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Mealey's Trade Secret

January 06, 2021
Federal Judge Stays Coverage Suit Pending Resolution Of Underlying Copyright Action

SAN DIEGO — A federal judge in California on Dec. 22 stayed an insurer’s lawsuit disputing coverage for an underlying copyright infringement and trade secret appropriation action, finding that the three factors in Landis v. N. Am. Co. weigh in favor of a stay pending resolution of the underlying action.
December 18, 2020
9th Circuit: No Trade Secret Protection For Published Patent Info

SAN FRANCISCO — In a Dec. 16 holding, the Ninth Circuit U.S. Court of Appeals upheld a dismissal of allegations that Google LLC violated the Defend Trade Secrets Act of 2016 when it disclosed engineered architecture (EA) information in patent applications filed in 2011 and published in 2012 (Eli Attia, et al. v. Google LLC, No. 19-15771, 9th Cir., 2020 U.S. App. LEXIS 39491).
November 23, 2020
5th Circuit: Company’s Trade Secrets Claims Are Subject To Arbitration In U.K.

NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel in a Nov. 10 unpublished opinion affirmed a district court’s dismissal of a Texas tech company’s trade secret and computer fraud claims against its U.K.-based former CEO, finding that the parties’ agreement calls for arbitration of disputes in London and gives English courts exclusive jurisdiction over those disputes (Fintech Fund, F.L.P. v. Ralph Horne, No. 18-20449, 5th Cir., 2020 U.S. App. LEXIS 35418).
November 20, 2020
Letter From The Editor

Dear Mealey’s® Trade Secret Law Report subscribers,
November 19, 2020
South Dakota High Court Upholds Dismissal Of Trade Secret Claims

PIERRE, S.D. — A South Dakota trial court did not err when it granted summary judgment in favor of defendants in a breach of contract and misappropriation of trade secrets lawsuit filed by a medical practice management services provider on claims that the certain of the defendants misappropriated the company’s trade secret information after forming a competing business because the company failed to plead its trade secret misappropriation claim with the requisite specificity, the South Dakota Supreme Court ruled Oct. 28 (Aqreva LLC v. Eide Bailly LLP, et al., No. 29142, S.D. Sup., 2020 S.D. LEXIS 124).
November 19, 2020
CSO Services Provider’s State, Federal Trade Secret Claims Deemed Sufficient

BALTIMORE — A federal judge in Maryland on Oct. 27 denied a pair motions to dismiss in a trade secret misappropriation lawsuit filed by a provider of court security officers (CSOs) for federal courts on behalf of the U.S. Marshal’s Service (USMS), ruling that the material contained in an exhibit in the plaintiff’s complaint, as well as other evidence provided, sufficiently lists the trade secret information the defendants are alleged to have misappropriated (Paragon Systems Inc. v. Michael Hughes, et al., No. 20-1209, D. Md., 2020 U.S. Dist. LEXIS 199932).
November 19, 2020
Appeal Filed In Contract Suit Over Alleged Restrictive Covenant Breach

FORT LAUDERDALE, Fla. — A defendant in a breach of contract lawsuit will ask the 11th Circuit U.S. Court of Appeals to weigh in on a federal district court’s grant of a preliminary injunction against her stemming from her alleged violation of certain restrictive covenants she agreed to as part of her employment with an energy drink company, according to a notice of appeal filed Nov. 6 in Florida federal court (Vital Pharmaceuticals Inc. v. Christopher Alfieri, et al., No. 20-61307, S.D. Fla.).
November 19, 2020
Microscope Equipment Maker Hits Rival With State, Federal Trade Secret Claims

PITTSBURGH — A former employee of a transmission electron microscopes (TEM) equipment manufacturer and the company that he formed have misappropriated an industry competitor’s trade secrets and are using those trade secrets to compete with the company in the TEM equipment industry, the company alleges in a complaint filed Oct. 29 in Pennsylvania federal court (E.A. Fischione Instruments Inc. v. Simple Organ Inc., et al., No. 20-1651, W.D. Pa.).
November 19, 2020
Private Equity Firm Scores Favorable Summary Judgment Ruling In Trade Secret Row

HOUSTON — A federal judge in Texas on Nov. 17 ruled that a firm has failed to present any evidence that a private equity investor misappropriated its trade secret information relating to an oil and gas exploration project for which the firm sought private equity investment because the firm failed to sufficiently plead the existence of a trade secret or that the defendants improperly used the proprietary information provided to them pursuant to the terms of a confidentiality agreement (Recif Resources LLC v. Juniper Capital Advisors LP, et al., No. 19-2953, S.D. Texas, 2020 U.S. Dist. LEXIS 214558).
November 18, 2020
Counterclaims In Trade Secret Dispute Over Alleged Comments Dismissed

SAN FRANCISCO — A federal judge in California on Nov. 16 ruled that dismissal of counterclaims in a trade secret misappropriation, breach of contract and copyright infringement lawsuit brought by a developer of cyber security productions and its subsidiary is warranted because the defendants failed to sufficiently show that statements made by the plaintiffs to their customers about the defendants were false (Proofpoint Inc. v. Vade Secure Inc., No. 19-4238, N.D. Calif., 2020 U.S. Dist. LEXIS 213980).
November 18, 2020
Company’s Former Exec To Pay $450,000 To Settle Trade Secret Claims

CAMDEN, N.J. — A federal judge in New Jersey on Nov. 16 granted approval of a $450,000 cash settlement in a trade secret misappropriation lawsuit brought against a former employee of a mail services company who was alleged to have misappropriated the company’s trade secrets to steal business with the Church of Scientology (COS) from his former employer for his own financial benefit (Asendia USA Inc. v. Eugene J. Donohue, et al., No. 20-2490, D. N.J.).
November 17, 2020
Judge: Trade Secret Suit Defendant Not Entitled To Attorney Fee Award

NEW YORK — A federal judge in New York on Nov. 12 ruled that a defendant in a breach of contract and trade secret misappropriation lawsuit is not entitled to attorney fees based on a provision in a confidentiality and nonsolicitation agreement he signed with his former employer because the lawsuit was dismissed prior to a determination on the merits of his former employer’s contract breach claim (K’oyitl’ots’ina Ltd. v. Robert Gottschalk, No. 10-11309, S.D. N.Y., 2020 U.S. Dist. LEXIS 212118).
November 12, 2020
Judge Orders Franks Hearing In Trade Secrets Theft Criminal Action

SAN JOSE, Calif. — A federal judge in California on Nov. 10 ruled that defendants in a criminal action charged with stealing their former employer’s trade secrets and misappropriating them to form a competing company are entitled to an evidentiary hearing under the U.S. Supreme Court’s ruling in Franks v. Delaware on the issue of whether the omission of a denied temporary restraining order application in a related civil action “would eliminate a fair probability for finding probable cause” (United States v. Liang Chen, No. 17-cr-603, N.D. Calif., 2020 U.S. Dist. LEXIS 210476).
November 10, 2020
Patent Infringement, Trade Secret Claims Sufficiently Pleaded, Judge Rules

HARRISBURG, Pa. — A federal judge in Pennsylvania on Nov. 6 ruled that a manufacturer of industrial air-handling systems has sufficiently pleaded that its customer data is a trade secret and that the company took reasonable measures to protect the secrecy of the information in pleading that a former employee and an industry competitor misappropriated the proprietary information in violation of federal securities law (Air Dynamics Industrial Systems Inc. v. D. Aaron Lehman, et al., No. 19-2073, M.D. Pa., 2020 U.S. Dist. LEXIS 207899).
November 09, 2020
Mother, Son Hit With Trade Secret Claims Over Theft Of Company Files

SANTA ANA, Calif. — An appraisal management company sued a former executive and her son, as well as an industry competitor in California federal court on Nov. 6, alleging that the individual defendants stole the company’s trade secrets and provided them to the competitor in an effort to steal business in violation of state and federal trade secret laws (Nationwide Property & Appraisal Services LLC v. Nicole Andrews, et al., No. 20-2126, C.D. Calif.).
November 06, 2020
State, Federal Trade Secret Law Claims Dismissed In Misappropriation Suit

SAN DIEGO — A multilevel marketing company that sells culinary products has failed to sufficiently plead that the daughter of its former CEO misappropriated its confidential and trade secret information or aided and abetted her mother in pillaging the company’s employees and contractors and using the company’s proprietary spice blends to create competing products, a federal judge in California ruled Nov. 4 in substantially dismissing all claims against the daughter (Spice Jazz LLC v. Youngevity International Inc., et al., No. 19-583, S.D. Calif., 2020 U.S. Dist. LEXIS 206327).
November 05, 2020
Drilling Company’s DTSA Claim Against Former Owner Survives Dismissal Bid

DENVER — A directional drilling company has sufficiently pleaded its claim against its former owners and the wife of one of the former owners for trade secret misappropriation in violation of the Defend Trade Secrets Act (DTSA) because the company has properly pleaded each of the elements of the claim, a federal judge in Colorado ruled Nov. 3 (Dab Drilling Inc. v. Brandon Dabovich, et al., No. 18-1197, D. Colo., 2020 U.S. Dist. LEXIS 204926).
November 05, 2020
Huawei Sues DOJ For Responses To FOIA Requests Over Trade Secret Investigation

WASHINGTON, D.C. — Chinese technology firm Huawei Technologies Co. Ltd. filed a complaint in District of Columbia federal court on Oct. 30 seeking to compel a group of federal government agencies to provide documents responsive to 12 Freedom of Information Act (FOIA) requests seeking materials related to an investigation of criminal trade secret violations by Huawei by the U.S. Department of Justice (DOJ) (Huawei Technologies Co. Ltd., et al. v. U.S. Immigration and Customs Enforcement, et al., No. 20-3155, D. D.C.).
October 29, 2020
State, Federal Trade Secret Claims Allowed To Proceed In Misappropriation Suit

SAN FRANCISCO — A provider of web-based business software and information technology tools has sufficiently pleaded its state and federal trade secret law claims against an industry competitor alleged to have misappropriated the provider’s trade secrets to unfairly compete with it by properly identifying the trade secrets and showing how the defendant used them to compete with the plaintiff, a federal judge in California ruled Oct. 27 (Zoho Corp. Pvt. Ltd. v. Freshworks Inc., No. 20-1869, N.D. Calif., 2020 U.S. Dist. LEXIS 199917).
October 28, 2020
Startup’s Jurisdictional Claims In Trade Secret Dispute Deemed Insufficient

SAN JOSE, Calif. — A startup company that develops technology relating to the diagnosis and treatment of sleep apnea has failed to properly plead allegations establishing personal jurisdiction over two companies and three individuals it provided its confidential and trade secret information to as part of a nondisclosure agreement (NDA), a federal judge in California ruled Oct. 26 in granting the defendants’ motion to dismiss (Serenium Inc. v. Jason Zhou, et al., No. 20-2132, N.D. Calif., 2020 U.S. Dist. LEXIS 198947).
October 23, 2020
Majority Of Claims In Company’s Trade Secrets Suit Pass Muster, Judge Rules

HOT SPRINGS, Ark. — A federal judge in Arkansas on Oct. 2 ruled that a provider of services in the forest products industry has sufficiently stated a majority of its claims against a former employee alleged to have taken part in a scheme with others to steal the company’s confidential and trade secret information and use the information to form a competing company in violation of state and federal trade secrets law (Timber Automation LLC v. FiberPro LLC, et al., No. 20-6076, W.D. Ark., 2020 U.S. Dist. LEXIS 183560).
October 23, 2020
Discovery Stay In Trade Secret Misappropriation Suit Pending Appeal Denied

AKRON, Ohio — A federal judge in Ohio on Oct. 16 ruled that a defendant in a breach of contract and trade secret misappropriation lawsuit is not entitled to a stay of discovery proceedings pending appeal of a preliminary injunction ruling barring him from working for an industry competitor for two years because such relief is not needed, the defendant will not face any undue hardship and the stay benefits judicial economy (Seaman Corp. v. Edward V. Flaherty, No. 20-443, N.D. Ohio, 2020 U.S. Dist. LEXIS 192164).
October 23, 2020
BioPharma Company Sues Former Employees For Misappropriating Customer Data

MARIETTA, Ga. — A biopharmaceutical company that develops regenerative biologics using human placental allografts on Oct. 16 sued an industry competitor and seven former employees who left their employment with the plaintiff to work for the competitor in Georgia state court, alleging that the defendants breached the terms of two restrictive covenants and misappropriated proprietary customer information to improperly compete with the company (MiMedx Group Inc. v. Stimlabs LLC, et al., No. 20105766, Ga. Super., Cobb Co., 2020 Ga. Sup. Ct. Pleadings LEXIS 1304).
October 22, 2020
Trade Secret Misappropriation Claims Survive Dismissal Bid, Judge Rules

BOSTON — A federal judge in Massachusetts on Oct. 21 ruled that a manufacturer of motion control products and systems for automobiles has sufficiently stated its claims for trade secret misappropriation in violation of state, federal and common law because it sufficiently pleaded the existence of trade secrets that were allegedly misappropriated by a former business partner (Moog Inc. v. ClearMotion Inc., No. 19-12066, D. Mass., 2020 U.S. Dist. LEXIS 194913).
October 21, 2020
Trade Secret Suit Defendant Denied Coronavirus-Related Home Confinement

SAVANNAH, Ga. — A federal judge in Georgia on Oct. 19 denied a defendant’s request to serve the remaining term of his 70-month prison sentence for his role in a trade secret theft scheme in home confinement due to the novel coronavirus pandemic, ruling that such relief could be granted only by the Federal Bureau of Prisons (BOP) (United States v. Craig German, No. 19-cr-069, S.D. Ga., 2020 U.S. Dist. LEXIS 193097).