Executive Pay and Loyalty

Trade Secret Protections

New Developments:
  • 2012.Dec.11  Claims for Penumbral Trade Secrets. The federal-state interplay in trade secret litigation, from federal preemption to the protection of non-trade secrets, receives comprehensive analysis in Sunpower Corp. v Solarcity Corp., ND CA 12/11/2012 (see the complaint dated 2/13/2012). Here is the court's conclusion:
    • "Here, SunPower has failed to allege facts showing that: (1) SunPower’s non-trade secret proprietary information is made property by some law other than CUTSA, or (2) SunPower’s NonTrade Secret Claims are predicated on something other than the misappropriation of information of value.  The Court believes SunPower may be able to amend its complaint to include allegations showing SunPower has some property interest in the purported non-trade secret information, or that SunPower’s Non-Trade Secret Claims are premised on something other than the misappropriation of information of value such that they are not superseded.  Accordingly, the Court grants leave to amend."
  • 2012.Apr.30  Secure Business-oriented Social Media Rights.  PhoneDog is in the midst of litigation with a former executive over who owns a key Twitter account as to which the key employee controlled the user access info.  Despite that, a CA court ruled that .  Most recently, Kravitz has filed a motion on 4/30/2012 to assert counterclaims asserting that FireDog breached California's non-competition laws (16600 and 17200), based on allegations that "PhoneDog expressly consented to Kravitz’s changing the Twitter handle on the Twitter Account at issue.

  • 2012.Mar.21  Preliminary Injunction Issued in California under UTSA.  In Pyro Spectaculars v. Souza (ED CA), a former employer succeeded in protecting its customer lists because the following types of information were held protectable under the Uniform Trade Secrets Act (CA Civil Code §3426: 
    • the contact person for the employer's work;
    • detailed financial, cost, and budgeting info for the employer's work;
    • specific products and preferences for particular customers; and
    • customer feedback.
  • 2011  Prospective Tense in Confidentiality Agreement Dooms Employer Protection.  News America Marketing v. Emmel, 11th Cir. 2011. Here, a harsh drafting lesson comes from the 11th Circuit which vacated an employer's injunction because the executive's disclosures -- which he admitted were timed to occur immediately before he signed a trade secrets agreement -- fell outside the literal scope of the employer's protection.  The 11th Circuit noted that 
    • (1) "The December 21, 2006 agreement contains no language that indicates the parties intended for it to apply retroactively or that provides assurance about any past events or actions,"
    • (2) "the simple past tense also could have been used to capture Emmel’s pre-contract conduct," and
    • (3) "to whatever extent there is any ambiguity in the agreement as to what acts are covered and what are not ...that ambiguity is generally construed against the drafter of the contract."

  • 2010.Feb.10  Exiting Employee's Pre-departure Disloyal Acts Precipitate Broad Injunctive Relief for Employer.  Bimbo Bakeries USA Inc. v. Botticella (E.D. Penn. 2/9/2010, aff'd 3rd Cir.) -- preliminary injuction granted against departing executive, in part based on evidence of downloading of computer records on eve of terminating employment, primarily based on evidence that he had accepted a job offer from a competitor, remained employed in a position to receive confidential information, and copied “trade secret information from his work laptop onto external storage devices."
Notable Pre-2010 Cases: