Court of Appeals for the Second Circuit Narrows Scope of Federal Laws Protecting Trade Secrets
On April 11, 2012, the United States Court of Appeals for the Second Circuit issued a much anticipated opinion explaining the reasons that it vacated the conviction of former Goldman Sachs' programmer, Sergey Aleynikov, under the federal National Stolen Property Act1 ("NSPA") and the federal Economic Espionage Act2 ("EEA"). As a result of the Second Circuit's decision in United States v. Aleynikov, companies that have developed proprietary software that they use to run their business, but that do not offer to sell or license this software to third parties, will no longer be able to seek federal criminal enforcement under the NSPA or the EEA when such software is stolen, at least in the Second Circuit (New York, Connecticut and Vermont). It is possible, perhaps even likely, that this case will also apply to SaaS companies that offer their software as a part of a service to customers, but do not make their software directly available to those customers. Although the case only affects federal cases arising in the Second Circuit, it may be applied by analogy in other federal courts.
Can "Friends" Be Trade Secrets?
Unfair competition litigation frequently involves disputes over whether information actually constitutes a trade secret. Given the prevalent use of social media by both businesses and individuals, it is not surprising that courts have begun to address whether such information can be a trade secret.
Should Courts Revisit the Rule Limiting a Non-Competition Injunction to the Term Provided in an Employment Contract?
It is well-established that an injunction to enforce a non-compete provision should not extend beyond the period set forth in the non-compete agreement.
Is Computer Fraud and Abuse Act for Hackers Only? Ninth Circuit Says Yes, and Supreme Court May Have to Make Final Call
Employers looking to hold employees liable for misappropriation of trade secrets or violations of company computer policies under the Computer Fraud and Abuse Act may have to find another avenue for relief. At least that's what the U.S. Court of Appeals for the Ninth Circuit thinks.
Ninth Circuit Rules the CFAA Requires Proof of Hacking
Last week, the Ninth Circuit published its long awaited en banc decision, authored by Chief Judge Alex Kozinski, in United States v. Nosal [pdf]. The 9-2 reversal of the 3-judge appellate decision holds that the Computer Fraud and Abuse Act's phrase “exceeds authorized access” is limited to violations of restrictions on physical access to information and does not extend to violations of restrictions on the use of information. Prosecution under the CFAA thus requires proof of “hacking” and employers will not be able to bring a claim for violation of the CFAA based on a violation of a computer use policy.
CFAA Does Not Apply to Employee Data Theft According to Ninth Circuit
"Computers have become an indispensable part of our daily lives. We use them for work; we use them for play. Sometimes we use them for play at work. Many employers have adopted policies prohibiting the use of work computers for nonbusiness purposes. Does an employee who violates such a policy commit a federal crime? How about someone who violates the terms of service of a social networking website? This depends on how broadly we read the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030."
Seventh Circuit Case Highlights Importance of Documenting Steps to Maintain Privacy of Trade Secrets
Under the Uniform Trade Secrets Act, a “trade secret†is information that (1) derives independent economic value by virtue of its being secret; and (2) is the subject of reasonable efforts by the plaintiff to maintain its secrecy. Although the first criterion is often discussed in judicial opinions, the second is not. The recent Seventh Circuit Court of Appeals case Fail-Safe, LLC v. A.O. Smith Corporation [pdf], No. 11-1354 (Mar. 29, 2012) is among the few reported cases that turn on the second prong of analysis.
What Does Obamacare Have to do with Non-Compete Agreements?
What does Obamacare have to do with non-compete agreements? Well, technically speaking, nothing. But the Supreme Court recently focused on what it should do with the remainder of the healthcare law if it decided to strike the individual mandate. Justice Scalia asked, "Once you cut the guts out of it, who knows which parts were desired and which ones weren't?"
Computer Forensics Fill in Wrinkles in Botox Trade Secrets Dispute
In the ongoing battle between competitors in the aesthetics field, the court in Allergan, Inc. v. Merz Pharmaceuticals, LLC, et al. recently completed a nine-day bench trial resulting in an injunction [pdf] against the defendants to prevent the actual or threatened misappropriation of Plaintiff Allergan, Inc.’s (Allergan) trade secrets.
Minnesota Court Narrowly Interprets the Computer Fraud and Abuse Act
Recently, a Minnesota federal district court construed the federal Computer Fraud and Abuse Act narrowly and dismissed an employer’s CFAA claim against three former high-level employees. In Walsh Bishop Associates, Inc. v. O’Brien, et al. [pdf], the court held that civil liability under the CFAA does not extend to an employee’s alleged later misuse of information that the employee was authorized to access. Thus, the court concluded that civil liability under the statute turns on whether the former employees were authorized to access the data at issue, not on whether the former employees allegedly misused the data after accessing it.
