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Bond Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 & PRACTICAL CONSIDERATIONS.... WEDNESDAY, MARCH 8, 2017 Agenda 3:15 p.m. Registration 3:30 - 4:45 p.m. Program 1.5 credits Professional Practice • Introduction to Trade Secrets (15 minutes) • Implications of Defend Trade Secrets Act of 2016 (20 minutes) • Preventing Trade Secret Theft (20 Minutes) • What to do in the Event of Trade Secret Theft (15 minutes) • Questions and Answers (5 minutes) Where Live Presentation James M. Hanley Federal Building 7th Floor Jury Assembly Room 100 South Clinton Street Syracuse, New York James T. Foley U.S. Courthouse Videoconference Presentation 5th Floor Conference Room 445 Broadway Albany, New York According to recent studies, 59% of employees admit to taking valuable company data from their employer at or around the time of termination. e cost of trade secret theſt to the United States economy is staggering, with annual estimated losses between 160 to 480 billion dollars. Fortunately, on May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 into law, thereby creating significant new protections for companies to mitigate these risks. is program will provide an overview of this important new federal law, contrast it to existing New York law, and provide practical steps that practitioners can use, including use of non-compete agreements, to protect their clients from trade secret theſt. Presented by Bradley A. Hoppe Bradley is the chair of the Bond, Schoeneck & King’s manufacturing industry group. He works with manufacturers and others to formulate strategies, strengthen policies, craſt non-competition and non-disclosure agreements, and, when necessary, pursue litigation to not only protect their most important intangible assets (trade secrets, confidential information and customer relationships), but also better safeguard the products of their ingenuity and hard work from being lost to competitors through unfair and unlawful conduct. Heath J. Szymczak Heath has extensive litigation experience in business-related torts, complex commercial litigation, and other civil litigation, including, among other areas, contractual disputes, unfair competition claims, shareholder derivative actions, shareholder freeze-out actions, corporate valuation, breach of fiduciary duty claims, class action consumer litigation, commercial lease disputes, intellectual property disputes, healthcare network provider disputes, replevin actions, construction litigation, estates litigation, lien enforcement, products liability defense, personal injury defense, insurance fraud, and insurance coverage disputes. Register at: https://events.r20.constantcontact.com/register/eventR eg?oeidk=a07edtqs307da84f56c&oseq=&c=4deab1d0-2bad-11e3- a046-d4ae529a8250&ch=4dede620-2bad-11e3-a046-d4ae529a8250 Attorney Advertising • © 2017 Bond, Schoeneck & King PLLC One Lincoln Center, Syracuse, NY 13202 • 315.218.8000 Bradley A. Hoppe 716.416.7025 [email protected] Heath J. Szymczak 716.416.7057 [email protected] The NDNY-FCBA’s CLE Committee Presents Implications of the Defend Trade Secrets Act of 2016 and Practical Considerations for Guarding Against Internal Data Theft

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Page 1: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

BondBond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 & PRACTICAL CONSIDERATIONS....

WEDNESDAY, MARCH 8, 2017

Agenda 3:15 p.m. Registration

3:30 - 4:45 p.m. Program 1.5 credits Professional Practice

• Introduction to Trade Secrets (15 minutes)

• Implications of Defend Trade Secrets Act of 2016 (20 minutes)

• Preventing Trade Secret Theft (20 Minutes)

• What to do in the Event of Trade Secret Theft (15 minutes)

• Questions and Answers (5 minutes)

Where Live Presentation James M. Hanley Federal Building 7th Floor Jury Assembly Room 100 South Clinton Street Syracuse, New York

James T. Foley U.S. Courthouse Videoconference Presentation 5th Floor Conference Room 445 Broadway Albany, New York

According to recent studies, 59% of employees admit to taking valuable company data from their employer at or around the time of termination. The cost of trade secret theft to the United States economy is staggering, with annual estimated losses between 160 to 480 billion dollars. Fortunately, on May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 into law, thereby creating significant new protections for companies to mitigate these risks. This program will provide an overview of this important new federal law, contrast it to existing New York law, and provide practical steps that practitioners can use, including use of non-compete agreements, to protect their clients from trade secret theft.

Presented by Bradley A. Hoppe Bradley is the chair of the Bond, Schoeneck & King’s manufacturing industry group. He works with manufacturers and others to formulate strategies, strengthen policies, craft non-competition and non-disclosure agreements, and, when necessary, pursue litigation to not only protect their most important intangible assets (trade secrets, confidential information and customer relationships), but also better safeguard the products of their ingenuity and hard work from being lost to competitors through unfair and unlawful conduct.

Heath J. Szymczak Heath has extensive litigation experience in business-related torts, complex commercial litigation, and other civil litigation, including, among other areas, contractual disputes, unfair competition claims, shareholder derivative actions, shareholder freeze-out actions, corporate valuation, breach of fiduciary duty claims, class action consumer litigation, commercial lease disputes, intellectual property disputes, healthcare network provider disputes, replevin actions, construction litigation, estates litigation, lien enforcement, products liability defense, personal injury defense, insurance fraud, and insurance coverage disputes.

Register at: https://events.r20.constantcontact.com/register/eventReg?oeidk=a07edtqs307da84f56c&oseq=&c=4deab1d0-2bad-11e3-a046-d4ae529a8250&ch=4dede620-2bad-11e3-a046-d4ae529a8250

Attorney Advertising • © 2017 Bond, Schoeneck & King PLLC One Lincoln Center, Syracuse, NY 13202 • 315.218.8000

Bradley A. Hoppe 716.416.7025 [email protected]

Heath J. Szymczak 716.416.7057 [email protected]

The NDNY-FCBA’s CLE Committee Presents Implications of the Defend Trade Secrets Act of 2016 and Practical Considerations for Guarding Against Internal Data Theft

Page 2: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

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Page 3: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

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Page 4: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

© 2016 Bond, Schoeneck & King PLLC

Implications of the Defend Trade Secrets Act of 2016 and

Practical Considerations for Guarding Against Internal Data Theft

Bradley A. Hoppe, Esq.716.416.7025

[email protected]

Heath J. Szymczak, Esq.716.416.7057

[email protected]

NDNY-FCBAContinuing Legal Education

March 8, 2017

I. Introduction to the Law of Trade Secrets

II. Implications of Defend Trade Secrets Act

III. Theft Prevention:

The Trade Secret Audit

IV. Theft Mitigation:

What to Do in the Event of Theft

V. Questions and Answers

2

I. Introduction to the Law ofTrade Secrets

3

Page 5: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

© 2016 Bond, Schoeneck & King PLLC

Trade Secret Theft:A Growing Problem

- Hackers

- Nation States

- Organized Crime

- Supply Chain

- Joint Venture

- Competitors

- Employees

- Accidental Disclosure

4

How Theft is Accomplished . . . . .

- Connecting a thumb drive to a computer

- Uploading data to the “cloud”

- Transferring data to a personal e-mail account

- 24% of employees had network access afterthey had left

- 82% of employers did not review whatdocuments and data had been taken

5

Growing Need to Protect Trade Secrets

- Estimated $160 to $480 billion lost to tradesecrets theft in U.S. each year.

- Number of trade secret cases doubled from1995 to 2004, and are projected to doubleagain by 2017.

- 59% of employees admit to stealingcompany data after leaving. Of those, 67%admit to using ex-employer’s data insubsequent employment

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Common Trade Secrets

- Formulas/recipes

- Manufacturing processes

- Business plans

- Customer lists

- R&D Information

- Market research, studies& analyses

- Financial Data (cost, price, margin, etc.)

- Etc.

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Legal Framework ForProtection of Trade Secrets

• NY Common Law

• Uniform Trade Secrets Act

• Computer Fraud and Abuse Act

• Economic Espionage Act

• Defend Trade Secrets Act of 2016

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NY Common Law1. Any formula, process, device, or compilation

of information

2. Used in one's business

3. Which confers a competitive advantage overthose in similar businesses

4. Who do not know it or use it.

(Restatement (First) of Torts § 757, comment b (1939))

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Factors to Consider . . . .1. Whether known outside the business

2. Extent known in the business;

3. Measures taken to keep secret;

4. Value to business and competitors;

5. Effort or money expended to develop; and

6. Difficulty in acquiring by others.

(Restatement (First) of Torts § 757, comment b (1939))

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Continuous Use

• New York rule requires that the information be“used in one’s business”

• “Continuous use” means that the alleged tradesecret cannot be “information as to a single orephemeral event in the conduct of the business”

• Could preclude protection of informationpertaining to a past failed and/or abandonedsecret process.

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Novelty and Prior Art

• Trade secret may be a device or processwhich is patentable; but it need not be.

• Novelty and invention are not requisite fora trade secret as they are for patentability.

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Misappropriation

• Under New York law, misappropriationconsists of use or disclosure of a tradesecret that was acquired through arelationship of trust (such as employment)or

• Through fraud or other improper means,such as theft, bribery, or hacking.

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Remedies• Injunctive Relief: Court may order a defendant to stop

violating the plaintiff's rights and to take steps topreserve the secrecy of the plaintiff's information.

• Damages: Court can make a defendant pay moneydamages to the plaintiff for the economic harm suffered.May include the plaintiff's losses resulting from themisappropriation and the defendant's profits derivedfrom it.

• Statute of Limitations: The statute of limitations for atrade secret claim in New York is three years.

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Inevitable Disclosure Doctrine

• In New York, possible to establish irreparable harmbased on the “inevitable disclosure” even in absence ofnon-compete.

• Key employee competes directly with former employerand had access to highly confidential information.Usually must show actual taking.

• Analogized the former employer's predicament to that of"a coach, one of whose players has left, playbook inhand, to join the opposing team before the big game.”

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Faithless Servant Doctrine

• Grounded in the law of agency. An agent has aduty of undivided loyalty to his principal.

• If he acts adversely to employer it amounts to afraud upon the principal so as to forfeit any rightto compensation during the period of disloyalty.

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Uniform Trade Secrets Act• Published by the Uniform Law Commission (the

same group that brought us the UniformCommercial Code) in 1979.

• Sought to create more predictability in the law oftrade secrets for companies operating inmultiple states.

• Enacted in varying forms–sometimes in whole,other times in part. New York andMassachusetts are the lone holdouts.

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Uniform Trade Secrets Act

• “information … that

• (i) derives independent economic value … fromnot being generally known to, and not beingreadily ascertainable by proper means by, otherpersons who can obtain economic value from itsdisclosure or use, and

• (ii) is the subject of efforts that are reasonableunder the circumstances to maintain itssecrecy.”

Uniform Trade Secrets Act § 1(4)

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• USTA definition is simpler. No continuous userequirement.

• Complexity and ambiguity of the New York ruleleaves far more to interpretation (and litigation).

• New York rule favors innovation by limiting“squatting” on new, unpatented, technology, italso creates a loophole by permitting acompetitor to benefit from another’s researchand development.

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Uniform Trade Secrets Act

Computer Fraud and Abuse Act

• Permits of Federal Civil Remedy, but Limited inapplication.

• Access computer “without authorization”

• Obtained information relating to:

1. “national defense or foreign relations”

2. “financial record of a financial institution”

3. “from any department or agency of theUnited States” or

4. “from any ‘protected computer.’”

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“Protected Computer”

• Exclusively for the use of, or conduct that affectsthe use of, a financial institution or the UnitedStates Government; or

• Used in or affecting interstate or foreigncommerce or communication, including acomputer located outside United States thataffects interstate or foreign commerce orcommunications.

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Economic Espionage Act

• Criminal Statute – 18 U.S.C. §§ 1831-1839.

• Previously no private civil remedy.

• Criminalizes “economic espionage” by a foreignentity as well as domestic misappropriation forfinancial gain.

• Notwithstanding the purpose and objectives ofthe EEA, its application has proven ineffectivedue to limited prosecutorial resources andproblems with the textual limitations in thestatute itself.

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United States v. Aleynikov

• Sergey Aleynikov - computer programmeremployed by Goldman Sachs & Co.

• Left Goldman Sachs to work for anothercompetitor. Was offered over twice his salary($400,000 to $1,000,000) to develop a similarsystem in a fraction of the time it should take.

• Encrypted and uploaded more than 500,000lines of source code for Goldman Sachs’computer trading system.

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United States v. Aleynikov

• Flew to Illinois to meet with his new employer,bringing a flash drive and a laptop containingportions of Goldman Sachs’ source code withhim.

• When he flew home the next day he wasarrested by the FBI at Newark InternationalAirport.

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United States v. Aleynikov

• Convicted under the EEA. Sentenced to 97months of imprisonment followed by a three-year term of supervised release, and wasordered to pay a $12,500 fine.

• Aleynikov appealed. Second Circuit reversed,finding that the source code was not “related toor included in a product that is produced for orplaced in interstate or foreign commerce.”

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II. Implications ofDefend Trade Secrets

Act of 2016

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Background on DTSA

• Lack of uniformity and previous attempts at a uniformlaw (Uniform Trade Secrets Act) failed because:

- Two major hold outs (New York and Mass)

- Only a few states adopted all of the uniform law

- States adopted different variations of the law

• Defend Trade Secrets Act took effect 5/11/16. Createsthe first federal civil claim for trade secret theft

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DTSA Application

• DTSA uses the definition of “trade secret” foundin the EEA, with a few slight modifications.

• “(1) In general.-- An owner of a trade secret thatis misappropriated may bring a civil action underthis subsection if the trade secret is related to aproduct or service used in, or intended for usein, interstate or foreign commerce.”

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Key Provisions of DTSA

1. Aggressive ex parte seizure available with respectto both the trade secret and any devices,documents or other places (e.g., servers) where itmay reside in whole or in part

2. Double damages may be awarded

3. Attorneys’ fees may be awarded

4. Whistleblower immunity for anyone who discloses atrade secret under certain limited circumstances

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Whistleblower Immunity• A litigant cannot recover double damages or

attorneys’ fees unless the employee confidentialityagreement contains a whistleblower immunityprovision

• “Employee” includes contractors and consultants

• “Agreement” includes any of the following:

−Non-disclosure/confidentiality agreement

−Non-competition/non-solicitation agreement

−Employee handbook containing confidentiality

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Key Language:

``(1) Immunity.--An individual shall not be held criminally orcivilly liable under any Federal or State trade secret law forthe disclosure of a trade secret that—

``(A) is made—

``(i) in confidence to a Federal, State, or localgovernment official, either directly or indirectly, or toan attorney; and

``(ii) solely for the purpose of reporting or investigating asuspected violation of law; or

``(B) is made in a complaint or other document filed in alawsuit or other proceeding, if such filing is made underseal.”

18 U.S.C. § 1833(b)

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DTSA vs. New York Law

• New York law does not award double damages orattorneys’ fees as the result of trade secret theft

• Aggressive ex parte seizure is not permitted underNew York law to recover stolen trade secretinformation

• DTSA’s definition of “trade secret” is broader thanthat recognized and applied under New York law

• Unlike New York, DTSA rejects “inevitabledisclosure” as a basis for an injunction to prohibit

employment

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DTSA Conclusions

• Creates more uniformity and predictability in the lawfor companies operating across state lines

• Provides remedies unavailable under New York law

• Requires all employment agreements and manualswith confidentiality obligations to be updated toinclude “whistleblower immunity notice” provisions

• Pros and cons of State vs. Federal Court

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DELTA FILTER CASE:Lessons in What Not to Do

DELTA FILTER:Lessons in What Not to Do

• Employee was in charge of Delta’s HEPA filterproduction.

• Employee left with another employee andstarted competing filter company.

• Court found that the manufacturingcomponents of competitor's production offilters were identical to those of Delta’s.BUT . . . . . .

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DELTA FILTER:Lessons in What Not to Do

• Court held machines could be duplicated withoutblueprints or photographs by simply describing themfrom memory (skills vs trade secret).

• Delta’s president admitted that its filter productionprocess and devices were open to inspection from timeto time by representatives of its competitors.

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DELTA FILTER:Lessons in What Not to Do

• “[I]n the absence of any secrecy agreementpreventing defendants from using the technicalknowledge which they naturally andlegitimately acquired during their employment,the credible evidence does not support anyinference that they used improper means toacquire the information . . . or that such meanswere necessary to do so.”

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DELTA FILTER:Lessons in What Not to Do

• “[T]he actions . . . were ‘as consistent withthe normally expected desire for fair,economic self-improvement as they [were]with a well-planned, well-concealedconspiratorial attempt at industrial piracy.’”

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III. Theft Prevention:

The Trade SecretAudit

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A Trade Secret Audit:

1. Identify Trade Secrets and Threats

2. Review Agreements

3. Review Onboard Protocol

4. Review Physical Security

5. Review Digital Security

6. Review Departure & Theft Protocols

7. Develop Culture of Protection

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Keeping Secrets Safe – Key Points

- Memorialize the Company’s Secrecy Policy

- Restrict Internal Access to Trade Secrets

- Limit/Eliminate Access to the “cloud”

- Physical Security - Lock Cabinets

- Label Trade Secret Documents

- Maintain Computer Secrecy

- Restrict Public Accessibility

- Deal Cautiously with Third Parties:Use Contracts

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Contracts: Restrictive Covenants

1. Non-Compete

2. Non-Solicit

3. Non-Disclosure/Confidentiality

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Restrictive Covenants

- Protect trade secrets/confidential information

- Protect goodwill and customer relationships

- Provide means to seek certain types of relief:

- Defend Trade Secrets Act double damages

- Return of compensation paid

- Attorneys’ fees and costs

- Injunctive relief

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Restrictive Covenants – Standard

1. Sufficient consideration is a must …

- Initial employment

- Continued employment*

- Promotion

- Severance benefits

- Termination “for cause” vs. “without cause

More is not better: you cannot “buy” longer orbroader covenants with more consideration

* Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250 (2d Dept. 1992)

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Restrictive Covenants – StandardTermination “For Cause” vs. “Without Cause”

• Until recently, it was understood that a non-compete wasunenforceable if employee terminated without cause.*

• The Fourth Department** held otherwise in 2014

o Distinguished between “non-compete” and “forfeiture forcompetition” clauses and limited Post, supra to the latter.

o Held that a without cause termination “would not render a non-compete unenforceable,” but was a relevant factor in balancing theequity for purposes of a preliminary injunction.

o The Court of Appeals later reversed Brown & Brown on othergrounds, but did not overrule the without cause determination.

* Post v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 48 N.Y.2d 84 (1979) (finding a “forfeiturefor competition” provision unenforceable where employee terminated without cause).

** Brown & Brown, Inc. v. Johnson, 115 A.D.3d 162 (4th Dept. 2014).

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Restrictive Covenants – StandardTermination “For Cause” vs. “Without Cause”• The First Department* rejected the Fourth Department’s

holding in November of 2016.

o Relied upon Post, supra to hold a non-compete unenforceablewhere “the employer … does not demonstrate ‘continuedwillingness to employ the part covenanting not to complete.’”

o Ignored Brown & Brown, supra and made no attempt to distinguishbetween “non-compete” and “forfeiture for competition” clauses.

• For practitioners in the First and Fourth Departments,this seems to be a settled issue, but for everyone else …

* Buchanan Capital Mkts., LLC v. DeLucca, 144 A.D.3d 508 (1st Dept. 2016).

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Restrictive Covenants – Standard

2. Must be reasonable in time and area and no broader thannecessary to protect legitimate interests, and cannot beharmful to the public and/or impose an undue burden*

- 2 years generally enforceable

- Area depends on footprint of business/employee

- Legitimate interests include:

- Trade secrets

- Goodwill/customer relationships

- Key employees

- The covenant cannot violate New York public policy

* See, e.g., BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999)

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Consequences of Overbreadth

If you are lucky, then theCourt will strike only theoverbroad portion andenforce the remainderof the covenant

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Consequences of Overbreadth

If unlucky, then thenightmare scenarioexists: the Court willstrike the entireprovision potentiallyleaving your tradesecrets and customerrelationships exposed.

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Brown & Brown, Inc. v. Johnson,115 A.D.3d 162 (4th Dept. 2014)• Analyzed employment agreement containing customer

non-solicitation and Florida choice of law provisions

• Invalidated choice of law provision because Florida lawwas “truly obnoxious” to New York public policy

• Held that a “without cause” termination did not renderthe non-solicitation provision unenforceable

• Held that the non-solicitation was overbroad because itapplied to all customers instead of those customers withwhom employee developed relationships

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Brown & Brown, Inc. v. Johnson,115 A.D.3d 162 (4th Dept. 2014)

• The court analyzed whether the customer non-solicitation provision should be partially enforced.

• The standard: the employer must establish “anabsence of overreaching, coercive use of dominantbargaining power, or other anti-competitivemisconduct[ and that it acted] in good faith [] toprotect a legitimate business interest, consistentwith reasonable standards of fair dealing.”

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Brown & Brown, Inc. v. Johnson,115 A.D.3d 162 (4th Dept. 2014)• Employer failed to satisfy standard because:

o The court found that the employer waited until the first dayof employment before notifying defendant of the agreementand only after the defendant quit her prior employment

o The employer presented the agreement to defendant afterBDO Seidman, so it was on notice of the overbreadth

o The employer included a partial enforcement provision inthe agreement in an attempt to escape BDO Seidman

• Court thus invalidated the entire covenant

52

Brown & Brown, Inc. v. Johnson, 25N.Y.3d 364 (2015)• Court affirmed in part and reversed in part.

• Affirmed that part of the decision finding that Floridalaw was “truly obnoxious” to New York public policy.

• Did not disturb the finding that a “without cause”termination does not invalidate the covenant.

• Reversed the partial enforcement finding becausequestions of fact existed surrounding defendant’shire and the notice provided of the agreement.

53

Brown & Brown, Inc. v. JohnsonConclusion• The Court of Appeals remanded the case to the trial

court to determine partial enforcement

• The trial court ultimately found, after a bench trial,that the employer failed to satisfy its burden forpartial enforcement of the covenant.

• After appeals to the Fourth Department and theCourt of Appeals, a bench trial, and likely hundredof thousands of dollars spent, the non-solicitationprovision was completely invalidated.

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Don’t Panic: It Can Still Be Fixed

- Periodic reviews/updates essential

- Covenants can be updated as part of:

- Continued employment

- Promotion

- Other positive change in employment

- Severance benefits

55

IV. Theft Mitigation:

What to Do in theEvent of Theft

56

What To Do In The Event of a Theft?

1. Contact an attorney.

A victim of trade secret theft needs someone withexpertise in this area who can walk him/herthrough all of the steps necessary to preserve andobtain relevant information/evidence and betterprotect his/her rights in future litigation.

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What To Do In The Event of a Theft?

2. Ensure that all devices are preserved.

• Computer, laptops, smart phones, tablets, thumbdrives, hard drives, etc. must be set aside in asecure place so that important evidence is not lost.

• Do not put devices back into circulation. This willcompromise the data, destroy chain of custody andnegatively impact a client’s ability to prove its case.

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What To Do In The Event of a Theft?

3. Ensure that all emails and other data are preserved.

At a minimum, you need to:

o Identify all employees with relevant informationand issue preservation instructions and disablethe auto-delete function on their computers andany other relevant devices; and

oConfirm that backup tapes are performing properly

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What To Do In The Event of a Theft?

4. Cut off ex-employee’s access to trade secrets

- Server

- Cloud accounts

- Access to physical files

5. Photograph and take inventory of work space

6. Interview and review emails of other employees

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What To Do In The Event of a Theft?

All of these steps need to be taken ASAP to:

o Identify exactly what has been taken.

o Identify if anyone else is involved.

oMitigate damage by preventing future theft

oEstablish that you have taken reasonablesteps to protect your information and yourcompany, which is essential to obtaininginjunctive relief in Court

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Questions?

62

Thank You!

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Page 30: Bond IMPLICATIONS OF THE DEFEND TRADE SECRETS ACT OF 2016 · 2017-04-21 · Protection of Trade Secrets •NY Common Law •Uniform Trade Secrets Act •Computer Fraud and Abuse Act

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ALBANY BUFFALO GARDEN CITY ITHACA NEW YORK CITY OSWEGO ROCHESTER SYRACUSE UTICA NAPLES, FL OVERLAND PARK, KS

BondBondTrade Secret Protection Audit

Prepare • Prevent • Protect

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Bond BondTRADE SECRET PROTECTION AUDIT

All too often, companies react to trade secret theft rather than prepare for, or even prevent it. It is far more cost effective to protect your assets and prevent theft in the first place through the implementation of upgraded security measures and protocols and well drafted employment agreements.

A Trade Secret Protection Audit will help put your company in a position of strength by, among other things:• updating and enhancing your non-compete, non-solicit, and non-disclosure agreements;• reviewing and fine-tuning your physical and digital security measures; and• developing and implementing employee departure protocols.

The tiers of service (which can be customized) are as follows:

We Help YouOperate From a Position of Strength

Tier One:1. Analyze trade secrets and other protectable information

and intangible assets.

2. Collaborate with your management to identify employees/contractors (a) with access to trade secrets; (b) who have developed relationships with key customers; and/or (c) who are otherwise considered key employees.

3. Analyze existing agreements for employees/contractors identified in paragraph 2 and, with respect to each such agreement:

a. Review and, where appropriate, update nondisclosure and/or confi dentiality provisions in employment/contractor agreements.

b. Review and, where appropriate, update non-competition provisions in employment/contractor agreements.

c. Review and, where appropriate, update non-solicitation provisions in employment/contractor agreements.

d. Review and, where appropriate, update standard intellectual property assignment provisions in employment/contractor agreements.

e. Review and, where appropriate, update remedies provisions in employment/contractor agreements.

f. Review and, where appropriate, update employment/contractor agreements to ensure compliance with Defend Trade Secrets Act notice requirements.

4. Analyze standard third party confidentiality agreements.

5. Analyze existing policies/procedures to protect trade secret information.

Tier Two:All items in tier one, plus:

1. Preparation of any necessary agreements not already in existence.

2. Preparation of employee document preservation instructions template.

3. Draft trade secret protection policy.

Looking for creativity, proactivity, experience,

and knowledge? Look to Bond.

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Bond TRADE SECRET PROTECTION AUDIT

Following a complimentary meeting with members of executive management to evaluate the scope of company operations and discern areas of risk relative to trade secrets and intangible assets, our attorneys will prepare a summary recommending the next steps your company should consider taking. We will then provide you a customized quote for the costs to you for those services, which will be based not only on the scope of services you choose, but also the size of your company and the number of employees directly involved in the trade secrets context. Simply put, you will know exactly what you will pay for your trade secret protection audit before we start work.

Prepare • Prevent • Protect

It is far more cost effective to protect your assets and prevent theft in the first place.

Look to Bond.

Tier Three:All items in tier two, plus:

1. Audit of relevant human resources policies and procedures and, as relevant, employee manuals and employee training with respect to trade secret polices.

2. Human resources training on establishing trade secret protection with respect to the following topics:

a. Recruitment/hiring practices;

b. Employee departure and exit interview practices; and

c. Treatment of former employee’s workspace, laptop, mobile devices, etc.

Tier Four:All items in tier three, plus:

1. Forensic audit of electronic security policies and protocols.*

2. Coordination of forensic audit and, where appropriate, coordinate and assist in the implementation of new security policies and procedures.

* Forensic analysis services will be conducted by third-party computer forensic experts under our supervision.

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Bond TRADE SECRET PROTECTION AUDIT

About Bond, Schoeneck & King

Bond, Schoeneck & King PLLC serves individuals, companies and public-sector entities in a broad range of areas. With 265 lawyers, we represent clients in financial services; manufacturing; agribusiness; commercial lending and real estate development and construction; energy; health care and long term care; and municipalities, school districts, higher education, and other exempt and nonprofit organizations. We maintain nine offices across New York; one in Naples, Florida; and one in Overland Park, Kansas. Bond is committed to understanding our clients’ needs and providing comprehensive, practical, high-quality and responsive solutions. We strive to maintain the highest professional and ethical standards, and to provide leadership in community activities, pro-bono work and service to the Bar. Bond, Schoeneck & King PLLC (Bond, we, or us), has prepared this communication to present only general information. This is not intended as legal advice, nor should you consider it as such. You should not act, or decline to act, based upon the contents. While we try to make sure that the information is complete and accurate, laws can change quickly. You should always formally engage a lawyer of your choosing before taking actions which have legal consequences. For information about our firm, practice areas and attorneys, visit our website, www.bsk.com. Prior results do not guarantee a similar outcome.

Attorney Advertising • © 2016 Bond, Schoeneck & King, PLLC, Avant Building - Suite 900, 200 Delaware Avenue, Buffalo, NY 14202-2107.

For more information:In Buffalo, contact Heath SzymczakHeath has extensive litigation experience in business-related torts, complex commercial litigation, and other civil litigation, including, among other areas, contractual disputes, unfair competition claims, shareholder derivative actions, shareholder freeze-out actions, corporate valuation, breach of fiduciary duty claims, class action consumer litigation, commercial lease disputes, intellectual property disputes, healthcare network provider disputes, replevin actions, construction litigation, estates litigation, lien enforcement, products liability defense, personal injury defense, insurance fraud, and insurance coverage disputes.Avant Building - Suite 900, 200 Delaware Avenue, Buffalo NY 14202-2107 716.416.7057; [email protected]

Heath J. Szymczak

In Albany, contact Sanjeeve DeSoyzaSanjeeve is a labor and employment law attorney who represents private and public sector clients before federal and state courts and various government agencies in employment discrimination, wage and hour matters, unfair competition and contract disputes. He also has extensive experience in collective bargaining negotiations, labor arbitrations, proceedings before the National Labor Relations Board and management of daily labor relations issues. 22 Corporate Woods Boulevard, Suite 501, Albany, NY 12211-2503 518.533.3206; [email protected] K. DeSoyza

In Naples, contact James DatiJim is a valued partner and trusted advisor to owner-executives, decision-makers, high net-worth individuals and others needing help with business and real estate legal matters. His objective is to deliver to Bond clients unfaltering legal advice, counsel and high-quality work product. Jim achieves this by fully understanding each client’s goals, expectations, values and concerns, gathering and processing relevant information, identifying possible decision options and finally implementing the client’s directives. For many clients, Jim serves as their “Outside, In-House Counsel” due to his sagacity, judgment and broad experience with many divergent legal issues. 4001 Tamiami Trail North, Suite 250, Naples FL 34103-3555 239.659.3845; [email protected]

James D. Dati

In New York City, contact David Prager David helps employers avoid costly employment disputes when they can be circumvented, and face down those in which a challenge is inevitable. Skilled in negotiation, dispute resolution and arbitration, employers turn to David with their labor and employment issues, starting with counseling and dispute-avoidance, through successful litigation and closure.600 Third Avenue, 22nd Floor, New York, NY 10016-1915 646.253.2330; [email protected]

David E. Prager

In Rochester, contact Bart Chacchia Bart leads the business law practice in Bond’s Rochester office and advises a wide spectrum of clients, including entrepreneurs, closely-held businesses, venture-backed companies, private equity funds and their portfolio companies, banks, financial institutions, private lenders, publicly-traded companies and public utilities, in connection with business entity formation and capitalization; incentive plans, executive compensation and employment agreements; customized domestic and international contracts; intellectual property protection; growth plans and commercial synergies; banking and finance; regulatory affairs and compliance; mergers and acquisitions; restructurings, reorganizations and consolidations; business succession planning and exit strategies; and ownership disputes and derivative actions.350 Linden Oaks, Suite 310, Rochester, NY 14625-2825 585.362.4742; [email protected]

Bart Chacchia

In Syracuse, contact Louis OrbachLou is deputy chair of the firm’s litigation department. He has tried cases to jury and bench, argued appeals, arbitrated and mediated disputes and counseled clients in high stakes matters of contention across New York State and around the country for over 20 years. Lou has proven himself an effective advocate in numerous and diverse venues, from rural county courthouses to the Second Circuit in Manhattan, and in subject areas ranging from civil rights to creditors’ rights, intellectual property to employment law and ERISA, and business and commercial law to Title IX.One Lincoln Center, Syracuse NY 13202-1355 315.218.8633; [email protected]

Louis Orbach

In Garden City, contact Howard Miller Howard is a labor and employment law attorney whose practice includes most aspects of employment and education law and related litigation. Many of his cases have received media attention and have been reported in the New York Law Journal and Employment Law 360. Howard frequently lectures on topics such as Constitutional Law, non-compete and trade secret litigation, employment and Constitutional issues relating to social networking sites and various aspects of employment discrimination and education law.1010 Franklin Avenue, Suite 200, Garden City NY 11530-2900 516.267.6318; [email protected]

Howard M. Miller