-2017-national-year-in-review-what-you-need-to-know-about-the-recent-cases-developments-in-trade-secrets-non-compete-and-computer-fraud-law/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Non-Compete Applies To Facebook Page for Unlaunched Business–Joseph v. O’Laughlin

29 12 2017

This is another case where the defendant allegedly solicits customers or employees over social media in the face of a restrictive covenant. We recently blogged a couple of cases involving solicitations over LinkedIn. This case involves solicitations over Facebook.

O’Laughlin sold his vet clinic to Joseph. The sale agreement contained a non-compete clause that prohibited him from opening a clinic or soliciting patients or employees within 50 miles of the location he sold. The covenant was valid for five years. He sold the clinic for $750,000.

Six months later, O’Laughlin filed a zoning petition to operate a clinic at a location which was 8 miles from the clinic he sold. He formed an entity, create a Facebook page, purchased equipment, and published a “coming soon” page on Facebook. A link directed users to the prospective location in question.

Joseph filed a lawsuit seeking to enforce the covenant and sought injunctive relief. The trial court entered the injunction. O’Laughlin appealed. On appeal, O’Laughlin argued that he did not actually operate a clinic within the prohibited area, and merely creating a Facebook didn’t amount to a violation. He tried to bill these actions as merely “preparatory”. The court is not persuaded.

As an initial matter, the language of the restrictive covenant was broad. It did not cover just the veterinary practice. It also covered engaging or participating in a competitive business. In the court’s view, this encompasses forming an entity, purchasing an equipment, and applying for a zoning exception.

The court also focuses on his solicitation of customers through social media. The court finds his operation of a Facebook page and communications with prospective customers violated the clause:

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Case citation: Joseph v. O’Laughlin, 2017 WL 3599048 (Pa. Super Ct. Aug. 22, 2017)

 

The content in this post was found at http://blog.ericgoldman.org/archives/2017/09/non-compete-applies-to-facebook-page-for-unlaunched-business-joseph-v-olaughlin.htm and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Top Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2016

1 02 2017

Continuing our annual tradition, we present the top developments/headlines for 2016 in trade secret, computer fraud, and non-compete law. Please join us for our first webinar of the New Year on February 2, 2017, at 12:00 p.m. Central, where we will discuss these new developments, their potential implications, and our predictions for 2017.

1. Defend Trade Secrets Act

2. EU Trade Secrets Directive

3. Government Agencies Continue to Scrutinize the Scope of Non-Disclosure and Restrictive Covenant Agreements

4. New State Legislation Regarding Restrictive Covenants

 

5. Noteworthy Trade Secret, Computer Fraud, and Non-Compete Cases

 

6. Forum Selection Clauses

7. Security Breaches and Data Theft Remain Prevalent

8. The ITC’s Extraterritorial Authority in Trade Secret Disputes

 

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The content in this post was found at http://www.tradesecretslaw.com/2017/01/articles/dtsa/top-developmentsheadlines-in-trade-secret-computer-fraud-and-non-compete-law-in-2016/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



D.C. Circuit Upholds NLRB Finding that Employment Agreement’s Confidentiality and Non-Disparagement Provisions Violated the NLRA

30 01 2017

 

Back in 2013, an NLRB administrative law judge found that certain confidentiality and non-disparagement provisions contained in Quicken’s Mortgage Banker Employment Agreement violated the NLRA (see our earlier blog post here). The Board agreed with the ALJ, and the Company petitioned the D.C. Circuit for review. Recently a three-judge panel of the D.C. Circuit denied the Company’s petition for review and granted the NLRB’s cross-application for enforcement, finding that there was nothing arbitrary or capricious about the Board’s decision and there was no abuse of discretion in the Board’s hearing process (Case No. 14-1231).

Facts

As a condition of employment, mortgage bankers were required to sign a Mortgage Banker Employment Agreement that included a confidentiality provision and a non-disparagement provision. The confidentiality provision prohibited employees from disclosing nonpublic information regarding the company’s personnel, including personnel lists, handbooks, personnel files, and personnel information of coworkers such as phone numbers, addresses, and email addresses. The non-disparagement provision prohibited employees from publicly criticizing, ridiculing, disparaging or defaming the company or its products, services, policies, directors, officers, shareholders or employees.

Court’s Reasoning

….

In finding that the Board properly determined that the confidentiality provision violated employees’ Section 7 rights, the court noted that the very information the provision forbids employees from sharing (i.e., personnel lists and employee rosters) has long been recognized as information that employees must be permitted to gather and share among themselves and with union organizers. With respect to the non-disparagement provision, the court found that the Board “quite reasonably found that such a sweeping gag order would significantly impede mortgage bankers’ exercise of their Section 7 rights because it directly forbids them to express negative opinions about the company, its policies, and its leadership in almost any public forum.”

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The content in this post was found at http://www.tradesecretslaw.com/2016/08/articles/restrictive-covenants/8146/and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Top Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2016

27 01 2017

Continuing our annual tradition, we present the top developments/headlines for 2016 in trade secret, computer fraud, and non-compete law. Please join us for our first webinar of the New Year on February 2, 2017, at 12:00 p.m. Central, where we will discuss these new developments, their potential implications, and our predictions for 2017.

1. Defend Trade Secrets Act

 

2. EU Trade Secrets Directive

3. Government Agencies Continue to Scrutinize the Scope of Non-Disclosure and Restrictive Covenant Agreements

4. New State Legislation Regarding Restrictive Covenants

 

5. Noteworthy Trade Secret, Computer Fraud, and Non-Compete Cases

6. Forum Selection Clauses

 

7. Security Breaches and Data Theft Remain Prevalent

8. The ITC’s Extraterritorial Authority in Trade Secret Disputes

 

more

The content in this post was found at http://www.tradesecretslaw.com/2017/01/articles/trade-secrets/top-developmentsheadlines-in-trade-secret-computer-fraud-and-non-compete-law-in-2016/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Texas Appellate Court Holds Condition Subsequent in Noncompete Agreement Excused Former Employee’s Competitive Activities

4 01 2017

A Texas Court of Appeals affirmed a summary judgment last month in favor of an ex-employee declaring that a noncompete clause in an asset purchase agreement and separate noncompete agreement did not bar him from competing with his former employer after he had resigned his position. The court’s opinion serves as a reminder that conditions subsequent in noncompete clauses must be drafted with special care in order to avoid the risk that former employees may ignore such clauses with impunity.

 

E. Texas Copy Sys., Inc. v. Player, 06-16-00035-CV, 2016 WL 6638865 (Tex. App.—Texarkana Nov. 10, 2016, no. pet. h.).

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The content in this post was found at http://www.tradesecretslaw.com/2016/12/articles/noncompete-enforceability/texas-appellate-court-holds-condition-subsequent-in-noncompete-agreement-excused-former-employees-competitive-activities/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Employees Bound By Clickthrough Agreements–ADP v. Lynch

12 07 2016

An employer sued two departing employees for joining a competitor. The employer sought to enforce, among other things, a non-compete clause (the court calls it a restrictive covenant). The employer included the non-compete provision in stock option grant documentation presented to employees electronically, which isn’t surprising because employees will agree to just about anything to get their stock option grants. The employees defended the employer’s lawsuit on lack of jurisdiction. The employer pointed to a venue selection clause that was included in the grant documentation along with the non-compete.

 

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Case citation: ADP, LLC v. Lynch, 2016 WL 3574328 (D. N.J. June 30, 2016)

The content in this post was found at http://blog.ericgoldman.org/archives/2016/07/employees-bound-by-clickthrough-agreements-adp-v-lynch.htm and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.



Oculus Faces Messy Ownership Claims Over Its Head Mounted Display–Total Recall v. Luckey

3 06 2016

Palmer Luckey, who ultimately developed the much-hyped Oculus Rift, entered into an agreement with a company called “Total Recall”. Although it was not crystal clear, the agreement was technically with Thomas Seidl, one of the partners of Total Recall. The agreement required Luckey to develop a prototype based on feedback from Seidl.

The parties corresponded via email, and Seidl asked for confirmation from Luckey regarding exclusivity:

[j]ust so we are on the same page. With the initial payment . . . I would like excusive rights to your design unless we decide not to use it. I need to cover myself if we pay for development and then end up paying for a competitor.

Luckey responds affirmatively:

[y]es we are on the same page here . . . I am sure we can put together a contract of some sort to finalize it all.

Seidl transferred $798 via PayPal. [Ouch. That Seidl made less than a thousand dollar payment for what turned into a much bigger problem for Luckey is a bummer. Perhaps it will be a minor blip on his radar screen in light of Oculus’s success, but still.]

A few months later, the parties entered into a “Nondisclosure, exclusivity and payments agreement”. It was between Seidl and Luckey and aimed at protecting confidential information, which it broadly defined as “all information or material that has or could have commercial value or other utility in the business in which Disclosing Party is engaged.” It had the standard carveouts from the definition of confidential information. It also included a non-disclosure and exclusivity provision:

The Receiving party shall keep all details including drawings and part suppliers of the Head Mounted Display [a term not defined anywhere in the agreement] confidential and shall not aid any other person or entity in the design of a Head Mounted Display other than the disclosing party. Unless within a twelve month period from 1st july 2011 the receiving party has not received a minimum payment in royalties of 10,000 US dollars by the disclosing party. The exclusivity shall remain in place for a period of 10 years providing a minimum of 10,000 US dollars is paid from the disclosing party to the receiving party per annum.

Luckey developed a prototype and modified the prototype based on feedback from Seidl. Luckey never returned the modified prototype (Seidl does not allege asking for its return). Luckey went on to form Oculus, LLC, and develop Rift, which became a blockbuster on Kickstarter and was ultimately sold to Facebook for 8 figures.

Total Recall asserted a range of contract and tort claims. (The Total Recall partners appear to be involved in some internal dispute regarding their pursuit of this lawsuit, including separate litigation in Hawaii, but the court’s order did not focus on that.)

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Case Citation: Total Recall Techs v. Palmer Luckey and Oculus, 2016 WL 199796 (N.D. Cal. Jan. 16, 2016)

 

The content in this post was found at http://blog.ericgoldman.org/archives/2016/01/oculus-faces-messy-ownership-claims-over-its-head-mounted-display-total-recall-v-luckey.htm and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.