Companies zealously guard their trade secrets and other information that gives them a competitive edge. And as we’ve covered in prior posts, companies often resort to the courts to protect this kind of information.
Recently, a media company filed a lawsuit seeking to use trade secret protections to recover something very public—a reporter’s Twitter account.
Sergey Aleynikov, a former computer programmer at Goldman, Sachs & Co., has been on a legal roller coaster for the past few years. In the span of few days, that roller coaster plummeted steeply—twice.
First, on January 20, 2017, the Delaware Supreme Court affirmed a trial court decision that Aleynikov could not recover advancement and indemnification for the legal expenses he is incurring in defending himself against counterclaims brought by two Goldman Sachs entities in New Jersey federal court.
Then, on January 24, a New York appellate court reinstated a jury verdict finding Aleynikov guilty of misappropriating computer code from Goldman.
Owners of stolen trade secrets now have another weapon in their arsenal.
Last month, President Obama signed the Defend Trade Secrets Act (the DTSA), which creates a new cause of action in federal court for the misappropriation of trade secrets. The DTSA does not preempt state laws governing misappropriation of trade secrets, so employers and other trade secret owners may now bring actions under the DTSA and applicable state laws. See 18 U.S.C. § 1838.
In the previous blog post, we discussed the ongoing bankruptcy litigation between Crystal Cathedral Ministries and its founder Dr. Robert Schuller over the rejection of his Transition Agreement. That contract purported to spell out the relationship between the parties as Dr. Schuller stepped aside from his post as senior pastor. The determination of whether that agreement was intended to be an employment agreement, and subject to the strict limitations of section 502(b)(7), or a retirement benefit which is not so limited, is pending before the Supreme Court. However, Dr. Schuller’s case also presented other interesting issues that could be instructive for other employers.
In addition to his claim for damages based on the rejection of the Transition Agreement, Dr. Schuller sought compensation from tCrystal Cathedral (the bankruptcy debtor) in an undetermined amount, for allegedly improper use of his intellectual property. The intellectual property, which consisted of more than 35 years of books, sermons and other writings, had been produced by Dr. Schuller while he was employed by the debtor as its senior pastor. Dr. Schuller, individually and through a wholly owned corporation, asserted a copyright to these materials. Under the Transition Agreement between the debtor and Dr. Schuller, the intellectual property was made available to the debtor for use pursuant to a royalty free license.
We cover a broad range of issues that arise in employment disputes. Occasionally, we also spotlight other topics of relevant legal interest, ranging from health care to white-collar defense to sports, just to keep things interesting.
Led by Jason Knott and Andrew Goldfarb, and featuring attorneys with deep knowledge and expertise in their fields, Suits by Suits seeks to engage its readers on these relevant and often complicated topics. Comments and special requests are welcome and invited. Before reading, please view the disclaimer.