shhh! it ’ s time for trade secret cases

Shhh! ItShhh! It’’s Time for s Time for Trade Secret CasesTrade Secret Cases

Steve BaronSteve Baron

10-26-0910-26-09

Cenveo Corp. v. Southern Cenveo Corp. v. Southern Graphic, et al (1-22-09)Graphic, et al (1-22-09)

Court = US DC MinnesotaCourt = US DC Minnesota Plaintiff = CenveoPlaintiff = Cenveo Defendants = Southern Graphic and indiv.Defendants = Southern Graphic and indiv. Fight = Cenveo wants to stop SG from Fight = Cenveo wants to stop SG from

working with past and current Cenveo working with past and current Cenveo clients and using proprietary info.clients and using proprietary info.

Court to decide whether to enter Court to decide whether to enter preliminary injunction.preliminary injunction.

Cenveo Corp. v. Southern Cenveo Corp. v. Southern Graphic (1-22-09)Graphic (1-22-09)

Court decides:Court decides: Grants preliminary injunction in part and Grants preliminary injunction in part and

denies in part.denies in part.

What are alleged trade secrets:What are alleged trade secrets: Job history information Job history information USB flash driveUSB flash drive

ClearOne v. Chiang (2007)ClearOne v. Chiang (2007)

Court = USDC UtahCourt = USDC Utah Plaintiff = ClearOne = Maker of wideband Plaintiff = ClearOne = Maker of wideband

codecode Defendants = Biamp licenses object code Defendants = Biamp licenses object code

from Widebandfrom Wideband The fightThe fight’’s about whether the code is a s about whether the code is a

trade secrettrade secret The posture: Biamp files a motion to The posture: Biamp files a motion to

dismissdismiss

ClearOne v. Chiang (2007)ClearOne v. Chiang (2007)

Biamp says: it canBiamp says: it can’’t read the object code; only t read the object code; only machines can read object code.machines can read object code.

Court says: who cares. It doesnCourt says: who cares. It doesn’’t matter.t matter. Biam says: object code was publicly available.Biam says: object code was publicly available. Court says: who cares. Even if object code Court says: who cares. Even if object code

available, the source code (human readable) available, the source code (human readable) may still be protectable trade secret.may still be protectable trade secret.

Result: Motion to dismiss complaint denied.Result: Motion to dismiss complaint denied.

Taco Bell v. TBWA (2009)Taco Bell v. TBWA (2009)

http://www.youtube.com/watch?v=M8sZ1DWsAHE/


Court = Ninth Circuit Court of AppealsCourt = Ninth Circuit Court of Appeals Plaintiff/Appellant = Taco BellPlaintiff/Appellant = Taco Bell Defendant/Appellee = TBWADefendant/Appellee = TBWA TheyThey’’re fightinre fightin’’ about who should pay for about who should pay for

the use of the psycho chihuahua the use of the psycho chihuahua character.character.

The confidential TS is the concept of using The confidential TS is the concept of using a psycho chihuahua as a Taco Bell a psycho chihuahua as a Taco Bell mascotmascot


Underlying case: Wrench v. Taco BellUnderlying case: Wrench v. Taco Bell Jury finds that Taco Bell breached and Jury finds that Taco Bell breached and

implied confidentiality agreement.implied confidentiality agreement. Awards Wrench $30 million, which mounts to Awards Wrench $30 million, which mounts to

$42 million with interest.$42 million with interest.


This case:This case: Question presented: Is Taco BellQuestion presented: Is Taco Bell’’s ad s ad

agency, TBWA, liable for agency, TBWA, liable for ““indemnityindemnity”” to Taco to Taco Bell?Bell?

Trial court granted summary judgment for Trial court granted summary judgment for TBWA.TBWA.

Ninth Circuit agrees: TBWA not aware of Ninth Circuit agrees: TBWA not aware of implied contract b/t Taco Bell and Wrench.implied contract b/t Taco Bell and Wrench.

Spring Design, Inc. v. Barnesandnoble.com (N.D. Cal. Dec. 27, 2010)

• Spring Design and B&N discuss doing a reader together; talks break off

• Both come out with a reader; Spring Design sues for trade secret misappropriation and Unfair competition.

• B&N files for summary judgment (dismissal). Gets dismissal on 1 of 4 patents (due to a public patent filing), but loses on the other claims that might set the case aside. NDA’s were signed that cause the court to be willing to examine the claims of fact.

• Pretty typical here: the side that loses at summary judgment will sometimes settle rather than go to trial:

• B&N settles with a licensing agreement.

Trade Secrets Take AwayTrade Secrets Take Away

Any information can fall within the ambit of trade secrets if its secret, Any information can fall within the ambit of trade secrets if its secret, you take reasonable steps to maintain secrecy and the info has you take reasonable steps to maintain secrecy and the info has economic valueeconomic value (e.g. source code, customer data, pre-public ad campaign) (e.g. source code, customer data, pre-public ad campaign)

Non-competes should be reasonable in scope and geography.Non-competes should be reasonable in scope and geography. Even if you donEven if you don’’t sign a contract, you owe a t sign a contract, you owe a ““duty of loyaltyduty of loyalty”” to your to your

employer and a duty to maintain confidentiality.employer and a duty to maintain confidentiality. When you leave a company, donWhen you leave a company, don’’t download company data onto t download company data onto

your own computer or a flash drive.your own computer or a flash drive. ThereThere’’s no worse way to start a new employment relationship s no worse way to start a new employment relationship

than to invite a lawsuit against you and your new employer.than to invite a lawsuit against you and your new employer.


Be careful what information you get and from whom.Be careful what information you get and from whom. In the world of advertising, it ainIn the world of advertising, it ain’’t over til wet over til we’’ve sorted out who ve sorted out who

has to pay $40 million.has to pay $40 million. E.g Taco Bell or its Ad Agency?E.g Taco Bell or its Ad Agency? Where a company (Taco Bell) supplies content to its agency but Where a company (Taco Bell) supplies content to its agency but

fails to disclose that it had a contract with the creator of the fails to disclose that it had a contract with the creator of the content not to disclose, no indemnity.content not to disclose, no indemnity.

Understand what it means to indemnify another partyUnderstand what it means to indemnify another party i.e. Assume the legal responsibility to pay if they get hit by a i.e. Assume the legal responsibility to pay if they get hit by a

money judgmentmoney judgment


Once the catOnce the cat’’s out of the bag, its out of the bag, it’’s tough to get it back in.s tough to get it back in. CourtCourt’’s favor injunctive relief in trade secret cases.s favor injunctive relief in trade secret cases. You canYou can’’t cover your tracks on a computer so dont cover your tracks on a computer so don’’t try.t try.

Computer forensic experts will get youComputer forensic experts will get you You may subject yourself to claims under the Computer Fraud and You may subject yourself to claims under the Computer Fraud and

Abuse ActAbuse Act

Quote of the DayQuote of the Day

““Do not tell secrets to those whose Do not tell secrets to those whose faith and and silence you have not faith and and silence you have not already tested.already tested.””

Elizabeth IElizabeth I

shhh! it ’ s time for trade secret cases

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