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.
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Former Part Owner of Hemp Company Sues for Misappropriation of Hemp-Based Trade Secrets Allegedly Valued at $3.8M
A former part owner of a failed venture sued the venture’s former CEO, Paul Smith, alleging he misappropriated trade-secret hemp strains, selling them to a Canadian cannabis company for nearly $4 million.
In its September 21, 2020 complaint, Big Wuf Enterprises, LLC and its principal, W. John Short, allege their former venture, YCG Holdings LLC,
Law Firm Accuses Departing Associate of Taking Firm Trade Secrets to In-House Position with Firm Client
On September 10, 2020, San Diego law firm Slate Law Group filed suit after a former associate left the firm to become in-house counsel for a firm client, ClickUp. Slate alleged that attorney Derek Dahlin misappropriated Slate’s trade secrets by providing ClickUp with confidential business information including Slate’s contract templates and work product.
According to the complaint, Dahlin was brought on as an independent contractor for Slate in March 2020 and was hired as a full-time associate on April 21. The complaint further states that shortly after Dahlin began working on ClickUp matters, ClickUp solicited Dahlin to become its in-house counsel.
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The Northern District of California Reminds Everyone How Serious Spoliation Sanctions Can Be
Alleged spoliation of evidence is unfortunately a somewhat common feature of many trade secret misappropriation cases. A recent district court order out of the Northern District of California, WeRide Corp. v. Kun Huang, highlighted just how serious the penalty for spoliation can be. No. 5:18-CV-07233-EJD, 2020 WL 1967209 (N.D. Cal. Apr. 24, 2020).
In WeRide, the defendant deleted entire email accounts, failed to disable its email server’s setting that automatically deleted all emails older than 90 days, and deleted relevant source code even after the court entered a preliminary injunction specifically enjoining the parties from destroying relevant documents. Taking into account the vast quantity of data deleted, along with the willful nature of the spoliation, the court granted sanctions of default, striking the defendants’ answers and directing judgment for the plaintiff.
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Courts Differ on Timing and Scope of Trade Secret Identification
Determining when a plaintiff must disclose and describe the trade secrets it alleges were misappropriated is often a hard-fought battle between the parties.
On the one hand, some plaintiffs want to fully discover the scope of the misappropriation before limiting their claims to only a subset of their trade secrets. Given the often-surreptitious nature of trade secret misappropriation, plaintiffs are sometimes concerned that they do not even know which trade secrets were misappropriated, so they could not reasonably identify their trade secrets early in the case. Defendants, on the other hand, often advocate for early disclosure of the trade secrets to narrow the case, limit discovery, and mitigate the risk that the plaintiff will belatedly craft its definition of what constitutes its “trade secret” from what it finds in discovery.
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