Non-Compete and Trade Secrets News for the week ended April 21, 2017
DuPont Employee Charged with Trade Secret Theft
No company has had bigger problems with trade secret theft than DuPont. And this problem is not ending anytime soon. The latest alleged misappropriation arises out of New Jersey and has resulted in a criminal complaint against retired chemical engineer Anchi Hou. The facts follow a familiar pattern, if they turn out to be true. Hou allegedly downloaded 20,000 files on DuPont's flexographic printing plate technology before his retirement. Chemical and Engineering News reports on the federal charges. A copy of the Criminal Complaint is available here.
Texas Trade Secrets Fee Boondoggle
A while back, I wrote a brief snippet on an absolutely bonkers trade secrets case in Texas called M-I, LLC v. Russo, where a jury found that an employee had failed to comply with a confidentiality agreement and awarded the ex-employer $500,000. But the same jury found the employer pursued a trade-secrets claim in bad faith and awarded the defendant $200,000 in fees. As one might expect, the lawyers had sumpin' to say 'bout that. A Law360 article by Michelle Casady details the trial judge's exasperation with both sides and his feeling that the whole lawsuit was a "waste of time." This post is definitely worth a read to understand how many judges feel about petty competitive lawsuits that seem only to benefit the lawyers.
Seyfarth Shaw's Trading Secrets blog has an excellent summary of the trade-secret status afforded customer lists. This particular category of claimed trade secrets generate a high-volume of lawsuits, particularly in the employment context. Courts' treatment of customer lists is highly case-specific because there are so many countervailing arguments. It's crucial to show an act of misappropriation, such as an improper physical or electronic taking of some information.
Automaker Tesla has settled its non-solicitation and trade secrets suit with ex-program manager Sterling Anderson. Anderson was instrumental in developing Tesla's auto-pilot system and allegedly downloaded a number of documents to his laptop upon departing Tesla for Aurora Innovation. Apparently, the settlement was non-confidential, as several outlets (including Fortune) report that Tesla will receive a $100,000 payment and some ongoing ability to audit Aurora Innovation's intellectual property. Out with a whimper, in other words.
Eric Ostroff has written a nice post about a comical incident of trade-secret disclosure by the Orlando Magic, when it tweeted out a picture of a whiteboard listing targeted players it may want to acquire. This proves that the Magic are still incompetent in so many ways.
Law360 reports on a newly-filed case in Illinois state court in the fragmented and highly competitive custom suit industry. It apparently arises out of an ex-employee's departure from Daniel George and new position with ESQ Clothing. According to the report, the employee - Grant McNamara - worked at Daniel George for only a few months but was bound by a fairly broad non-compete. The complaint also appears (from the report at least) to claim "inevitable disclosure" of trade secrets. A few months' employment seems like a fairly weak starting point on which to base an inevitable disclosure. Then again, by definition, they're all weak.
In case you haven't heard, Bill O'Reilly is out at Fox News after the (delayed) fall-out from over a decade's worth of sexual harassment accusations and settlements. The Hollywood Reporter says that O'Reilly's severance agreement terms aren't yet known but that "a non-compete clause will be among them." This is one instance in which I'm all in favor of strict enforcement - in the unlikely event it would ever become necessary - without any regard for a balancing of competing interests.
Utah Business had a terrific article this week on how Utah employers perceive and use non-compete agreements. The article cites a number of statistics that likely parallel the experiences of employers in other States. Utah passed a more restrictive law last year that curtailed the permitted scope of non-compete agreements and enabled employees to obtain attorneys' fees in certain actions.
Finally, Cara Bayles has a Law360 piece on Anthony Levandowski's appeal of an adverse discovery ruling in Waymo LLC v. Uber. Levandowski actually filed a motion to stay entry of the April 10 Order with the Federal Circuit (not the Ninth). I wrote last week about this April 10 discovery order. In general, it concerns the Fifth Amendment issue Levandowski raised concerning Uber's production of a privilege log that would detail some allegedly misappropriated Waymo trade secrets.