Thursday, August 30, 2012

The Reading List (No. 10)

Today's Chicago Tribune Business section contains a lead article on the sentencing of Hanjuan Jin (right), the former software engineer who was caught boarding a plane to China with highly confidential documents misappropriated from Motorola. This is a very in-depth article and also discusses the recent Valspar case on which I have previously written.

The Colorado Springs Gazette discusses a jury verdict of $1.34 million against two former managers who violated non-competition covenants. The article seems to indicate the employees solicited customers, but does not elaborate on the basis for the high damages award. Though damages are difficult to prove in non-compete cases, a plaintiff can recover them with a sound, cohesive theory and well-prepared damages witnesses. Presumably, the plaintiff had that here.

Seyfarth Shaw's blog always contains helpful, in-depth posts, but I enjoyed Paul Freehling's article on the interplay between damages and permanent injunction awards. A similar issue arises in the context of royalty injunctions - the flip side of compulsory licensing in the patent law arena (an approach Judge Posner recently endorsed). This royalty injunction remedy essentially allows a court to condition future use of a misappropriated trade secret on payment of a reasonable royalty to the trade secret owner. But states vary on the circumstances in which a royalty injunction may be appropriate. In any event, it shouldn't be very often. While patents derive value from exclusivity, trade secrets derive value from...secrecy. A royalty injunction that allows a misappropriator to use stolen information seems to undercut the very foundation for trade secrets law.

Finally, John Marsh has outlined a series of "7 Deadly Sins" that departing employees should always keep in mind when trying to avoid litigation. His post contains an excellent, in-depth summary of what often causes non-compete/trade secrets suits to go south from the employee's perspective.

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