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Presenting a live 90-minute webinar with interactive Q&A
The Defend Trade Secrets Act of 2016: Leveraging
the New Federal Framework to Protect IP Navigating the New IP Landscape, Evaluating Federal and State Causes
of Action, Weighing Trade Secret vs. Patent Protection
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
TUESDAY, JULY 26, 2016
John M. Augustyn, Shareholder, Leydig Voit & Mayer, Chicago
Steven M. Auvil, Partner, Squire Patton Boggs, Washington, D.C.
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THE DEFEND TRADE SECRETS ACT OF 2016:
LEVERAGING THE NEW FEDERAL FRAMEWORK
TO PROTECT IP
John Augustyn, Shareholder, Leydig, Voit & Mayer, Ltd.
Steven Auvil, Partner, Squire Patton Boggs (US) LLP
July 26, 2016
Strafford Publications Webinar
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John Augustyn, Shareholder
Leydig, Voit & Mayer, Ltd.
John Augustyn has been active in litigation, client counseling, and prosecution for over 25 years. He has been lead or co-counsel in over 15 patent and trade secret litigations in various industries. In addition, he manages the patent prosecution for several international corporations. Furthermore, he has extensive experience in the drafting and negotiation of agreements relating to intellectual property. He has authored numerous articles and chapters for books, has appeared on multiple television and radio programs, and has provided over 20 CLE programs to thousands of attorneys. Mr. Augustyn was a law school instructor for several years. Prior to attending law school, he worked as an engineer. Mr. Augustyn has received several legal awards, including Super Lawyer, Top Rated Lawyer, and Leading Lawyer.
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Steven M. Auvil, Partner
Squire Patton Boggs (US) LLP
Steve Auvil leads the Squire Patton Boggs Intellectual
Property & Technology Practice Group’s litigation
practice in the US, and his practice is focused on
litigation of intellectual property (IP) disputes. He has
served as lead trial counsel and successfully
represented clients in numerous patent, trade secret,
copyright and trademark/trade dress cases in federal
district courts. Steve has also argued several patent-
related appeals before the US Court of Appeals for the
Federal Circuit and handled disputes before US
administrative agencies. Steve has considerable
experience counseling clients on IP matters, preparing
and prosecuting patent applications, and negotiating
agreements. Steve is active in a number of
professional organizations, has taught patent law and
practice as an adjunct faculty member. He has been
listed in Chambers USA Leading Lawyers since 2007
and The Best Lawyers in America since 2006
Agenda
• Current trade secret acts and causes of action
(John Augustyn)
• Overview of important sections of the Defend Trade
Secrets Act of 2016 (DTSA) (Steve Auvil)
• Pros and cons of federal versus state trade secret
action (John Augustyn)
• Recent cases under the DTSA (Steve Auvil)
• Changes required in agreements and employment
policies (John Augustyn)
• Best practices for trade secret protection (Steve Auvil)
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CURRENT trade secret acts and causes of action
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Current Trade Secrets Acts and
Causes of Action
1. State Trade Secrets Acts
2. Uniform Trade Secrets Act
3. Breach of Contract
4. Computer Fraud and Abuse Act
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State Trade Secret Acts
• 48 states have a Trade Secrets Act
• Most state Trade Secrets Acts are similar to the Uniform
Trade Secrets Act
• Defined body of case law involving state trade secrets
acts
• State trade secrets actions continue to be available
after passage of DTSA
• Pros and cons to state trade secrets action
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Uniform Trade Secrets Act (“UTSA”)
1. Codifies common law trade secret protection
2. Definitions
• Improper means
• Misappropriation
• Trade secret
3. Injunctive Relief
• Actual or threatened misappropriation may be
enjoined
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Uniform Trade Secrets Act (“UTSA”)
• Duration (terminated when trade secret ceased to
exist, plus any head start time period)
• In exceptional circumstances, future use upon
payment of reasonable royalty
4. Damages
• Actual loss and unjust enrichment (but no double
counting)
• Reasonable royalty
• Duration (for period entitled to trade secret
protection plus any head start time period)
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Uniform Trade Secrets Act (“UTSA”)
5. Exemplary Damages
• Up to twice the damages
• Willful and malicious misappropriation
6. Attorney Fees
• Claim made in bad faith
• Motion to terminate injunction made or resisted in
bad faith
• Willful and malicious misappropriation
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Uniform Trade Secrets Act (“UTSA”)
7. Statute of Limitations
• 3 years after discovery or should have discovered
• Continuing misappropriation is a single claim
• Some states use continuing wrong
8. Does Not Effect Other Laws
• Contract remedies
• Other civil remedies
• Criminal remedies
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Breach of Contract Action
• Contract can define terms and obligations
• Impose obligations greater than Trade Secrets Act or
trade secret case law
• Define damages in contract
• Contract can protect non-trade secret information
• Signed by defendant
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OVERVIEW of important sections of the Defend Trade Secrets Act of
2016
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Overview: Federal Cause of Action
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Overview: Ex Parte Seizure
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Overview: Ex Parte Seizure
• a TRO “would be inadequate … because [target] would
evade, avoid, or otherwise not comply with such an order”
• target “would destroy, move, hide, or otherwise make such
matter inaccessible” if the applicant were to provide that
person notice
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Overview: Injunctive Relief
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Overview: Immunity and Notice
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Overview: Immunity and Notice
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Overview: Immunity and Notice
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Overview: RICO Predicate Act
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Overview: Criminal Changes
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PROS AND CONS of federal versus state trade secret actions
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Pros and Cons of Federal versus
State Trade Secret Action 1. Jurisdiction
• DTSA provides Federal jurisdiction
2. Venue
• General venue rules apply
• Case law differences
• Docket speed
• Judge and Jury considerations
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Pros and Cons of Federal versus
State Trade Secret Action • Law enforcement cooperation
• Local Rules
• Other Factors
3. Pleading Requirements
• Notice pleading
• Fact pleading
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Pros and Cons of Federal versus
State Trade Secret Action 4. Preliminary Relief
• Ex parte seizure order
• Temporary restraining order
• Preliminary injunction
5. Discovery
• Deposition subpoenas
• Limits on depositions, interrogatories, requests for
production, etc.
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Pros and Cons of Federal versus
State Trade Secret Action 6. Legal Theories and Case Law
• Inevitable Disclosure Doctrine
• Continuing Wrong
7. Disclosure Issues
• Protective order
• Sealing court filings
8. Law Enforcement Involvement
• Local
• Federal
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Defending Against a DTSA Claim
Defending Against a DTSA Claim
1. Ex Parte Seizure
2. Temporary Restraining Order
3. Preliminary Injunction
4. Litigation Hold
5. Internal Investigation
6. Forensic Analysis of Computers and Other Devices
7. Criminal Liability
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RECENT CASES under the Defend Trade Secrets Act of 2016
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Recent Cases
• Dazzle Software II, LLC, et al. v. John Kinney, et al.,
16-cv-12191 (E.D. Mich.)
• Complaint, filed June 14, includes claims for violation of
DTSA and Michigan UTSA. ECF 1.
• Plaintiffs simultaneously filed a ex parte application for
seizure. ECF 2.
• On June 15, the Court denied the motion “on an ex parte
basis” without any reasoning: “Plaintiff shall serve the
Verified Complaint and Application upon Defendants and file
proof of such service with the Court. Upon that filing, the
Court will schedule a hearing on the Application on an
expedited basis.” ECF 3.
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Recent Cases
• Dazzle Software II, LLC, et al. v. John Kinney, et al.,
16-cv-12191 (E.D. Mich.)
• On July 7, defendants filed their brief in opposition, a motion
to stay the hearing pending completion of expedited
discovery, and a motion for expedited discovery. ECF 15
and 16.
• A hearing was held on July 15 regarding the application for
ex parte seizure and motion for expedited discovery.
• On July 18, the Court denied the application for seizure and
granted in part the motion for expedited discovery. ECF 20.
• Limited expedited discovery was permitted by the Court.
See ECF 20.
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Recent Cases
• Scientific Games Int’l, Inc. v. Brian Keith Cash,
2:16-cv-142 (N.D. Ga.)
• Complaint, filed June 22, includes claims of misappropriation
of trade secrets under the DTSA and the Georgia UTSA.
ECF 1.
• On June 23, plaintiff filed motions for TRO, preliminary
injunction, and expedited discovery in connection with its
trade secret misappropriation claims. ECF 6 and 7.
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Recent Cases
• Scientific Games Int’l, Inc. v. Brian Keith Cash,
2:16-cv-142 (N.D. Ga.)
• At motion hearing held on June 27, counsel informed the
Court that an agreement had been reached as to both
motions. ECF 11.
• Court granted stipulated motion for expedited discovery and
stipulated TRO on June 28. ECF 12 and 13.
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Recent Cases
• The Monsanto Company, et al. v. Jiunn-Ren Chen, et al.,
4:16-cv-876 (E.D. MO)
• Complaint, filed June 16, includes claims of misappropriation
of trade secrets under the DTSA and Missouri UTSA. ECF 1.
• Plaintiff filed a motion for TRO simultaneously with the
complaint in connection with its trade secret misappropriation
claims. ECF 2.
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Recent Cases
• The Monsanto Company, et al. v. Jiunn-Ren Chen, et al.,
4:16-cv-876 (E.D. MO)
• TRO hearing was held on June 17 and the TRO was granted
the same day. ECF 12 and 13.
• The parties filed a consent motion for preliminary injunction
on July 12, a hearing was held and the Court granted the
stipulated preliminary injunction on July 18 . ECF 22, 25, 26.
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CHANGES REQUIRED in agreements and employment policies
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Changes Required in Agreements and
Employment Policies • Award of exemplary damages or attorney’s fees
requires notice to employee
• Notice of immunity sections
• Immunity for disclosure:
1. to government official or attorney to report violation
of law
2. in complaint or other document filed under seal
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Changes Required in Agreements and
Employment Policies • Employee defined broadly
• “The term ‘employee’ includes any individual
performing work as a contractor or consultant for an
employer.”
18 USC 1833(b)(4).
• Effective May 11, 2016 for any new or updated
agreements
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Agreements to Revise
• Non-Disclosure Agreements
• Proprietary information and or assignment agreements
• Research and Development Agreements
• Consulting Agreements
• Employment Agreements
• Stock option plans, severance agreements
• Any other agreement “that governs the use of a trade
secret or other confidential information” 18 USC
1833(b)(3)(A).
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Model Provision
Immunity From Liability for Confidential Disclosure of a Trade Secret to the Government or in a Sealed Court Filing. The federal Defend Trade Secrets Act of 2016 immunizes you against criminal and civil liability under federal or state trade secret laws – under certain circumstances – if you disclose a trade secret for the purpose of reporting a suspected violation of law. Immunity is available if you disclose a trade secret in either of these two circumstances:
(1) You disclose the trade secret (a) in confidence, (b) directly or indirectly to a government official (federal, state or local) or to a lawyer, and (c) solely for the purpose of reporting or investigating a suspected violation of law; or
(2) In a legal proceeding, you disclose the trade secret in the complaint or other documents filed in the case, so long as the document is filed “under seal” (meaning that it is not accessible to the public).
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Policy Document
Can satisfy the notice requirement by providing “a cross-
reference to a policy document provided to the employee
that sets forth the employer’s reporting for a suspected
violation of law.” 18 USC 1833(b)(3)(B).
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BEST PRACTICES for trade secret protection
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Best Practices
1. Safeguarding trade secrets – yours and others’
2. Employee intake and exit processes
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Best Practices
Safeguarding trade secrets—yours and other’s
Yours
• No external hard drives on company computers absent authorization
• Restrict access to “highly confidential” information servers
• IT alerts for downloads of quantities of files or quantities of data
• Email / data transmission limits
Other’s
• Legal dept. review requirement for all NDAs – use own form
• Strict documentation protocols
• If other’s technology of no interest, say it
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Best Practices
Focus on inadvertent means of disclosure
• Websites!
• Trade shows and professional gatherings
• Articles and other publications
• Job interviews
• Customers (consider nondisclosure agreement)
• Vendors (ditto)
• Consultants (nondisclosure and assignment of proprietary rights)
• Studies or surveys
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Best Practices
New employee intake process
• Confidentiality agreement / NDA
• Inventions assignment agreement
• State law notices
• Noncompete / nonsolicitation
• State law differences
Existing employee exit process
• Written reaffirmation of NDA / PIAA
• Written confirmation of return of all company property and data
• Prophylactic letter to new employer regarding ex-employee obligations
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Disclaimer
Any views expressed through this presentation are those of the author and may not reflect the views of Leydig, Voit & Mayer or any of its clients. This presentation is for informational purposes only and not for the purpose of providing legal advice. Use of any information contained within this presentation does not create an attorney-client relationship. ©2016 Leydig, Voit & Mayer. All rights reserved.
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