The New Federal Defense of Trade Secrets Act-Employers Take Note

Earlier this year, I wrote about the federal Defense of Trade Secrets Act passed by the senate.  This month, President Obama signed the act into law.  The law (“DTSA”) creates a federal cause of action for theft of trade secrets.  This means that the owner of a trade secret that has been stolen or disclosed can sue in federal court. 

There is a whistleblower provision that grants immunity from a theft of trade secret claim to anyone who makes a disclosure in confidence to either (1) a federal, state, or local government official, or (2) an attorney, as long as the reason for disclosure is for the sole purpose of reporting or investigating a violation of the law. 

The whistleblower provision requires employers to provide notice to all employees.  Failure to do so will void an employer’s ability to take advantage of the DTSA’s provisions regarding exemplary damage awards (up to twice the damage award) and attorneys’ fees in cases of willful violations.

What’s the take away here?  It is in every employer’s best interest to include the new notification in any employee agreement relating to trade secrets, confidentiality and/or nondisclosure obligations.  This would include

·      Non-compete agreements

·      Consulting agreements

·      Employment agreements

·      Separation agreements

·      Retention agreements, and

·      Independent contractor agreements.

It would be wise to also include a notice in any employee handbook or new employee orientation materials.

Protecting your innovative developments is critical to any organization.  Having the right person to help you make those decisions is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.

An Epic Tale of Trade Secrets

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I wrote earlier this year in my blog about a pending trade secret bill approved by the judiciary committee in the senate.  Recently the senate passed the Defend Trade Secrets Act.  The act essentially provides for a federal cause of action for trade secret cases.  The bill is now in the house and is expected to pass.  President Obama has shown his support for the bill.

While the federal law is pending, state trade secret laws are the only remedy currently available.  Recently Epic Systems brought a trade secret case against Tate Group, an Indian company, for theft of trade secrets, computer fraud, breach of contract and unfair competition in the western district of Wisconsin (case 14-cv-748-wmc).  The jury awarded Epic $240 million in compensatory damages and $700 million in punitive damages.  The jury found Tata guilty of downloading documents from hospital software and providing those documents to one of its subsidiaries, Med Mantra.  If Epic ends up collecting the award, it will be more than double Epic’s expected annual profits this year.

What’s the take away here?  If you are the owner of trade secrets-protect them.  Ensure that you have implemented systems and educated your people on best practices to keep your trade secrets confidential.  If someone takes your trade secrets without authorization, go after them.   Hopefully you will be able to do that in federal court in the near future.  If you are working with companies that have trade secrets, make sure you abide by the terms of the confidentiality agreement and treat the trade secret information in the same manner as you would treat your own proprietary information.

Protecting your innovative developments is critical to any organization.  Having the right person to help you make that decision is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.

After a Long and Winding Road, Beatle Reclaims Publishing Rights

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Paul McCartney is using a US Copyright provision to right a wrong he feels occurred many years ago.  As you may recall, the bulk of the Beatles tunes were attributed to the duo of John Lennon and Paul McCartney.  However, in the 1960’s, Paul McCartney and the other Beatles lost their publishing rights to many of their songs when ATV, a publishing company created by the Beatles, their manager and some of their investors, was sold without the knowledge of the band members.

At one time Yoko Ono, John Lennon’s widow and McCartney tried to purchase ATV for 20 million dollars.  The deal fell through and Michael Jackson purchased ATV for 47.5 million in 1985.  McCartney may now be able to reclaim those rights 56 years later.

Rather than let it be, McCartney filed a “notice of termination” with the US Copyright Office.  This enables a songwriter to reclaim ownership in publishing rights for a song anywhere between 2 to 10 years before the 56 year lapse of time after the publication rights were originally sold.  Some of the songs won’t be eligible for release until the singer is 83. 

What’s the take away here.  Any artist, author or creator of a work protected under copyright law should understand those rights .  In addition, anyone who may have an interest subject to copyright law should think carefully about corporate structure and where the ownership of the intellectual property should be held when forming a new business.  This often takes the form of an IP holding company.  Situations may vary, but who will own the rights in the copyright and how the business will be structured should be well thought out when setting up any business.

 Protecting your innovative developments is critical to any organization.  Having the right person to help you make that decision is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.