By Sherry Bragg

Businesses at every level – from Fortune 500 companies to solo-inventor enterprises – rely on trade secret protections to safeguard their intellectual property trade secrets. American companies and innovators now have additional protections for their valuable intellectual property assets in the newly enacted federal Defend Trade Secrets Act (DTSA). This legislation represents

When companies sue their former employees for theft they often claim that the former employee’s new employer has conspired with the former employee to misappropriate trade secrets, or that that new employer has aided and abetted the former employee’s breach of duty he/she owed to his/her former employer.

Like Woodward and Bernstein, liability “follows the

Companies and employers aroundJames-Kachmar-08_web the country seek to protect their intellectual property by, among other things, using non-compete provisions in employment agreements. Generally, these provisions are intended to prevent an employee from soliciting or doing business with a former employer’s customer/clients over a set period of time and/or in regard to a set geographical area. Under California law, and specifically Business and Professions Code section 16600, such provisions are unenforceable unless they fall within one of the statutory exceptions, i.e., primarily in connection with the sale of a business interest. For years, although California state courts would refuse to enforce such provisions under section 16600, federal courts in California sometimes applied a narrow court-created exception and allow such provisions to be enforced provided that they were narrowly tailored as to time and geographical area. In 2008, the California Supreme Court unequivocally ruled that such provisions were unenforceable under section 16600 and rejected the “narrowly restricted” exception used by federal courts. (See Edwards v. Arthur Andersen, LP, 44 Cal.4th 937 (2008).)

In response to the Edwards decision, many California companies and employers began to omit such provisions from their new employment agreements or re-write them with specific language restricting an employee from using trade secret information to unfairly compete. However, other companies and employers left their old agreements untouched and in place thinking merely that they would not enforce them should the need arise. A recent court decision, Couch v. Morgan Stanley & Co., Inc. (E.D. Cal. Aug. 7, 2015), reveals the risk an employer or company faces in failing to update their older employment agreements to remove or revise such provisions.


Continue Reading Hidden Pitfalls of Old Non-Compete Provisions

In the bustling craft brew transparenteconomy brewers are faced with new issues every day. One that recently came to my attention arises when the craft brewery’s brewmaster or head brewer decides to either start his own craft brewery, or go to work for another brewery. While this may not initially seem like a big deal, it gets much more complicated when that brewmaster or brewer is responsible for the creation of your flagship brew. The question arises: who owns the intellectual property rights to that brew? Of course, the brewery is going to say that they have been selling, distributing, and promoting the brew, so it must be theirs. On the other hand, the brewer is going to say that he created it, so it must be his. The truth is that determining who owns the intellectual property rights to the brew formula can get quite complicated, encompassing numerous factors. But it does not have to be.

With a booming industry such as craft brew, it is imperative that the appropriate precautions be taken to protect the craft brewery’s most lucrative asset: the beer itself. In order to protect a brew formula from being taken from your company and utilized by a competitor when one of your brewers, the creator of the formula or not, leaves the company, the formula must be treated as a trade secret. The California Uniform Trade Secrets Act (“UTSA”) defines a trade secret as:

information, including a formula, pattern, compilation, program, device, method, or technique, or process, that:
(1) derives independent economic value, actual or potential, from not being generally known to the public, or to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.


Continue Reading Hey, that’s my beer! I think…