In a world in which confidential information is increasingly shared and stored digitally, and where the places information and data can reside are proliferating rapidly, trade secret and employee mobility counseling and litigation have become a substantial part of our firm’s practice and of the services we offer to our clients.
Employees are telecommuting, working on tablet computers while traveling, file sharing through cloud-based storage providers, collaborating across offices and companies on wikis, and living life 24/7 on mobile devices. This has created complex challenges both for companies seeking to protect their trade secrets and for those seeking to avoid receiving or using other companies’ trade secrets.
Munger, Tolles & Olson has developed a strong emphasis in trade secret law and the related issues associated with employees who move from one competitor to the next. We represent companies and individuals across industries in a wide variety of trade secret and employee mobility cases. With a deep bench of attorneys experienced in these matters, Munger Tolles is at the forefront of protecting and defending the rights, intellectual property, and financial security of organizations embroiled in these complex legal situations.
Counseling to Protect Against Trade Secret Disputes
Our counseling practice is focused on solutions to try to avoid problems and disputes over trade secrets.
- We work with our clients to develop trade secret protection programs to avoid the loss of trade secrets. This includes working with our clients to adopt human resources and employment policies such as putting in place confidentiality agreements and privacy policies, limiting use of personal email at work, addressing technical protections such as disabling the use of removable storage devices on company computers, and training employees on the proper treatment of confidential information.
- We work with clients who are involved in active acquisition discussions, business partnerships, and partnership negotiations to ensure that they have taken the appropriate measures to protect confidential information exchanged during those relationships and discussions.
- We develop “on-boarding programs” for clients to use with new employees to avoid problems associated with mobile employees bringing confidential information from prior employers into the new workplace. We institute these policies company wide, and we also work on a case-by-case basis when faced with a particularly sensitive or high-profile hire from a competitor.
- We work with clients to develop and implement robust and enforceable restrictive covenants (non-competes and non-solicits) where lawful, and we assess existing restrictive covenants to advise on obligations and enforceability.
Internal Investigations and Litigation
Even with the best counseling and preparation, disputes do happen. When they do, we work quickly and effectively to investigate and/or litigate. Trade secret disputes often occur with little or no notice and require a rapid response with an experienced team to address the issues and develop a strategy appropriate for the client’s situation. Our attorneys have a wide range of experience with internal investigations, negotiating resolutions with adverse parties, litigating as plaintiffs and defendants, and taking the case through preliminary injunction proceedings, jury trials, and the appellate process.
For companies who have lost employees to competitors and suspect that trade secrets have been taken on the way out the door, Munger Tolles will work with clients to investigate the severity of the potential problem promptly and to develop a solution to protect the clients’ rights and property. Similarly, business relationships often involve sharing confidential information between companies pursuant to confidentiality agreements or non-disclosure agreements. When a client suspects that there has been a breach of such an agreement, we work with that client to develop a strategic plan of action to protect the information. Whether the solution involves negotiating with the former employee or the company who has received information, or filing litigation to enforce the client’s rights, Munger Tolles works with the client throughout the process to provide a solution to the loss of valued information.
For companies who have hired employees from competitors and have been accused of taking and using confidential information, Munger Tolles works with clients to conduct internal investigations into potential trade secret disclosure or use and to develop solutions to address potential problems before they turn into litigation. If and when our clients face litigation, Munger Tolles has an experienced team ready to jump into action in federal or state court in response to temporary restraining orders and the litigation that ensues in trade secret cases.
We also have experience in litigating issues related to non-competition agreements and non-solicitation agreements. We have litigated issues related to the enforceability of these restrictive covenants and have developed an expertise in choice of law issues, among other things, as they relate to efforts to enforce out-of-state non-competition agreements in California.
Munger Tolles has represented:
- Amgen, in bringing a trade secret action in Ventura County state court against Coherus BioSciences, Inc. and a former Amgen executive for misappropriating trade secrets related to Amgen’s groundbreaking oncology drug Neulasta®. After defeating summary judgment, achieved a favorable settlement, including a multi-year royalty, the night before opening statements were set to begin in a six-week jury trial.
- Intel in two separate actions filed in federal court against former employees who stole Intel confidential and trade secret information. Obtained TROs, expedited discovery, and preliminary injunction in both matters to protect against further dissemination of the information and to compel the return of all misappropriated devices and materials.
- Ten-X, an online real estate marketplace, in obtaining a preliminary injunction and then later a cash settlement, a public apology, and certain ongoing restrictions in its lawsuit against Commercial Real Estate Exchange (CREXi) and its CEO alleging breach of contract, breach of fiduciary duty, and misappropriation of trade secrets.
- Fortress Investment Group in obtaining a complete defense verdict in a five-week bench trial in a lawsuit filed by a life settlement investment fund seeking more than $200 million in damages and bringing claims of misappropriation of trade secrets, breach of fiduciary duty, fraud, unfair competition and breach of contract.
- Air Lease Corporation in defending against allegations of trade secret theft, aiding and abetting breach of fiduciary duty, and unfair competition relating to the formation of the company by Steven Udvar-Hazy after he retired from ILFC.
- DoubleLine Capital and certain of its founders, including its CEO Jeffrey Gundlach, in winning a $66.7 million jury verdict in favor of Gundlach against his former employer, Trust Company of the West (TCW), on his cross-complaint. TCW originally brought suit against Mr. Gundlach and his company, claiming breach of fiduciary duty, trade secret theft and tortious interference in connection with a large scale departure of employees to DoubleLine after Mr. Gundlach was fired. The jury awarded no damages on TCW’s complaint against DoubleLine and the individual defendants.
- ABC in successfully defeating an injunction sought by CBS which aimed to shut down ABC’s reality show “The Glass House” based on allegations that former CBS employees who worked on “The Big Brother” misappropriated “trade secrets” related to reality show programming and used those secrets in producing “The Glass House.” CBS ultimately dismissed the case with prejudice.
- Guardsmark, a security firm, in obtaining a rare injunction in San Francisco Superior Court precluding competition by one of its former managers after he started a competing business and attempted to take over one of Guardsmark’s most significant contracts in San Francisco. Law360 described the victory as “a rare ruling in a state where non-compete contracts are virtually nonexistent.”
- Edgewood Partners Ins. Center (EPIC), an insurance brokerage firm, in defeating efforts by a well-financed and global competitor to obtain injunctive relief for alleged corporate raiding and trade secret theft when approximately 50 employees left Gallagher, a rival insurance brokerage firm, for EPIC within a few days. Our investigation of the matter included forensic computer analysis and interviews of more than 40 employees.
- Abbott Laboratories in pursuing lawsuits against three employees for downloading confidential documents upon their departure and for breach of non-solicitation agreements.
Carolyn Hoecker Luedtke
Laura D. Smolowe