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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.

jaugustyn@leydig.com

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

steven.auvil@squirepb.com

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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