Companies in highly competitive industries often consider trade secrets to be their crown jewels. It is essential that companies understand that, in order to succeed in litigation over trade secret information, they must be able to articulate “reasonable measures” taken to protect the company’s crown jewels. Not only is it required to meet the definition of a trade secret, but failing to point to specific protective steps taken to protect the alleged trade secret can lead to defeat at the outset of a case via a motion to dismiss, or at summary judgment or trial. When addressing issues pertaining to “reasonableness,” courts typically take a case-by-case approach. “Total silence,” “absolute secrecy,” and “all conceivable efforts” are not required. But to be “reasonable,” protective measures must be established and followed for the alleged trade secret. As illustrated in the recently filed cases below, the range of protection measures are broad. Trade secret plaintiffs are touting their computer use and security policies, IP policies, and non-disclosure agreements when possible.
ImageTrend Inc. v. Locality Media Inc. et al.
ImageTrend Inc., an emergency medical services (EMS) software developer, filed a complaint against competitor Locality Media Inc. alleging that Locality Media and four of ImageTrend’s former employees stole ImageTrend’s trade secrets and reverse-engineered its software to build a competing EMS software platform focused on fire rescue management. The complaint also alleges that Locality Media hired a former ImageTrend client in order to gain access to its software platform’s user interface. ImageTrend alleges that it had developed and maintained strict administrative, physical, and technical safeguards to protect against threats or hazards to the security or integrity of its confidential information, including but not limited to “implementation of multifactor authentication, database and laptop encryption, strict firewall controls at authorization boundaries, intrusion detection and prevention technologies, meticulous audit and system access reporting, acceptable use policies, client contracts” as well as requiring employees to complete security training and sign an IP policy that prohibits employees from conducting reverse engineering activities outside of the regular course of business and from disclosing proprietary or confidential information to third parties. The case, No. 0:22-cv-00254, is pending in the U.S. District Court for the District of Minnesota.
Read more: Law 360 Article.
Chewy Inc. v. Riley
Chewy, the online pet supply and service provider giant, has filed suit against former executive Zackery Riley alleging trade secrets theft upon his departure to rival Fuzzy Pet Health Inc. Chewy and Fuzzy Pet compete in the business of pet telehealth services. Chewy alleges that Riley, who had led the development and launch of Chewy’s pet telehealth service, downloaded a significant amount of confidential company documents and trade secrets related to the service to a personal account and then attempted to delete that information from Chewy’s systems. Among the trade secrets that Riley allegedly misappropriated were Chewy’s metrics for evaluating existing products and customers and plans for product expansion and new offerings. Chewy alleges that it takes reasonable steps to ensure the secrecy of its confidential information, including requiring employees with access to such information to sign non-disclosure agreements, and requiring high-level executives like Riley to enter into additional restrictive covenants like a Confidentiality, Non-Solicitation, and Non-Compete Agreement. The case, No. 0:22-cv-60238, is pending in the U.S. District Court for the Southern District of Florida.
Read more: Law 360 Article.
Pfizer, Inc. v. Regor Therapeutics, Inc., et al.
Pfizer, one of the world’s premier biopharmaceutical companies, has accused two former executives of stealing diabetes and cancer medication research for two biotech startups that they developed prior to their departure from Pfizer. Pfizer alleges that forensic analysis reveals that the duo began siphoning Pfizer research and data to show to prospective investors around the time that they began seeking funding for their startup four years ago. For example, the complaint alleges that the former executives copied their personal address to communications with vendors so that they would have access to the communications after their anticipated departure from Pfizer; “cut and pasted” trade secret information into generic documents and transferred such documents to their personal email accounts. Pfizer further alleges an executive turned over an iPhone that ultimately turned out not to be a real Pfizer-issued iPhone, such that Pfizer has not had an opportunity to identify additional materials stolen from Pfizer. In its complaint, Pfizer alleges that it takes significant steps to protect its innovations, including the research-and-development work at issue in the case. For example, Pfizer alleges that it requires employees to sign employment agreements whereby they acknowledge the confidentiality of Pfizer information and agree to maintain that confidentiality by limiting the transmission of confidential information internally at Pfizer to those with a need to know the information. Pfizer also alleges that it restricts physical access to Pfizer facilities, uses password and related security protocols to restrict access to computerized information, requires Pfizer employees to surrender all company-issued electronic device and confidential information when they leave Pfizer, and provides regular training regarding its security and confidentiality policies. The case, No. 3:22-cv-00190, is pending in the U.S. District Court for the District of Connecticut.
Read more: Law 360 Article.