Trade Secrets, Noncompetes & Employee Mobility

Representative Matters

Our attorneys have extensive experience litigating complex misappropriation claims involving computer hardware, software, data security technologies, and proprietary business information to include pricing, customer information, and bid information. Examples of representative trade secret litigation matters include:

• Lead trial counsel in a complex trade secrets dispute between competitors involving extensive cross-border discovery, where we won summary judgment for our client on all claims and an award of attorney fees as a sanction against plaintiff for commencing the suit in bad faith and submitting materially false affidavits to the court. The victory was profiled in a “How They Won It” feature in Law360 and reported widely in the legal press as the first time an Illinois court had awarded a trade secrets defendant its entire fees for a complex, multi-year litigation.
• Lead trial counsel in a suit arising from the resignation of our client’s former general manager and his attempt to form a competing business with our client’s long-term exclusive supplier, where we won a TRO and a criminal contempt finding against the supplier, which was sustained on expedited appeal to the Texas Supreme Court on the eve of a jury trial. Before the jury, ArentFox Schiff won a substantial verdict of both actual and punitive damages.
• Lead trial counsel where we were engaged as “rescue” trial counsel for defendants in a suit arising from alleged employee raiding of a competitor to form a new business. ArentFox Schiff was engaged only one month before the two-week jury trial and won a unanimous defense verdict on all claims.
• In a multi-forum litigation, ArentFox Schiff first won a TRO against a departing executive and then, when the defendant attempted to frustrate enforcement by filing a bankruptcy petition and feigning mental illness, won a bad faith dismissal of the bankruptcy case, followed by civil contempt awards against the defendant and two co-conspirators who assisted him to violate the TRO and hide assets, followed by RICO and business tort claims against the contemnors and other associates. The matter was resolved by a confidential global settlement.
• Obtained a TRO, a Preliminary Injunction, and a Permanent Injunction in California against two employees and their new employer, a major competitor, when the employees left our client to go to work for the competitor. Before they resigned from our client’s employ, the two individuals had systematically downloaded customer contact information, pricing schedules, and other confidential information and had gone to great lengths to hide their downloading efforts.
• Lead counsel representing a private equity investor in a suit against a selling co-founder and selling shareholder of an acquired business, who secretly formed a competing business with other former employees post-closing. After obtaining the employees’ videotaped confessions admitting the scheme, we won a favorable settlement.
• Obtained an injunction in California against a former CEO of an acquired agribusiness company who agreed not to compete against the acquiring company for two years after he left its employ. He left and then secretly formed a new company under another individual’s name and tried to surreptitiously provide the know- how he had sold to the acquiring company to the new enterprise.
• Lead trial counsel in a suit arising from the resignation of our client’s former general manager and the manager’s attempt to form a competing business with other key employees and a long-term exclusive supplier. We won a TRO and a criminal contempt finding against the supplier, which was sustained on expedited appeal to the Texas Supreme Court on the eve of a jury trial. Before the jury, we won a substantial verdict of both actual and punitive damages.
• Lead trial counsel for the defendants in a complex trade secrets dispute between competing manufacturers of plastic packaging, involving extensive cross-border discovery. We won summary judgment on all claims, and the court awarded our clients recovery of attorney fees as a sanction against the plaintiff for commencing the suit in bad faith, based on a showing that the plaintiff’s general counsel had submitted materially false affidavits to the court.
• Defended a leading IT temporary staffing firm in proceedings before the National Labor Relations Board. NLRB general counsel challenged our client’s confidentiality and data security policies and employment agreement covenants as unfair labor practices. We developed a factual record before the administrative law judge to demonstrate the challenged policies are essential to protect both our client’s own and its customers’ trade secrets and personally identifiable information. The matter was resolved by consent.
• Represented a public utility company in litigation against an environmental engineering and consulting firm engaged by our client to provide litigation consulting services for the Gowanus Canal Superfund Site in Brooklyn, NY. Our client alleged that the environmental consulting firm secretly switched sides in the dispute and accepted a conflicting engagement with our client’s adversaries in the environmental dispute, thereby disclosing confidential information and breaching the consultant’s fiduciary obligations. The litigation was a very high profile dispute within the environmental engineering and consulting sector involving clean-up of one of the most prominent Superfund sites in the U.S. and raising novel issues of the duties owed by litigation consultants and expert witnesses. The parties reached a confidential settlement.
• Represented a leading manufacturer of safety signs in a trade secret and noncompete case involving four former sales and marketing employees who moved to a competitor in breach of their restrictive covenant agreements. We won a preliminary injunction and then proceeded with discovery, where we asserted that false affidavits were submitted to the court in order to conceal their theft, retention, and use of highly sensitive business plans and sales data. In spring 2020, we represented our client in a five-day Zoom bench trial on our client’s motion for sanctions. At the conclusion of the bench trial, the parties jointly moved the court to stay the case for settlement negotiations and a confidential was settlement reached.
• Investigated the departure of an executive who had overseen the research and development to introduce a significant new food safety product to protect against harmful pathogens and a business strategy for promoting the product. When the investigation revealed that the departing executive had copied hundreds of highly sensitive files and was joining a competitor, we commenced suit and won an ex parte TRO followed by a one day bench trial. The Eastern District of Texas granted the preliminary injunction.
• Following a change of control transaction with new investors, our client’s former CEO and other founding members of the company leadership team resigned, having received substantial consideration in connection with the sale of the company. Although they had entered into noncompetition agreements in connection with the sale, they created a competing business within a few months after the closing. Our team commenced suit against the former executives, seeking injunctive relief and restitution. The parties reached a settlement.
• Obtaining a jury verdict in the client’s favor on claims for misappropriation of trade secrets, breach of contract, and breach of duty of loyalty against a former employee who stole company formulas and scientific research records before quitting and joining a Chinese competitor. The seven-figure judgment includes compensatory damages, costs, and punitive damages. This case was one of the Top 25 breach of contract verdicts in California in 2017.
• Defending a South Korean company in trade secrets litigation in the Eastern District of Virginia, involving the alleged theft of dozens of trade secrets related to the manufacturing process for para-aramid fibers. The case, which also involved claims of civil and statutory conspiracy as well as antitrust counterclaims, was tried by a jury over eight weeks.
• Defending a South Korean company in criminal prosecution under the Economic Espionage Act in the Eastern District of Virginia, involving the alleged theft of trade secrets related to the manufacturing process for para-aramid fibers.
• Representing an individual charged in federal court with theft of trade secrets and economic espionage for allegedly hiring laid-off employees of a competitor in order to obtain confidential and proprietary information.
• Representing a prominent defense government contractor in litigation against a former employee who misappropriated valuable trade secrets related to bidding for contracts and who attempted to hide the misappropriation through the spoliation of electronically stored information and other evidence. Secured a temporary restraining order (TRO) and preliminary injunction and obtained an award finding a willful and malicious violation of the Defend Trade Secrets Act (DTSA) and permitting recovery of substantial fees and costs related to the litigation and the extensive spoliation efforts.
• Representing a defense government contractor in litigation against a group of employees who assisted a competitor in its bid competition efforts for the recompete of a government contract for which they were key, in violation of their noncompetes and other contract and fiduciary obligations. Secured a temporary restraining order (TRO), and subsequent contempt sanctions against the primary defendant upon discovering and obtaining third-party subpoena evidence of violations of the TRO. The case settled on favorable terms.
• Defending a company in trade secrets litigation alleging the misappropriation of hundreds of trade secrets related to business intelligence software. Secured the exclusion of the plaintiff’s damages expert and theories on pretrial motions, and obtained a defense verdict on all but three of the alleged trade secret claims.
• Defending a company in state court litigation involving the alleged misappropriation of customer lists and other alleged trade secrets related to the casualty insurance business. After a multi-day bench trial, received a defense verdict on plaintiff’s misappropriation claims.
• Defending a start-up company in a month-long jury trial in state court over alleged misappropriation of trade secrets and unfair business practices arising from the expert witness industry. The case settled on favorable terms, below statutory offer, following jury verdict.
• Defending a start-up clean room parts manufacturer against allegations that the company’s competing designs were made using the plaintiffs’ trade secrets. Following extensive discovery, the case was dismissed.
• Defending a computer communications hardware manufacturer in a case involving misappropriation of trade secrets and trespass to the plaintiff’s computer systems. After initial litigation, a confidential business resolution was obtained.
• Defending a company in state court litigation filed by the former CEO of a subsidiary who sought substantial severance under his executive agreement. The company alleged, in defense, that the CEO’s misappropriation of trade secrets barred the executive’s entitlement to the contract severance. The case settled after initial litigation.
• Defending a company in state court litigation filed by a former salesperson who claimed substantial unpaid commissions. The company asserted counterclaims and third-party claims against the former salesperson and his new employer for the misappropriation of its trade secrets, including customer and pricing information related to its financial printing services. The case settled following discovery on the company’s trade secret claims.
• Defending a company in federal court litigation against Defense of Trade Secrets Act (DTSA) and related state claims filed by the former employer of a newly hired sales manager asserting misappropriation of its product and pipeline data. Negotiated a consent order for limited forensic examination in lieu of TRO.
• Defending a senior executive in ICC Arbitration against noncompete and equity clawback claims related to the executive departing one publicly traded government contractor to join the senior leadership of another publicly traded government contractor. The arbitration involved unique issues regarding the employee choice doctrine, equity valuation, the relative assessment of competitor status, and the scope of discovery to the third-party new employer. Discovery was successfully limited, and the case settled following submission of the final pre-hearing papers and expiration of the restrictive covenant periods.