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In an order dated April 20, 2021, U.S. District Judge Lorna G. Schofield granted Syntel Inc.’s request for a new trial or remittitur on the $569,710,384 punitive damage award issued against Syntel following an October 2020 jury trial.

In October 2020, a New York federal jury found that Syntel had misappropriated the TriZetto Group, Inc.’s trade secrets in violation of the Defend Trade Secrets Act and New York law. The jury also found that Syntel infringed one or more of TriZetto’s copyrights. The jury awarded $284,855,192 million in compensatory damages and $569,710,384 million in punitive damages. Continue Reading New York Federal Judge Finds Punitive Damages Award Excessive Following Trade Secrets Trial

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In 2017, EMC Outdoor, LLC (EMC) terminated Jennifer Stuart’s employment. After, EMC filed suit against Ms. Stuart, Grandesign (Ms. Stuart’s current employer), and another former employee, alleging inter alia claims for misappropriation of trade secrets under federal and state law. On March 31, 2021, the Pennsylvania District Court granted summary judgment against EMC’s trade secret claims, finding no misappropriation because, under EMC’s employment agreement, Stuart was not required to keep trade secrets confidential following her termination. Continue Reading Draft Your Employment Agreements Carefully: A Questionable Word of Warning from the District of Pennsylvania

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In trade secret litigation between two competing legal services firms, the United States District Court for the District of Connecticut recently ordered the plaintiff to produce documents without the attorneys’-eyes-only designation that the plaintiff believed was necessary. Continue Reading Legal Services Firm Ordered to Produce Confidential Documents to Competitor in Trade Secret Dispute

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In 2010, two parties, AcryliCon USA, LLC (AcryliCon) and Silikal GmbH (Silikal) agreed to share rights to a secret formula for a flooring resin known as 1061 SW.  Under the agreement, Silikal would manufacture 1061 SW and AcryliCon and its affiliates would have exclusive rights to distribution. After Silikal began selling 1061 SW without permission, AcryliCon sued for breach of their agreement and for misappropriation of a shared trade secret. A jury awarded AcryliCon $1.5 million in damages on each of the two claims and $3 million in punitive damages on the misappropriation claim. Silikal appealed, arguing, among other things, that AcryliCon failed to prove its misappropriation claim. In a recent decision, the U.S. Court of Appeals for the Eleventh Circuit agreed.

Continue Reading Timing Is Everything: Eleventh Circuit Finds No Misappropriation Under Georgia Trade Secret Law

Is It Even Possible to Persuade a Biased Juror?

If you recently debated someone who adamantly supported a different candidate than you in the last presidential election, you have good reason to wonder whether there is hope of persuading someone biased against your position in a theft of trade secrets case. Fortunately, jury persuasion happens all the time (and is arguably easier than persuading a voter who holds entrenched opinions about a presidential candidate). You cannot talk a juror out of a deeply held value system; however, you can demonstrate how your case fits within it, and persuade the juror from that vantage point. Continue Reading You’re the Defense. How Do You Persuade a Pro-Plaintiff Juror?

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In an order filed January 8, 2021, the U.S. District Court judge overseeing the case cut Motorola’s $760 million jury award against competitor Hytera Corp. by over $200 million. Judge Charles Norgle of the Northern District of Illinois noted that the he made the decision “[w]ith a cool head and a keen eye.” The court found that the $760 million award included a double recovery for Motorola, in that it improperly awarded Motorola “both the $135.8 million in disgorged profits and the $73.6 million in avoided research and development costs.” Continue Reading Motorola Solutions v. Hytera Commc’ns Corp. Ltd.

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Marketing agency InnerWorkings, Inc. filed suit under the Illinois Trade Secrets Act against a former sales executive who left the company for one of its direct competitors, HALO Branded Solutions. InnerWorkings does not allege that the former sales executive, Brian Battaglia, absconded with or stole trade secrets when he left for HALO. Continue Reading InnerWorkings, Inc. v. Battaglia

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On January 6, 2021, we learned that federal courts’ nationwide case management system was breached as part of the SolarWinds hack, potentially giving hackers access to sealed court documents that may include trade secret information. The AP reports that a federal court official said that the “potential reach is vast” and the “actual reach is probably significant.” At this stage, officials do not know the full extent of the breach, which documents hackers accessed, or whether officials can retrieve those documents.

In response, the federal judiciary has announced new procedures relating to “highly sensitive” documents; namely, that courts will now accept sealed highly sensitive documents only in paper form or via secure electronic device (such as a thumb drive) and that the sealed documents will no longer be uploaded to the court’s CM/ECF electronic court records system. Individual courts around the country have begun to issue orders or notices relating to that national directive, including specifying which document categories will count as “highly sensitive” documents warranting special protections. The federal directive says that “sealed filings in many civil cases likely would not be sufficiently sensitive” to require the new special treatment and can continue to be e-filed.

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Many of us have had to get used to videoconferencing. But that communication platform comes with its own challenges in protecting trade secrets. The Delaware Court of Chancery in Smash Franchise Partners, LLC v. Kanda Holdings, Inc. denied a preliminary injunction motion because, among other reasons, the plaintiff failed to show a reasonable likelihood that it took reasonable efforts to protect its alleged trade secrets when it disclosed the information on a Zoom call. C.A. No. 2020-0302-JTL (Del. Ch. Aug. 13, 2020), vacated in part on other grounds. Smash used the same Zoom meeting code for all its meetings, did not require that participants enter a password, did not use the “waiting room” feature to screen meeting participants, and did not take roll of each person attending the meeting (some of whom could not be identified). In other words, anyone who had the Zoom meeting code could enter the meeting and receive the confidential information. Although Zoom offered these security measures, the plaintiff’s failure to use them showed a lack of reasonable efforts to protect the information.

This is a cautionary tale about ensuring that companies utilize appropriate protections while videoconferencing (or using other technological platforms more generally). Just as companies should not let strangers walk into in-person meetings about trade secrets, companies should adopt protections when those meetings occur remotely. Beyond videoconferencing, companies should also consider technological measures that help protect confidential information during remote work. Even apart from whether a court will find that the efforts were reasonable, a company never wants to lose its trade secrets when it could have safeguarded them by using readily available tools.

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On November 30, 2020, the United States Supreme Court heard oral arguments in Van Buren v. United States, which may resolve a circuit split on the extent to which the Computer Fraud and Abuse Act (CFAA) covers an employee’s alleged misappropriation of the employer’s information. Enacted in 1986, the CFAA imposes criminal penalties on a person who intentionally accesses a protected computer and obtains information “without authorization” or in a way that “exceeds authorized access.”  The CFAA also creates a civil cause of action. The CFAA does not define “without authorization,” but it does define “exceeds authorized access” as “access[ing] a computer with authorization and [using] such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6). That definition is front and center in Van Buren, which involves a police officer who disclosed information he obtained through a confidential database; the officer had access to a confidential database but only for law enforcement purposes.

Two main approaches have emerged to deal with a situation where a person has the right to access computer files but not for the allegedly improper purpose. The First, Fifth, Seventh, and Eleventh Circuits broadly interpret the CFAA as prohibiting using information on a computer in violation of a confidentiality agreement or for a prohibited purpose, even if the person otherwise has permission to access that same information. By contrast, the Second, Fourth, and Ninth Circuits interpret the statute more narrowly, like an anti-hacking statute, holding that improper use of information validly accessed does not violate the CFAA. The Supreme Court’s decision to resolve this circuit split is expected by the end of June 2021.