trade secrets – Foldenauer

Patents, copyrights, and trademarks indicate clearly that an item of intellectual property belongs to its owner, but not all ideas are eligible for those protections. Good ideas are essential to operating a successful business, and intellectual property laws enable you to protect your original ideas, even the ones that are not covered by trademarks, patents, or copyrights. Trade secrets are the information shared only within your company that enables it to function in a unique way or provide unique products or services; if all your competitors knew your trade secrets, your company would lose its competitive edge. Trade secrets are not just the recipes that make the chicken sandwiches at Chick-fil-A, Wendy’s, and Popeye’s different from each other; every business has trade secrets, even cybersecurity firms. If a competitor or former employee is misusing your company’s trade secrets, contact a San Diego intellectual property business lawyer.

The Perils of Proofpoint

In the past several years, the email security software company Proofpoint, which is based in Sunnyvale, has seen its share of legal trouble because of intellectual property disputes. The trouble started when Proofpoint acquired a company called Cloudmark in 2017 for $110 million. Around the same time, Oliver Lemarie, who had been a vice president at Cloudmark, began working for Vade Secure, which is based in France.

One of the main reasons that Proofpoint chose to buy Cloudmark was because of its cloud-based Mail Transfer Agent (MTA) product. Meanwhile, in June 2019, Vade launched a cloud-based MTA product that was very similar to the one Cloudmark had been producing. The new MTA product enabled Vade Secure to obtain nearly $80 million in funding from an investor called General Catalyst; the General Catalyst investment represented nearly 90% of Vade Secure’s funding. Vade also used Cloudmark trade secrets to develop other products, such as its Microsoft 365 Email Content Filter, Vade MTA Builder, and Vade Cloud.

The following month, Proofpoint filed a lawsuit against Vade Secure, alleging that Lemarie had intentionally misappropriated trade secrets and used them to compete with Proofpoint. In August 2021, the court ruled in favor of Proofpoint. It ordered Vade to pay $13.5 million to Proofpoint for unjust enrichment and $480,000 for breach of contract, although it did not order Vade to pay any compensation for financial losses it had caused Proofpoint to incur. The court will rule later about how much money, if any, in punitive damages Vade Secure must pay.

This is not Proofpoint’s only legal dispute over trade secrets. It also claims that Samuel Boone, a former Director of National Partner Sales at Proofpoint, shared the company’s sales strategies with a competitor company called Abnormal Security. The lawsuit between Proofpoint and Boone is ongoing.

Contact Foldenauer Law Group About Trade Secret Disputes

A business dispute lawyer can help you seek damages from people who have used your company’s trade secrets without your permission. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.

If you were dating someone, and they told you that you could never have another romantic relationship after breaking up with them, you would either say “pffft!” or file for a restraining order. Why do employees tolerate such behavior from employers and former business partners, then? Non-compete clauses are a common feature of employment contracts in some industries. As of 2021, approximately one in five workers has signed a non-compete agreement with their current employer. At their worst, non-compete agreements harm the economy by limiting workers’ ability to seek employment and companies’ ability to recruit new employees. On the other hand, companies have the right to protect their trade secrets. If you are involved in a dispute about the use of privileged information by a former partner or employee of a company, contact a San Diego intellectual property business lawyer.

Executive Order Protects Workers from Overreach by Non-Compete Clauses

An executive order issued by President Biden in July 2021 targeted overreach by non-compete clauses in employment contracts. The ostensible purpose of non-compete clauses is to prevent employees from taking the business secrets and innovative business practices they learned in the scope of their work and using it to open a new business that competes directly with their former employer. Despite this, many businesses require employees who do not have specialized insider knowledge to sign non-compete agreements that limit their ability to seek employment in their geographic area after their employment ends. In fact, over 20% of employees who do not have bachelor’s degrees are subject to non-compete agreements. The executive order authorizes, and even encourages, the Federal Trade Commission to “address agreements that may unduly limit workers’ ability to change jobs.” Meanwhile, California courts have consistently ruled that most workers have the right to “job hop,” and that this right is an essential component of fair market competition.

How California Law Keeps Your Trade Secrets Safe

If you are trying to protect your trade secrets, California is a good place to do it. With or without non-compete agreements, the Uniform Trade Secrets Act, which is part of the California Civil Code, acknowledges that trade secrets are a kind of intellectual property, and businesses have the right to protect their intellectual property. Whether client lists count as trade secrets depends on the circumstances. President Biden’s executive order implies that, the more specific the agreement is about which information the former employee or partner may not share, the better, and it is sufficient to specify that a party to the agreement may not share client lists. Meanwhile, California courts have ruled that “general business know-how” is not a trade secret, but rather expertise that the employee has gained in the course of their work for the employer.

Contact Foldenauer Law Group About Protecting Trade Secrets

An intellectual property lawyer can help you enforce your trade secrets or fight for your right to fairly compete in the marketplace. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.

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