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Author Name Bradford K. Newman
Published date 2016
ISBN no. 978-1-58852-342-6
eBook ISBN no. 978-1-58852-343-3
Condition New
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Chapter 1: Introduction
§ 1.01 Introduction
Chapter 2: The “Trade Secret Audit”: Identifying and Protecting Intellectual Property and Corporate Assets
§ 2.01 Introduction
§ 2.02 Identifying Trade Secrets
[1] Canvassing Broadly to Identify Trade Secrets
[2] Finding the Source of Information About Innovations
[3] Developing Scalable Processes for “Bottom Up” Accounting of Intellectual Property
§ 2.03 Identifying Existing Protections of Intellectual Property—and the Potential Deficiencies in These Protections
[1] Site Security’s Role in Protecting Intellectual Property
[2] Human Resources: Protecting Company Data During the Hiring Process
[3] IT: Securing Company Networks and Computer Media
[4] Employment Forms: Confidentiality Agreements with Employees
[5] Employee Exits: Special Protections for High Risk and Other Employee Departures
§ 2.04 The Attorney-Client Privilege in Connection with Conducting the Audit
§ 2.05 Forming an Intellectual Property Committee (IPC) and Developing an Effective Trade Secret Plan (TSP)
[1] The Intellectual Property Committee
[2] Formulating the Trade Secret Plan
[3] “Reasonable Measures to Protect”—Proper Classification of Trade Secrets and Corresponding Protection Measures
[a] Sliding Scale Protection Based on Value of the Trade Secret: Limiting Access to Sensitive Information
[b] Determining Appropriate Tiers of Protection
[c] Assigning Owners
§ 2.06 Acting on the TSP: Implementing the Plan and Updating Regularly
[1] Ensuring Employees Are Informed of Their Obligations
[2] Auditing Compliance and Effectiveness
§ 2.07 Form: Employee Confidentiality and Invention Assignment Agreement
Chapter 2 Appendix
Chapter 3: Understanding Corporate IT Infrastructure and Risks Related to Employee Computer Media Usage
§ 3.01 Introduction
§ 3.02 Email and Instant Communication
[1] Corporate Email
[2] Personal Web-Based Email
[a] “Pushing” Corporate Data to Private Web Accounts
[b] Slack Space
[c] Unallocated Space
[3] Office Communicators
[4] Instant Messenger Clients
[5] Text Messaging
§ 3.03 Social Media
[1] Social Networking Websites
[2] Ownership of Social Media Used for Business Purposes
[3] Employee Blogs
[4] Employer Hosted/Sponsored Sites
§ 3.04 Devices
[1] Company-Issued Devices
[a] Establishing Ownership
[b] Controlling Use
[2] External Devices
[3] Remote Access
[4] Cloud Storage Hosted by Third Parties
§ 3.05 Metadata
[1] Limits of Metadata
[2] Destruction of Metadata
[3] Metadata by Program
[a] Documents
[b] Corporate/Web-Based Email
[c] Internet Activity
[d] Metadata Stored on Mobile Devices
[e] External Devices
§ 3.06 Form: Data Collection Questionnaire
Chapter 4: Monitoring Corporate Computer Media
§ 4.01 Introduction
§ 4.02 Laws Governing Employer Workplace Technology Monitoring
[1] Personal Web Accounts and the Electronic Communications Privacy Act
[a] The Wiretapping Act
[i] Exceptions
[ii] Penalties
[b] The Stored Communications Act
[2] Computer Fraud and Abuse Act
[a] “Exceeds Authorized Access”
[b] “Without Authorization”
[3] Constitutional Concerns
[a] Federal Constitution
[b] Relevant State Constitutions
[4] Tort Liability
[5] Employer Privacy Disclaimer
[a] Expectation of Privacy
[b] Invasion of Privacy
§ 4.03 Strategies for Effectively Monitoring Computer Usage
[1] Monitoring Corporate Email Accounts
[2] Monitoring Web Mail
[3] Monitoring Corporate Computer Systems
[a] Servers
[b] Computers
[i] Personal Communications Stored on Company Computers
[ii] Keystroke Logging
[iii] The Attorney-Client Privilege
[4] Monitoring Employer-Issued Cell Phones
[5] Monitoring Through GPS
[6] Monitoring Texts
[7] Monitoring Phone Conversations
[8] Monitoring Internet Use
[9] Monitoring Cloud Storage
[10] Monitoring Premises
[11] Monitoring Hard Copy Documents
§ 4.04 Form: Sample Monitoring Policy
Chapter 5: Recruiting a Competitor’s Employees
§ 5.01 Introduction
§ 5.02 Recruiting: Dangers and Risk Mitigation
[1] Competitor Employee Recruiting Policies
[a] Third-Party Recruiters
[b] Targeting Employees of Certain Competitors
[c] Social Media and Other Non-Corporate Communication
[d] Tracking Contact with Competitors’ Employees
[e] Information to Avoid Receiving
[f] Questions Not to Ask
[2] Initial Contact: Minimizing Unwanted Data Transfer
[3] Proper Interviewing
[a] Questions Relating to Work Performed at a Competitor
[b] Requesting Samples of Work
[i] Work Samples
[ii] Homework Assignments
§ 5.03 Onboarding: Dangers and Risk Mitigation
[1] Training Against Trade Secret Disclosure
[2] Post-Hire Measures: First Sixty-Ninety Days
[a] Additional Training
[b] Temporarily Re-Assigning Duties or “Walling Off”
[c] Monitoring Computer Usage
[3] Remedial Measures If Third-Party Data Is Discovered
[a] Discovered Before Work Commences
[b] Discovered after Work Commences
[i] Forensic Imaging
[ii] Removal from Systems
[iii] Interview and Investigate Possible Usage
[iv] Search Term Follow-Up
[v] Keep In-House or Escrow with Third Party
[vi] Self-Disclose and Self-Report
§ 5.04 Form: Candidate Certification Letter
§ 5.05 Form: New Employee Certification Letter
Chapter 6: Protecting Assets Through Contract
§ 6.01 Introduction
§ 6.02 Employment Agreements
[1] Stand-Alone Agreements
[2] Employee Handbooks—The Limits of Incorporation by Reference
§ 6.03 Employee Confidentiality and Invention Assignment Agreements
[1] Defining Contractual Terms
[a] Distinctions Among Patents, Trade Secrets, Proprietary Information, Ideas and Developments
[b] Risks of Overbroad Definitions
[2] “Magic” Language
[3] Duty of Loyalty Clauses
[4] Choice of Law
[5] Consideration
[6] Remedies
[a] Injunctive Relief
[b] Other Remedies
[7] Whistleblowing Considerations
[8] Assignment of Inventions
[9] Agreement to Perform Necessary Acts
[10] Utilizing Power of Attorney
[11] Post-Employment Restrictions
[12] Considerations for Third Parties
[a] Independent Contractors/Contingent Workers
[b] Suppliers
§ 6.04 Equity Agreements and ERISA Plans
[1] Forfeitures and Clawbacks
[2] Severance Agreements
§ 6.05 Form: Employee Invention Assignment andConfidentiality Agreement
§ 6.06 Order: In the Matter of KBR, Inc., SEC File No. 3-16466 (April 1, 2015)
Chapter 7: Departures and Exit Interviews
§ 7.01 Introduction
§ 7.02 Measures Before Departure
[1] IT Practices
[2] Human Resources Practices
[3] Human Resources and IT After Notice but Before Departure
§ 7.03 Measures to Implement During Employee Departures
[1] Return of Company-Issued Devices
[2] Return of Company Property
[a] Electronic Files
[b] Hard Copy Files
[3] Information Technology Access
§ 7.04 Use of Exit Interviews
[1] Before the Exit Interview
[a] Consistent Procedure
[b] Guidelines for Exit Interviews
[c] Interview Communications and Escalation Plan
[d] Select the Exit Interviewers
[2] Conducting the Exit Interview
[a] Documenting the Exit Interview
[b] Reviewing Contractual Obligations
[c] Confirming Disclosure of Ideas and Inventions
[d] Reviewing All Possible Locations of Trade Secret Material
[e] Determining Future Plans
[f] Termination/Exit Certifications
[3] After the Exit Interview
§ 7.05 Form: Human Resources Checklist for Conducting Exit Interviews
§ 7.06 Form: Employee Exit Acknowledgment and Certification
Chapter 8: High Risk Departure Program
§ 8.01 The Perils of Departure
§ 8.02 Identifying the High-Risk Employees
[1] Job Classifications
[2] Access to Sensitive Data
[3] Specific Employee Risk Factors
§ 8.03 Precautions Before Departure
[1] Identify Vulnerable Data and Inventory Computer Media
[2] Disable Access and Passwords
[3] Forensically Image and Analyze Computer Activity
[4] Review of Corporate Emails at the Server Level
[5] Commence Legal Monitoring of Computer Activity
[a] Company Computer and Email Monitoring
[b] Web Activity
[6] Analyze Smart Phone Usage
[7] Monitor Online Social Media
[8] Segregate Certain Communications
[9] Ongoing Monitoring Where Feasible
[10] Monitoring and Interviewing the Employee’s Team
[11] Review Employee’s Physical Access
[12] Intelligence About the New Employer
[13] Exit Interview
§ 8.04 Responding to Departure
[1] When an Employee Gives Notice
[a] Collect All Devices and Documents Quickly
[i] Computer Devices
[ii] Hard Copy Documents
[b] Forensic Imaging
[2] Immediate Forensic Review v. Creation of a “Library”
[a] Immediate Forensic Review
[b] Creating and Maintaining a Forensic Library
[3] Legal Strategies for Publicly Addressing High-Risk Departures
[a] Public Messaging
[b] Retaining Employees
[c] Communicating With Key Customers and Partners
§ 8.05 Form: Human Resources Checklist for High-Risk Departures
§ 8.06 Form: New Employer Letter
Chapter 9: The Inevitable Disclosure Doctrine
§ 9.01 Introduction
§ 9.02 Policy Considerations
[1] Arguments for the Doctrine
[2] Arguments Against the Doctrine
[3] Strategic Use of the Doctrine
§ 9.03 State by State
§ 9.04 Drafting Contracts
[1] The Importance of Choice-of-Law Provisions
[2] Employee Contracts
[3] Threatened Disclosure When Inevitable Disclosure Is Unavailable
§ 9.05 Application in an Inevitable Disclosure State
[1] Current Employees
[2] Defense: Hiring
[3] Offense: Departures
Chapter 10: Non-Competition and Non-Solicitation Agreements: Their Use in Protecting IP and Enforceability Concerns
§ 10.01 Introduction
§ 10.02 Basic Overview of Non-Competition Agreements
[1] Drafting Agreements to Protect IP
[a] Protecting Confidential and Valuable Corporate Data Is a Legitimate Purpose for Utilizing Non-Competition Agreements
[b] Components of a Strategically Drafted Non-Competition Provision Aimed at Protecting Trade Secrets
[c] The “Necessary to Protect Trade Secrets” Rationale for Enforcing Non-Compete Agreements—A Cautionary Tale for the Unwary
[d] Narrow Restraint Doctrine
[e] The “Employee Choice” Doctrine
[f] Anchoring the Non-Competition Provision in the Duty of Loyalty
[2] Agreements Relating to the Purchase of a Business
[a] Duration of Non-Competition Agreements’ Protection of “Good Will”
[b] Which Acquired Employees Can Be Bound by Non-Competition Restrictions
[3] Unique Potential Risks in Knowingly Employing Unenforceable Non-Competition Agreements
[a] California Private Attorneys General Act of 2004
[b] Potential Ramifications and Declaratory Judgment
§ 10.03 Basic Overview of Non-Solicitation Agreements
[1] Enforceability Can Rest on the Targets of Prohibited Solicitation—Employees, Customers or Suppliers/Vendors
[a] Non-Solicitation of Employees
[b] Non-Solicitation of Customers
[c] Non-Solicitation of Suppliers/Vendors
[2] What Constitutes “Solicitation”
[3] Risks of Entering into No-Hire and Non-Solicitation Agreements with Competitors
[a] No-Hire Agreements
[b] Non-Solicitation/“No-Calling” Agreements
[i] Anticompetitive Risks of Using Non-Solicitation/“No Cold Call” Agreements
[ii] Limited Circumstances Where Horizontal Non-Solicitation Agreements Are Permitted
[iii] Risks of Civil Liability in Using Non-Solicitation/“No Cold Call” Agreements
[iv] Are Horizontal Non-Solicitation Agreements Per Se Illegal?
[4] Possibility of “Blue Penciling” or Court Modification of Non-Solicitation Agreements
§ 10.04 Enforcing Non-Competition and Non-Solicitation Agreements—Considerations When Contemplating Injunctive Relief
§ 10.05 Complaint: United States v. Adobe Systems Inc., No. 1:10-cv-01629 (D. D.C. Sept. 24, 2010)
§ 10.06 Competitive Impact Statement: United States v. Adobe Systems Inc., No. 1:10-cv-01629 (D. D.C. Sept. 24, 2010)
§ 10.07 Final Judgment: United States v. Adobe Systems Inc., 2011 U.S. Dist. LEXIS 83756 (D.D.C. March 17, 2011)
§ 10.08 Consolidated Amended Complaint: In re High-Tech Employees Antitrust Litigation,No. 5:2011cv02509 (N.D. Cal. September 13, 2011)
§ 10.09 Order Denying Plaintiffs’ Motion For Preliminary Approval of Settlements with Adobe, Apple, Google, and Intel: In Re: High-Tech Employee Antitrust Litigation, 2014 U.S. Dist. LEXIS 110064 (N.D. Cal. August 8, 2014)
§ 10.10 Complaints: In the Matter of Tecnica Group; In the Matter of Market Völkl; FTC File No. 121-0004 (May 19, 2014)
§ 10.11 Orders: In the Matter of Tecnica Group; In the Matter of Market Völkl; FTC File No. 121-0004 (July 3, 2014)
§ 10.12 Jimmy Johns’ Employee Confidentiality and Non-Competition Agreement That Is Subject of Legal Challenge
Chapter 11: Strategies for Dealing with Competitors Who Hire Key Employees
§ 11.01 Introduction
§ 11.02 Determining Whether to Contact the New Employer
[1] Strategic Advantages of Informal Resolution Versus Initiating a Lawsuit Without Prior Notice
[2] Goals of a Demand Letter
[a] Determining the Extent of the Data Compromised
[b] Ensuring an Investigation Is Conducted
[c] Obtaining the Stolen Information and Preventing Misuse
[d] Preserving Relevant Evidence
[e] Making a Pre-Litigation Record of Efforts to Resolve
[i] Advantage for Injunctive Relief
[ii] Advantage for Trial
[3] Specific Strategies to Accomplish Goals of Demand Letter to Competitor
[a] Protocols for Identifying and Securing Company Data Beyond Active Files Specifically Identified by the Competitor
[i] Narrow Universe of Active Files
[ii] Agreement to Produce File Lists from Certain Electronic Storage Devices
[iii] MD5 Hash Searches
[iv] Search of Slack and Unallocated Space on Certain Competitor Devices
[b] Advantages to the Responding Party of Forensically Imaging Relevant Devices
[4] Risks of Being Overly Demanding
§ 11.03 Considerations When Contacting the Former Employee
[1] Sending the Reminder Letter Where There Is No Proof of Data Theft
[2] Where Data Theft Is Established or Strongly Suspected, Sending the Letter Seeking Resolution
§ 11.04 Avoiding Defamation, Interference, and Other Tort Claims through Contact with the Competitor
[1] Defamation
[a] Protection of a Business Interest
[b] Litigation Privilege
[2] Tortious Interference with Contract
§ 11.05 Forms: Sample Letters to Competing Companies
[1] Sample Template Letter Notifying Hiring Entity of Departed Employee’s Contractual Obligations
[2] Sample Template Letter to Hiring Entity Expressing Concern Over Specific Examples of Potential Intellectual Property Theft
§ 11.06 Forms: Sample Letters to Departed Employees
[1] Sample Template Letter Reminding Departed Employee of Contractual Obligations to Former Company
[2] Sample Template Letter to Departed Employee Identifying Only Some Examples
[3] Sample Template Letter to Departed Employee Identifying All Discovered Examples
§ 11.07 Form: Sample Litigation Notice Letter and Litigation Hold Notice
Chapter 12: Pleading and Pre-Trial Litigation Strategies in Lawsuits Involving Trade Secrets, Breach of Fiduciary Duty, and Related Torts
§ 12.01 Introduction
§ 12.02 Pleading Misappropriation Claims
[1] Pleading Misappropriation in UTSA States
[2] Pleading Misappropriation in Non-UTSA States
[a] Massachusetts: State-Specific Statutes
[b] New York: The Common-Law Approach
§ 12.03 Pleading Causes of Action in Addition to a UTSA Claim
[1] Claims against the Former Employee
[a] Common-Law Claims
[i] Breach of the Duty of Loyalty
[ii] Breach of Fiduciary Duty
[b] Contractual Claims: Breach of Contract
[c] Statutory Claims: Computer Fraud and Abuse Act
[2] Claims against the New Employer
[a] Aiding and Abetting Breach of Fiduciary Duty/Duty of Loyalty
[b] Interference with Contractual Relations or Prospective Economic Advantage
[3] Claims against Both Parties
[a] Common-Law Unfair Competition
[b] Statutory Unfair Competition
[c] Conversion
§ 12.04 UTSA Preemption of Common-Law Claims
[1] The Doctrine and Its Rationale
[2] Strategies for Avoiding UTSA Preemption: Pleading Proprietary Information as Distinct from Trade Secrets
§ 12.05 Identifying Trade Secrets with Reasonable Particularity
[1] The Requirement and Governing Standard
[2] Preparing a Trade Secret Identification Statement: Strategies and Risks
[3] When to Serve the Trade Secret Disclosure Statement
[4] Obtaining Certification of (and, Challenging) Compliance with Identification Requirements
[5] Defendants’ Strategies: Challenge Sufficiency; Demand More Detail; Start Discovery First
§ 12.06 E-Discovery Issues in Trade Secrets Cases
[1] Protective Orders
[a] Tiers of Protective Orders Regarding Confidentiality of Data
[i] “Confidential” Information
[ii] “Attorneys’ Eyes Only” Information
[iii] “Outside Attorneys’ Eyes Only” Information
[iv] Special Designations for Source Code and Similar Data
[v] Strategic Considerations for Defining Designations
[b] Who Should Be Able to Access Designated Data?
[c] Abuse of Confidentiality Designations
[i] Defining the Process for Challenging a Party’s Designation of Documents under Each Confidentiality Tier
[d] Procedures Governing Expert Retention and Access to Protected Documents
[i] Expert Retention and Disclosure
[ii] Expert Access to Opponents’ Designated Data
[e] Strategies for Sealing Publicly Filed and Otherwise Preventing Non-Party Access to Trade Secrets
§ 12.07 The Defend Trade Secrets Act
[1] Creating a Federal Cause of Action and Its Relation to State Laws
[2] The DTSA Cause of Action
[3] Ex Parte Civil Seizures
[4] Remedies
[5] Employee Immunity Provision and Potential for Employee Abuse
[6] Criminal Implications
[7] Implications of the Defend Trade Secrets Act
Chapter 13: Trial Themes, Selecting a Jury, Remedies, and Unique Settlement Considerations
§ 13.01 Trial
[1] Choosing a Theme
[a] Plaintiff Themes
[i] The Technology at Issue Is Valuable
[ii] Defendants Engaged in a Conspiracy to Steal What They Could Not Obtain Through Lawful Means or Purchase on the Open Market
[iii] Contrasting How Responsible Companies Act with How the Defendant Allegedly Proceeded
[iv] Contextualize the Harm in Material Terms
[v] Defendant Stole to Shortcut Traditional Development Costs
[vi] David v. Goliath
[vii] Betrayal
[b] Defense Themes
[i] —No Theft Occurred
[ii] Even If Data Was Taken, No Use Was Made of It
[iii] The Defendant’s Success Comes from Independent Innovation—Not from Theft
[iv] Attacking the Nature and Value of the Plaintiffs’ Claimed Trade Secrets
[v] Reverse of the “David v. Goliath” Theme—the Plaintiff’s Real Motive in This Lawsuit Is to Stifle Lawful Competition
[vi] Highlight the Substantial Resources and Time Necessary to Develop Technology Similar to the Plaintiffs’ Technology
[vii] The Plaintiffs’ Claimed Trade Secrets Were Actually Stolen from a Third Party by the Plaintiffs
[viii] The Plaintiff Failed to Protect Its Trade Secrets Adequately
[ix] The Claimed Trade Secrets Are Public and Therefore Not Confidential
[x] Lack of Harm to the Plaintiff.
[2] Selecting a Jury
§ 13.02 Remedies and Relief for Trade Secret Theft
[1] Temporary Restraining Orders
[a] Likelihood of Success on the Merits
[b] Irreparable Harm; Inadequacy of Legal Remedies
[2] Which Injunctive Remedies to Seek
[a] Evidence Preservation, Including No Use or Disclosure
[b] “Give Back”
[c] Imaging and Inspection of Personal Computer Devices
[d] Sworn Certification
[e] Enjoining Sale and/or Release of Product
[f] Restriction of Employment
[3] Damages
§ 13.03 Unique Settlement Considerations
[1] Single Claim Doctrine
[2] Requiring Waiver of the Single Claim Doctrine in Settlement
§ 13.04 Form: Sample Juror Questionnaire
§ 13.05 Form: Sample Juror Questionnaire
§ 13.06 Form: Sample Court Order Requiring Evidence Preservation, Including No Use or Disclosure
§ 13.07 Form: Sample Court Order Requiring Evidence Preservation, Including No Use or Disclosure, Return of Data, Computer Imaging, and Sworn Certification
§ 13.08 Form: Sample Court Order Enjoining Release and Sale of Product
§ 13.09 Form: Sample Court Order Imposing Restriction on Employment
Chapter 14: Criminal Remedies
§ 14.01 Introduction
§ 14.02 Federal Criminal Laws Regarding Theft of Trade Secrets and Other Corporate Data
[1] Economic Espionage Act of 1996
[a] Overview
[b] Establishing the Existence of a Trade Secret
[c] Attempt and Conspiracy to Violate the EEA
[d] Section 1831: Establishing That the Theft Was Intended to Benefit a Foreign Government, Instrumentality, or Agent
[e] Section 1832: Establishing That the Stolen Secret Was “Placed in Interstate Commerce”
[f] Penalties Under Section 1831
[g] Penalties under Section 1832
[2] The Computer Fraud and Abuse Act
[3] Mail and Wire Fraud
[4] The National Stolen Property Act
§ 14.03 State Criminal Laws
[1] Whether to Pursue State or Federal Remedies
[2] California
[3] New York
[4] Texas
§ 14.04 Strategic Considerations in Pursuing a Criminal Remedy
[1] When to Seek Law Enforcement Involvement
[a] Advantages
[i] Investigative Powers
[ii] Dissuading Data Thieves from Further Compromising Stolen Data
[iii] Potential Criminal Remedies
[b] Disadvantages
[i] Loss of Control
[ii] Lack of Resources
[iii] Burden of Proof
[iv] Delay
[2] Presenting the Case to Law Enforcement
[3] Risk of Becoming a State Actor
§ 14.05 Using Evidence Obtained from a Criminal Investigation in Subsequent Civil Litigation
[1] Obtaining the Prosecution’s Evidence: FOIA and Touhy Requests
[a] Touhy Requests
[b] Freedom of Information Act (FOIA)
[2] Using a Plea Agreement
§ 14.06 Form: Sample Touhy Request
§ 14.07 Form: Sample Plea Agreement
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