intellectual property law seminar - husch blackwell/media/files/events/2016/12... · © 2016 husch...

Intellectual Property Law Seminar Kansas City, Missouri December 7, 2016

© 2016 Husch Blackwell LLP. All Rights Reserved.

© 2016 H usch B l ack we l l LLP

By:

Nathan Oleen

Max Ellenbecker

Anatomy of a Software Development Deal


Development & Pricing Internal Preparation Software Specifications Development Process Pricing and Payment Acceptance Testing

Ownership & Risk Ownership Warranties Indemnification Limitation of Liability

Post-Development Setup and Hosting Training Maintenance and Support Source Code Escrow



Internal Preparation


Internal Preparation Clear understanding amongst stakeholders

Size and type of development deal

– Market analysis

– Due diligence

Simultaneously negotiate with two or more developers



Software Specifications

Source: www.projectcartoon.com


Software Specifications Descriptions

– Features

– Functionalities

– Parameters

Diagrams

Flowcharts

Use cases

Wireframes of GUIs



Development Process – Waterfall More rigid and concrete

Distinct Phases or Milestones

– Target dates for Deliverables

Testing after Coding

Change Orders


Development Process – Agile More flexible

Continuous cycle

– Shorter “Iterations” or “Sprints”

– 2-4 week durations

Testing simultaneous with Coding

Focus is on user stories, project roles, planning, and management meetings



Pricing & Payment Waterfall

– Fixed-price model– Fees divided among Milestones– Holdback until acceptance of Deliverables

Agile– Developers seek time-and-materials (T&M) model– Customers seek fixed-price model– Middle ground Fixed price per iteration Capped T&M Holdback until entire project is complete


Acceptance Testing Waterfall

– Deliverables tested at completion of Milestones– Specified period of time to test– Accept or Reject if non-compliant, bugs, performance

issues– Correction period (if necessary)

Agile– “Owner” provides continuous feedback in “closed

loop” until “done”– Other stakeholders may provide input at defined

points of iteration/sprint



Ownership General Rule: Developer owns copyrights unless

assigned to customer

“Custom-developed” works → Assignment

“Pre-existing” works → Nonexclusive, perpetual, royalty-free license


Warranties Conformance with industry standards

Sufficient right to assign/license

Performance specifications

No infringement

No open source code (unless listed)

No viruses or malicious technologies



Indemnification Often tied to breaches of warranties Important inclusions:

– Infringement of third-party IP rights– Breach of confidentiality

Common exclusions for infringement caused by:– Customer modification of software– Use in connection with other software

Requiring additional remedies:– Provide suitable non-infringing alternative– Obtain license– Terminate and refund


Limitation of Liability Similar to other commercial contracts

– Excluding consequential, exemplary, and punitive damages

– Limiting direct damages to defined amount

Careful consideration of carve-outs

– Indemnification for third-party IP claims

– Breach of confidentiality



Setup & Hosting

Setup

– Install and configure

Hosting

– Customer, developer or

third party

Considerations for third-party hosting service providers:

– Service Level Agreements (availability requirements)

– Audit reports (SSAE 16, SOC 1, SOC 2)

Important for mission critical software and sensitive information


Training Training materials

– User manuals, tutorials and videos

In-person or remote training

– Scope of training

– Required hours and availability

– Additional costs for training



Maintenance & Support Technical troubleshooting, correction of defects, updates

Severity Levels based on Impact of defect

– e.g., Level 1, 2, 3, or 4

Initial response time based on Severity Level

– e.g., 2, 12, 48, 72 hours

Resolution time based on Severity Level

– e.g., 24, 48 hours, 4, 10 days

Typically Excluded

– Upgrades to software

– Development of additional features


Source Code Escrow Ensures customer access to the developed software

When used: when developer retains ownership or control

Use of third-party escrow agent

Defining the triggering events

– Failure to provide maintenance & support

– Developer bankruptcy

– Acquisition by competitor

Key consideration: re-submitting to escrow when fixes, upgrades, etc. are added to the software



Questions?

Nathan Oleen

HUSCH BLACKWELL LLP

4801 Main Street, Suite 1000

Kansas City, MO 64112

816.983.8237

[email protected]

Max Ellenbecker

HUSCH BLACKWELL LLP

4801 Main Street, Suite 1000

Kansas City, MO 64112

816.983.8496

[email protected]


Internet of Things

Intellectual Property Law Seminar 2016

By: Bob Bowman and Andy Schlidt

Legal Concepts You Need to Know.


WHAT IS IoT?

The Internet of Things (IoT) is a network of physical objects embedded with electronics, sensors, software, and / or network connectivity, which enables the collection and sharing of data.



PROJECTIONS FOR IOT


Unlimited Application



The Internet will disappear.- Google chairman, Eric Schmidt

The Future is

is IoT


WHAT ARE SOMEOF THE LEGAL CONSIDERATIONS

And these are only a few…



PATENTS Patent filings related to IoT have been rapidly taken place in all

industries.

Industry Snapshot – Fitness Wearables*– Leading Patent Filers toward wearables – mostly technology

companies Samsung with around 1500 patent filings Google (Alphabet) with around 1250 patent filings Microsoft and Apple with each around 1100 patent filings

– Market Leaders in Product Sales Garmin and Fitbit have around 100 patent filings each.

– Patents directed toward sensors, sensor systems, wireless communications, processors, and other product features.

*http://www.ipwatchdog.com/2016/08/24/iot-ip-landscape-fitness-wearables/id=72137/


PATENTS For manufactured goods and services, trends appear to be moving

toward joint development of patentable technology – redesign of existing products to incorporate existing or developed sensor and communications technology.

For financial institutions, a flurry of patent activity has taken place to secure rights in methods and technology related to carrying out financial transactions using blockchain technology for the IoT (Andy will describe blockchain in more detail later).

The patent race is on. Time to start thinking how your products or services can be adapted and/or will fit into the IoT and to get a view of the IoT patent landscape in your industry.



REGULATORY COMPLIANCE

IoT is largely unregulated (VW)

Expect flurry of new regulation:– FAA enacting regulations

for airborne apps (drones)– FCC enacting mobile

marketing rules (telecom)– FTC (fair practices)

Before leaping, a compliance assessment for your industry is recommended


PRIVACY & SECURITY

-- Computer Business Review 4.12.16



PRIVACY & SECURITY

Emerging IoT Standards:

• “Strategic Principles for Securing the Internet of Things”

(U.S. Department of Homeland Security, 11.15.16)

• “Network of Things”

(National Institute of Standards and Technology, 7.1.16)

Trends:

Privacy will be required by design and default. Affirmative consent will be required from users before collecting PII. Limits will be imposed on the types of user information that may be collected. IoT devices will be required to encrypt information.


OWNERSHIP

Who owns this? Data, sensors, chips, devices, networks... Keeping track won’t be easy in an IoT World. ZDNet.com 1.11.16.



SHARING AGREEMENTS

Heightened importance of Contracts

To manage multiple vendor environments Establish ownership of jointly developed products Establish ownership of collected data Grant use rights (data, software, devices) via license Allocate risk Document compliance

“IoT Revolution Hinges on Licensing, Entitlement Management”


BLOCKCHAIN: Smart Contracts

A decentralized ledger system, shared by parties participating in a collective network that enables the tracking and trading of anything of value – money, titles, business records, goods or other assets.



IoTWorld Impact

It is expected that in about 15 years or so, everything will be handled by IoT


ARE YOU READY?

Robert J. BowmanAttorneyDirect: [email protected]

Andy J. SchlidtPartner

Direct: (414) [email protected]


Brand-Aid:Protecting Your Trademarks

By: Albert Carrion


What is a Trademark? A “trademark” is a word, phrase, symbol or

design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.

Trade Dress is a distinctive, nonfunctional feature, which distinguishes a merchant's or manufacturer's goods or services from those of another. The trade dress of a product involves the "total image" and can include the color of the packaging, the configuration of goods, etc...



Purpose of Trademarks

A symbol of “Goodwill”

Differentiate products/services

Protect investment in reputation

Avoid consumer confusion/being mislead


Types of Marks

Word mark – standard character format

WALMART



Word Mark

KRAFT


Types of Marks Design mark – logos or stylized format; 2- or 3-

dimensional marks



Design Mark - Logo


Design Mark – Stylized



Design Mark - Stylized


Types of Marks Composite mark – word and design mark combined;

stylized words protected only as presented



Composite Mark


Types of Marks Trade Dress mark – shape; color; sound; scent



Trade Dress


Selecting a Trademark - Make It Distinctive! Inherently Distinctive

– Fanciful – KODAK; EXXON; SANKA– Arbitrary – APPLE (computers); CAMEL

(cigarettes); SHELL (gasoline)– Suggestive – NIKE (athletic wear); BEAR

(parkas); CHICKEN OF THE SEA (tuna fish) Distinctive Only with Secondary Meaning

– Describes ingredient, purpose or feature/Geographic/personal name -DISCOUNT MUFFLERS; SHAKE ‘N BAKE; SHARP(TVs)

Never Distinctive – Generic– BABY OIL (mineral oil); BUNDT

(coffee cake); CRAB HOUSE (seafood restaurant)



Clearing a Trademark

Test is likelihood of confusionKeys: similar mark/similar product or services

Resources and clearances:– U.S. PTO online records – www.uspto.gov– Google searches– Search reports obtained/reviewed by a trademark

lawyer.– Domain name availability– Undesirable translations/difficult to say, read or spell

(e.g. NOVA, HERMES, PORSCHE)


Acquiring Trademark Rights in U.S.

Priority goes to first to use in commerce

Common law rights - TM or SM symbol

State Registration

Federal Registration - ® • Intent to Use application • Use-based application

Oppositions and Cancellations



What Rights Do You Get?

Registered Mark at PTO: The right to prevent others, on a nationwide basis, from using the same or a confusingly similar mark to identify their goods or services, where their use results in a “likelihood of confusion” in the mind of consumers.

State Trademark Registration: Similar rights, but limited to geographic area of the state.

Common law use – priority commensurate with scope of geographic use and type of goods/services provided


Trademark Infringement

“Trademark infringement” means the use of a trademark without the trademark owner’s permission.

Priority Protectable mark Likelihood of Confusion – 7 Factor Test

Legal Steps– Cease and desist letter or direct call– Wind down period– Licensing use of the mark– Disclaimer of association– Lawsuits - Legal relief for successful trademark owner



•Defenses to Trademark Infringement Claim

No protectable interest in mark (e.g., the mark is generic)

Prior Use No likelihood of confusion Fair Use - descriptive mark is used in good faith

for its primary, rather than secondary, meaning, and no consumer confusion is likely to result

Nominative Use – use of another’s trademark is necessary to identify the product/service; no suggestion of endorsement or sponsorship

Parody


Related Branding issues Transferring ownership of trademarks

Licensing trademarks

Foreign trademark rights



Branding Misconceptions The Secretary of State accepted my corporate name so I

will have no trademark issues using it as a brand.

My Assumed Name certificate protects my name rights just as well as a trademark registration.

The PTO will police/prohibit unauthorized use of my

registered trademark.

Once my mark gets registered at the PTO, I don’t have to do anything until renewal in 10 years.


Questions

Contact Information:

Albert CarrionHusch Blackwell, LLP

[email protected](512) 472 - 5456


To Patent, or Not to Patent: Navigating the Path Between Patents and Trade Secrets

By: Devon Rolf and Kris Kappel


Big Picture Definitions

What is a Patent

What is a Trade Secret



Patents Patent Office review and approval

– The patent contract – tell everyone in the universe your secret sauce and how to practice without undue experimentation in exchange for limited monopoly

– Publication within 18 months of filing (35 USC §112)

Nearly 3 years to final determination

Computer implemented inventions


Trade Secrets

• Information is secret

• Measures developed to keep information secret

• Independent economic value



Changes in Law Changes in U.S. Patent Law

– Creation of PTAB– Section 101 – patentable subject matter

Changes in Trade Secret Law– Defend Trade Secrets Act (DTSA)



What Does It Take To Get A Patent?

Novelty

Non-Obviousness

Patentable Subject Matter


Novelty & Non-Obviousness Novelty – Has anyone ever done this exact thing before?

Non-Obviousness – Would it have been obvious to do this based on what others have already done?



Patentable Subject Matter Is this even something that is even eligible for patent

protection?

Historically Ineligible:– Laws of Nature & Natural Phenomena (e.g., gravity)– Mathematical Formulae (e.g., E=mc2)– Things that defy the laws of physics (e.g., perpetual

motion machines)


CLAIM IS NOT ELIGIBLE

SUBJECT MATTER

(Step 1IS THE CLAIM TO A PROCESS, MACHINE, MANUFACTURE OR COMPOSITION OF

MATTER?

Step 2aIS THE CLAIM DIRECTED TO A LAW OF NATURE, A NATURAL

PHENOMENON, OR AN ABSTRACT IDEA

(Judicial Exceptions)?

Step 2bDOES THE CLAIM RECITE

ADDITIONAL ELEMENTS THAT AMOUNT TO SIGNIFICANTLY MORE THAN THE JUDICIAL

EXCEPTION?CLAIM QUALIFIES AS

ELIGIBLE SUBJECT MATTER

NO

NO

YES

YES

YES

NO



Abstract Ideas in Software Four basic categories of Abstract Ideas:

– Mathematical Formulas

– Fundamental Economic Principles

– Certain Methods of Organizing Human Activities

– An Idea “of Itself”


Recent Cases & USPTO Guidelines

Enfish Bascom McRo USPTO Guidelines on Eligibility

(www.uspto.gov)



Changes in U.S. Patent LawDisparate Impact in Certain Art Fields

Source, Bilskiblog, 10/19/2016AliceStorm Update for Fall 2016By Robert R. Sachs, Fenwick & West







Software Takeaways Lower chance of patentability if:

– Repetitive calculations– Receiving, processing, and storing data– Electronically scanning or extracting data from a

physical document– Electronic record keeping– Automating mental tasks, and – Receiving or transmitting data over a network such as

the Internet.

Start thinking about trade secret protection!



Abstract Ideas In Biotech Products of Nature – Is your creation materially different

from what already exists in nature?– DNA– Proteins– Bacteria

Natural Laws & Biological Truths


Natural Phenomenon Genetically modified oil-eating bacteria found patentable

– Modifications were sufficient to distinguish from naturally occurring bacteria

Identification of genes predictive of cancer found not patentable

Required significant effort and investment, but the court focused on whether any changes were made to the genes in question.

Discovery of relationship between biomarker levels in blood and drug efficacy found not patentable– Considered a “law of nature”



Biotech Takeaways Don’t try to patent the idea, patent a specific

implementation of the idea. Example: don’t try to patent the relationship between a

hormone and pregnancy. If you develop a method for creating something that

exists in nature, or discover a relationship between something natural and a condition or genetic defect…

Consider trade secret protection!


Broad Scope of Trade Secrets Broad application to many businesses

Can protect any information that provides a competitive advantage in the marketplace– Technical or non-technical

Novelty -- not required Non-obviousness -- not required Key to address classic problem:

– the enemy from within



The Defend Trade Secrets Act Signed into law by President Obama on May 11, 2016

– Consistency in defining “trade secret”– Consistency in defining “misappropriation”– Consistency in application of law– Seizure (in extreme circumstances)

Limitations -– Notice requirements – No application to misappropriations occurring before

enactment


Factors to Weigh in Decision Making Productization:

– Trade Secrets are vulnerable to reverse engineering– This risk may be reduced where reverse engineering

is particularly difficult or expensive or where distribution is carefully controlled to prohibit reverse engineering.

– Required disclosure for governmental approvals? (FDA)

Technologies reserved for internal uses are generally better candidates for trade secret protection.



Factors to Weigh in Decision Making Competition:

– In assessing likelihood of independent development, consider; Who are the competitors, Their known development activities, The probability of new competitors arising.

Trade secret owner has more control over the evolution of the technology.


Factors to Weigh in Decision Making Shelf Life:

– Technology may quickly become obsolete in rapidly changing segments.

– If the value of the IP is only several years or less, consider;

Q: Is the time and expense of obtaining a patent worthwhile?



Factors to Weigh in Decision Making Maintenance:

– Trade secrets – planning and discipline secrecy must be maintained

– Patent – protected by right effective monetization may require diligent

detection of infringers If infringements are difficult to detect or prove, your

patent may be worthless Limited extraterritorial reach of patents


Factors to Weigh in Decision Making Costs:

– Trade Secrets May involve little upfront expense Requires ongoing expense and efforts to maintain

secrecy

– Patents Upfront expense and effort Litigation costs



Factors to Weigh in Decision Making Capitalization:

– Trade secrets may have difficulty in attracting investors who have concerns over ability to protect the secret

– Third parties may be more comfortable with “relative certainty” of patent protection


Complementary Protections? Staging protections

– Improvements or innovations made after filing– manufacturing processes related to the patented

invention

Timing Disclosure– 18 months of confidentiality following filing– Ask for non-publication Give up ability to seek foreign protections



Questions?Kris [email protected]

Devon Rolf [email protected]


Litigating a Defend Trade Secrets Act Claim

By: Joan K. Archer, Ph.D.


Defend Trade Secrets Act Background

Defend Trade Secrets Act (“DTSA”) was signed into law on May 11, 2016.

Took several years to get passed. Amends the Economic Espionage Act of 1996 – Chpt. 90

of Title 18 of the United States Code (18 U.S.C. § 1831 et seq.).

Creates federal civil cause of action for misappropriation of trade secrets.

Prior to act, claims had to be brought under state law. Does not preempt state law/Uniform Trade Secrets Act.



Key Proof Points Under DTSA Connected to Interstate Commerce (18 U.S.C.

§ 1836(b)(1)): To bring a claim under the DTSA, the trade secret in issue must be “related to a product or service used in, or intended for use in, interstate or foreign commerce.

3 Year SOL (18 U.S.C. § 1836(d)): : Action must be commenced no later than 3 years after the date on which the misappropriation is discovered or, by reasonable diligence, should have been discovered.


Key Proof Points Under DTSA (Cont.)

Must be a Trade Secret (18 U.S.C. § 1839(3)): “…all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing….”

Must be Protected (18 U.S.C. § 1839(3)(A)): : Owner must take “reasonable measures” to keep information secret.




Owner Must Derive Independent Economic Value (18 U.S.C. § 1839(3)(B)): : The trade secret information must derived independent economic value from not being generally known or readily ascertainable by proper means and from which another party could obtain economic value through the disclosure or use.

“Owner” Defined (18 U.S.C. § 1839(4)): : “…the person or entity in whom or in which rightful legal or equitable title to, or license in, the trade secret ….”



“Misappropriation” Defined (18 U.S.C. § 1839(5)): – acquisition of a trade secret by a person who knows

or has reason to know that the trade secret was acquired by improper means; or

– derived from a person who used improper means to acquire a trade secret or otherwise involving a duty of confidentiality.

“Improper Means” ((18 U.S.C. § 1839(6)(A)): includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.




“Improper Means” Does Not Include ((18 U.S.C. § 1839(6)(B)):– reverse engineering;– independent derivation;– any other lawful means of acquisition.


DTSA Unknowns Will negative know-how be included as a protectable

interest? (Blind alleys) Will information learned or memorized be determined to

be a protectable interest? (Versus general education Will accidental or inadvertent disclosures no longer be

fatal to a plaintiff’s claim? (Not “generally known” or “readily ascertainable”)



Remedies Under DTSA Statutory Remedies ((18 U.S.C. § 1836(b)):

– Injunctions

to prevent misappropriation on terms court deems reasonable provided the order does not:

– prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows; or

– otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business;

Require affirmative actions to be taken to protect the trade secret Reasonable Royalty--If exceptional circumstances render injunction

inequitable


Remedies Under DTSA (Cont.) Statutory Remedies ((18 U.S.C. § 1836(b)):

– Damages for actual loss.– Damages for unjust enrichment if not covered by

actual damages.– Reasonable royalty in lieu of other damages– 2x Exemplary damages if willfully and maliciously

misappropriated – Prevailing party attorneys’ fees to prevailing party

(bad faith)



Remedies Under DTSA (Cont.) Extraordinary Relief: Ex Parte Seizure ((18 U.S.C.

§ 1836(b)(2)):

– “Based on an affidavit or verified complaintsatisfying the requirements of this paragraph, the court may, upon ex parte application but only in extraordinary circumstances, issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”


Remedies Under DTSA (Cont.) Requirements for issuing ex parte seizure order (Cont.):

– the person against whom seizure would be ordered has actual possession of the trade secret and property to be seized;

– the application describes with reasonable particularity the matter to be seized and, to the extent reasonable under the circumstances, identifies the location where the matter is to be seized;

– the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person; and

– the applicant has not publicized the requested seizure.



Remedies Under DTSA (Cont.) Requirements for issuing ex parte seizure order:

– Rule 65 Injunction Inadequate “because the party to which the order would be issued would evade, avoid, or otherwise not comply with such an order;

– immediate and irreparable injury will occur if is not ordered;– the harm to the applicant of denying the application outweighs

the harm to defendant and substantially outweighs harm to third parties;

– likelihood of success the applicant is likely to succeed in showing that the information is a trade secret; and the person against whom seizure would be ordered

misappropriated the trade secret of the applicant by improper means or conspired to use improper means to misappropriate the trade secret;


Noteworthy Items Racketeer Influenced Corrupt Organizations Act

(“RICO”) : – 18 U.S.C. § 1961 expressly added theft of trade

secrets to the list of prerequisite offenses needed to bring a RICO claim

– Acts must be indictable under 18 U.S.C. § 1831 (Economic Espionage) and § 1832 (Theft of Trade Secrets)



Noteworthy Items (Cont.) Orders to Preserve Confidentiality 18 U.S.C. § 1835

– (a)IN GENERAL.—In any prosecution or other proceeding under this chapter, the court shall enter such orders and take such other action as may be necessary and appropriate to preserve the confidentiality of trade secrets, consistent with the requirements of the Federal Rules of Criminal and Civil Procedure, the Federal Rules of Evidence, and all other applicable laws. An interlocutory appeal by the United States shall lie from a decision or order of a district court authorizing or directing the disclosure of any trade secret.

– (b)RIGHTS OF TRADE SECRET OWNERS.—The court may not authorize or direct the disclosure of any information the owner asserts to be a trade secret unless the court allows the owner the opportunity to file a submission under seal that describes the interest of the owner in keeping the information confidential. No submission under seal made under this subsection may be used in a prosecution under this chapter for any purpose other than those set forth in this section, or otherwise required by law. The provision of information relating to a trade secret to the United States or the court in connection with a prosecution under this chapter shall not constitute a waiver of trade secret protection, and the disclosure of information relating to a trade secret in connection with a prosecution under this chapter shall not constitute a waiver of trade secret protection unless the trade secret owner expressly consents to such waiver.


Defenses to DTSA 3 Year Statute of Limitations

– Key issue: “Continuing misappropriation” constitutes a single claim of misappropriation ((18 U.S.C. § 1836(d)).

Before or After Effective Date: “The amendments made by this section shall apply with respect to any misappropriation of a trade secret (as defined in section 1839 of title 18, United States Code, as amended by this section) for which any act occurs on or after the date of the enactment of this Act.”



Defenses to DTSA (Cont.) Before or After Effective Date (Cont.):

– Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Group, Inc., No. 1:15-cv-00211-LGS-RLE, 2016 WL 5338550 (S.D.N.Y. Sept. 23, 2016), Court relied on 18 U.S.C. § 1839(5) and allowed a party to amend its pleadings to add a DTSA cause of action based on the competitor’s alleged continuing use of trade secrets after May 11, 2016.

– Adams Arms, LLC v. Unified Weapon Sys., Inc., No. 8:16-cv-1503-T-33AEP, 2016 WL 5391394 (M.D. Fla. Sept. 27, 2016), Court concluded that the DTSA applies as long as the alleged use or disclosure of the trade secrets continued on or after May 11, 2016.


Defenses to DTSA (Cont.) Before or After Effective Date (Cont.):

– Dazzle Software II, LLC v. Kinney, No. 2:16-cv-12191-MFL-MKM, 2016 WL 6248906 (E.D. Mich. Aug. 22, 2016), Court granted the MTD the DTSA claim, but left leave to amend to “plead with specificity any alleged conduct . . . post-dating the effective date of the DTSA.”



Defenses to DTSA (Cont.) Information Obtained Through Proper Means:

Information in issue was discovered through– Reverse engineering or– Independent effort and investment or– Other lawful means.


Defenses to DTSA (Cont.) Reasonable Measures to Protect Information Not

Used.– M.C. Dean, Inc. v. City of Miami Beach, No. 1:16-cv-

21731-CMA, 2016 WL 4179807 (S.D. Fla. Aug. 8, 2016), Court concluded that the plaintiff did not sufficiently plead a DTSA claim because he did not take reasonable steps to protect the secrecy of employee payroll information that he agreed, via contract, to disclose to the city.

– Measures such as NDAs with employees and customers, security systems, policies, education and training on best practices, etc.



Recent Cases Addressing State/DTSA Conflicts

Henry Schein, Inc. v. Cook, No. 3:16-cv-03166-JST, 2016 WL 3212457 & 2016 WL 3418537 (N.D. Cal. June 10, 2016): Court granted motion for a TRO blocking a former employee from accessing misappropriated data and from contacting former clients even though non-solicitation agreements are often invalid under California law. At PI phase, the court lifted the ban on contacting clients.

Panera, LLC v. Nettles, No. 4:16-cv-1181-JAR, 2016 WL 4124114 (E.D. Mo. Aug. 3, 2016), Court enjoined a former employee from working for or disclosing trade secrets to Papa John’s. Injunction issued under Missouri law. Court noted that an analysis under the DTSA would likely result in a similar injunction.


Defenses to DTSA (Cont.) Failure to define or identify trade secret.

– Question of timing on when to assert. Laches, Waiver, Estoppel.



Questions?

Joan K. Archer, Ph.D.PartnerDirect: [email protected] & Agribusiness Industry GroupFollow us: www.foodandaglawinsights.com

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