Protecting the Crown Jewels: Trade Secrets and Non-Disclosure Agreements Part III: Trade Secret Litigation By: John L. Watkins and Thomas L. McLain Contact: [email_address] or [email_address]

Disclaimer This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (May 4, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney in their jurisdiction.

This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (May 4, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney in their jurisdiction.

Trade Secret Litigation Sometimes, despite all reasonable efforts, trade secrets will be misappropriated or confidentiality breached Litigation may be the only option

Sometimes, despite all reasonable efforts, trade secrets will be misappropriated or confidentiality breached

Litigation may be the only option

Pre-Suit Investigation Pre-suit investigation is critical Often moves very quickly Involve counsel More thorough investigation Implementation of safeguards Protection of privileges

Pre-suit investigation is critical

Often moves very quickly

Involve counsel

More thorough investigation

Implementation of safeguards

Protection of privileges

Pre-Suit Investigation Unusual downloads Review IT Logs Communications Emails Instant messages Voice mails Destruction/deletion Security cameras Consider expert

Unusual downloads

Review IT Logs

Communications

Emails

Instant messages

Voice mails

Destruction/deletion

Security cameras

Consider expert

Pre-Suit Investigation Interviews Involve counsel Employees Possibly customers Possibly suppliers Search Internet

Interviews

Involve counsel

Employees

Possibly customers

Possibly suppliers

Search Internet

Preservation Preservation demand Preservation directive or “hold” IT should be involved Consider involving outside computer expert

Preservation demand

Preservation directive or “hold”

IT should be involved

Consider involving outside computer expert

Litigation Started by filing a Complaint Complaint will include background facts Legal theories Misappropriation of trade secrets Federal Computer Fraud and Abuse Act State computer abuse statute Breach of Non-Disclosure Agreement Breach of fiduciary duty Possibly others

Started by filing a Complaint

Complaint will include background facts

Legal theories

Misappropriation of trade secrets

Federal Computer Fraud and Abuse Act

State computer abuse statute

Breach of Non-Disclosure Agreement

Breach of fiduciary duty

Possibly others

Potential Remedies Injunctive relief Court order to do something or to stop doing something Damages Actual damages Consider proof at outset Statutory damages Punitive damages Attorneys fees and costs

Injunctive relief

Court order to do something or to stop doing something

Damages

Actual damages

Consider proof at outset

Statutory damages

Punitive damages

Attorneys fees and costs

Defenses Trade secret cases often vigorously defended Courts seem to vary in how they resolve the issues Some focus on requiring strict proof of the elements Other courts focus on nature of defendant’s conduct

Trade secret cases often vigorously defended

Courts seem to vary in how they resolve the issues

Some focus on requiring strict proof of the elements

Other courts focus on nature of defendant’s conduct

Defenses Information not a trade secret Publicly available Reasonably ascertainable by proper means Discovered by proper means Reverse engineering

Information not a trade secret

Publicly available

Reasonably ascertainable by proper means

Discovered by proper means

Reverse engineering

Defenses Not subject to reasonable efforts to maintain secrecy Often focus of defense Issues Not subject to NDAs NDAs not enforceable Information widely available within company Information not password protected Provided to others under no condition of secrecy Customers

Not subject to reasonable efforts to maintain secrecy

Often focus of defense

Issues

Not subject to NDAs

NDAs not enforceable

Information widely available within company

Information not password protected

Provided to others under no condition of secrecy

Customers

Defenses Contest damages No damages to plaintiff No benefit to defendant No “jump start” Contest punitive damages Contest attorney’s fees

Contest damages

No damages to plaintiff

No benefit to defendant

No “jump start”

Contest punitive damages

Contest attorney’s fees

Preliminary Motions TRO/Preliminary Injunction Happens very fast – Sometimes hours or days Subject to strict legal standards But often granted upon sufficient proof Often sets tone for resolution Court may require plaintiff to post bond

TRO/Preliminary Injunction

Happens very fast – Sometimes hours or days

Subject to strict legal standards

But often granted upon sufficient proof

Often sets tone for resolution

Court may require plaintiff to post bond

Preliminary Motions Expedited discovery Preservation order Request for immediate inspection Request for expedited depositions

Expedited discovery

Preservation order

Request for immediate inspection

Request for expedited depositions

Discovery Document requests Interrogatories (written questions) Depositions Requests for Admissions Often involves e-discovery Usually lasts four to eight months, depending on the court

Document requests

Interrogatories (written questions)

Depositions

Requests for Admissions

Often involves e-discovery

Usually lasts four to eight months, depending on the court

Mediation Formal settlement negotiation with a trained third-party Sometimes required by courts, but often agreed to by parties Confidential Allows for creative solutions not available in court Relatively low cost and low risk

Formal settlement negotiation with a trained third-party

Sometimes required by courts, but often agreed to by parties

Confidential

Allows for creative solutions not available in court

Relatively low cost and low risk

Trial Case normally tried to a jury (typically, six or twelve persons) Jurors hear evidence and make determination Plaintiff will ask court to make the preliminary injunction (if there is one) permanent Judgment will be entered for the winning party

Case normally tried to a jury (typically, six or twelve persons)

Jurors hear evidence and make determination

Plaintiff will ask court to make the preliminary injunction (if there is one) permanent

Judgment will be entered for the winning party

Appeal Losing party may choose to appeal Appeals are typically based on errors of law Improper evidentiary rulings Improper legal instructions to the jurors Improper application of legal standards

Losing party may choose to appeal

Appeals are typically based on errors of law

Improper evidentiary rulings

Improper legal instructions to the jurors

Improper application of legal standards

Conclusion This concludes our podcast series on Trade Secrets and Non-Disclosure Agreements We will have new podcasts on different subjects For more information, visit our website, www.ctflegal.com

This concludes our podcast series on Trade Secrets and Non-Disclosure Agreements

We will have new podcasts on different subjects

For more information, visit our website, www.ctflegal.com