On January 11, 2021, the mayor of the District of Columbia signed an Act prohibiting non-competition provisions in employment agreements entered into after the date of passage. While under the peculiar rules of the District of Columbia, Congress has a 30-day window to disapprove the Act, it appears likely that this Act will pass. The effect of passage is significant, in that this widely-used tool to protect ongoing businesses will be taken away.
We hope you and your employees had a festive holiday season and happy New Year! It is always helpful to review your company policies and procedures on an annual basis, and policies and procedures on protection of trade secrets and confidential information are no different. Below are some tips to remember and questions to consider as you conduct your review this year.
Trade Secret Insider co-founders Joe Lavigne and P.J. Kee were guests on the recent HR Works Podcast episode “HR Works 128: Employee Monitoring and Protecting Trade Secrets.” During the episode, Joe, P.J., and show host Jim Davis discuss issues employers have while monitoring remote employee productivity as well as how employers can protect their trade secrets and confidential information when employees work remotely.
In April, our editor, Joe Lavigne, explained how employers can ensure trade secret protections while allowing employees to work from home during the pandemic. The article advised employers to restrict the transmission of trade secrets through social media platforms like Zoom. A recent decision out of Delaware confirmed that the failure to use Zoom privacy and security settings may result in the loss of trade secret protections.
Recently, the US Court of Appeals for the First Circuit, Fifth Circuit and Sixth Circuits reached decisions that analyze the enforceability of restrictive covenants in employment agreements. These decisions ultimately offer employers some valuable lessons when drafting employment agreements that contain restrictive covenants. An analysis of the decisions can be found here.
Musical artist and fashion icon Kanye West is being sued by a video and ecommerce company called MyChannel Inc. (MYC) that claims he breached their mutual nondisclosure agreement and took “their proprietary and confidential technology and information to fuel the e-commerce engine” of his Yeezy brand. MYC filed its lawsuit in the US District Court for the Central District of California. The minority-owned business alleges that West made “lavish promises to MYC of millions of dollars in economic reward,” as well as the formation of a lucrative partnership providing millions more[.]” In return, MYC asserted that it agreed to provide Kanye West—and did in fact provide Kanye West—with “tens of thousands of hours of investment in Yeezy in reliance on those promises and the MYC-Kanye partnership.”
Since 2017, we have been covering the legal saga of Anthony Levandowski – the executive/engineer who allegedly stole Google’s trade secrets related to self-driving car technology and used it for the benefit of his new company, which he ultimately sold to Uber. The saga included civil litigation, arbitration, bankruptcy, and criminal charges, but it seems like the story is coming to an end.
With the COVID-19 pandemic still ongoing throughout the United States, lawyers have had to come up with creative solutions to complete discovery, particularly when it comes to taking depositions. Over the past few months and for the foreseeable future, most depositions are taking place, at least in part, using videoconferencing technology. As these depositions have become more widespread, some attorneys have asked courts to require in-person depositions.
In early June of 2020, a Texas appellate court overturned a record $706 million verdict rendered by a San Antonio jury more than two years ago, and, in doing so, it ordered a new trial.
The case centered on real estate analytic firm HouseCanary Inc.’s fraud and misappropriation of trade secret claims against Amrock Inc., a Detroit home appraisal company related to Quicken Loans Inc.
In 2015, Amrock entered into an agreement to license HouseCanary’s proprietary home appraisal software. Amrock later filed a lawsuit alleging HouseCanary failed to deliver functioning software for valuing residential properties.
HouseCanary, on the other hand, asserted its own claims, accusing Amrock of fraudulently misappropriating technology “even after purporting to terminate” their agreement. At issue was HouseCanary’s purported revoluationary app that would allow appraisers to submit appraisals in the field.
Following a seven-week trial, a 12-person jury found in favor of HouseCanary. Amrock was ordered to pay $235.4 million in compensatory damages, $470.8 million in punitive damages, $29 million in prejudgment interest, and $4.5 million in attorneys’ fees.
Ultimately, the appellate court reversed the jury’s verdict because of flaws with the jury charges, including a problem with the definition of trade secrets theft, which the appellate court found tainted the verdict.
A trade secret fight has broken out among rival food companies. Mars, Inc. contends that a former executive downloaded several thousand files containing trade secrets and confidential business information shortly before switching sides to work for JAB Holding Company, LLC and its subsidiary Pret Panera Holding Company, Inc.
The former executive is not Mars’s only target. It also squarely points the finger at JAB and Pret Panera. Mars alleges that JAB and Pret Panera tried to conceal the former executives misdeeds and that it “is disturbing that no one at JAB or Pret Panera sounded the alarm when presented with stolen Mars documents.” Mars goes on to allege that the former executive’s “new colleagues instead appear to have accepted the stolen confidential Mars materials without question.”
In recent public statements, JAB and Pret Panera have denied any wrongdoing, contending that the lawsuit is “completely without merit” and pointing to an internal investigation conducted by outside counsel.
The lawsuit, which is pending in federal district court in Washington, DC., will likely be contentious and generate potentially significant rulings. We will continue monitor the case and provide timely updates.