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Non-Compete and Trade Secrets Blog

Posts from November 2010.

The American Bar Association’s Commission on Ethics 20/20 is examining whether technological advances are placing clients’ confidential information at risk, and if so, what should be done about it. Businesses should be asking themselves, "Can our lawyer keep a (trade) secret?"

If the recent WikiLeaks release of more than a quarter-million sensitive files is not a wake-up call to companies about the need to proactively protect confidential information, nothing is. The lesson is clear. When it comes to protecting trade secrets, preventative measures are as important, if not more important, than remedial measures.

If you had dismissed Oracle's lawsuit against rival SAP as just one more squabble between giant IT competitors, you likely weren't alone. But on Tuesday, November 23, 2010, all that changed when a nothern California jury ordered SAP to pay Oracle a whopping $1.3 billion for theft of software and related documents.

Federal courts are split over whether the Computer Fraud & Abuse Act applies to a faithless employee’s misappropriation of an employer’s confidential information by means of the employer’s computer. A California federal court recently held that an employee's access to such a computer is not "unauthorized" for purposes of the CFAA even if the employer's policies preclude such conduct.

On Friday, November 19, 2010, a Manhattan jury convicted former Société Générale trader, Samarath Agrawal, of misappropriating trade secrets. The case is one of two recent criminal prosecutions undertaken by the United States Government for employee theft of source code underlying high-frequency trading platforms.

Litigation budgets can be difficult to prepare under the best of circumstances. This is especially true for non-compete cases because judges have remarkably broad discretion when it comes to the procedures they require and because litigation activity is front-loaded. The key is to recognize what parts of non-compete litigation are in a party’s control, and what parts are not, and then to make realistic projections with the understanding that they likely will need frequent updating as the case evolves.

Federal courts continue to debate whether the Computer Fraud & Abuse Act applies to the misappropriation of an employer’s electronic trade secrets by departing employees. In a recent criminal case, one more court sided with employees -- and against the U.S. Government -- when it held that the CFAA does not apply in this context.

By now, it is almost old news that Georgia voters overwhelmingly passed a constitutional amendment authorizing a new statutory framework for enforcement of restrictive covenants. But a question has quickly emerged as to when the new law is effective.

Multi-national corporations operating in the United States often question whether their trade secrets will receive adequate protection in foreign markets. With this concern in mind, multi-national companies commonly prefer to litigate in U.S. courts where legitimate trade secret rights are consistently respected. When parties and witnesses are located abroad, keeping litigation in U.S. courts, however, presents certain challenges. Smart litigation decisions can make the difference.

In a landslide victory with 68% of the votes, the constitutional amendment authorizing a new statutory framework for enforcement of restrictive covenants in Georgia was passed by Georgia voters on November 2, 2010. The new framework goes into effect immediately, but it will only be applied to restrictive covenants that are signed November 3, 2010 or thereafter.

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