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California Litigation Newsletter

Intellectual Property & Technology

9 Out of 9 Supreme Court Justices Agree: Registration (Not Application) Before Copyright Litigation (GT Alert)

By Ian C. Ballon and Sabina A. Vayner

“Registration” really does mean . . . registration. A unanimous U.S. Supreme Court resolved the long-simmering “application approach” vs. “registration approach” circuit split, affirming the Eleventh Circuit’s holding in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 856 F.3d 1338 (11th Cir. 2017), that a copyright owner must have a registration certificate in hand before showing up at the courthouse steps. 

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Considerations for Federal Contractor Trade Secret Protection (Law360)

By Kurt A. Kappes and Daniel D. Straus

Most federal government procurement contracts require contractors to grant the government unlimited license rights in certain technical data and computer software related to contract performance. After granting the government unlimited rights, contractors retain valuable ownership rights in their trade secrets, technical data and computer software. A recent case from the Armed Services Board of Contract Appeals, Appeals of The Boeing Company, ASBCA Nos. 61387, 61388, highlights the importance of contractors taking proactive steps to protect their ownership rights in trade secrets, technical data and computer software during contract formation, rather than waiting to resolve such issues during contract performance.

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Infringement Protection for Foreign Sales of a Patented Product (New Jersey Law Journal)

By Barry J. Schindler

You are counsel for Company A whose product is on the market in the United States and abroad. Sales are exceeding all expectations when you receive a very upsetting call from a salesperson in Europe—“I am calling to let you know ….” It turns out that your company’s European competitor is selling an exact copy of your device based on component(s) being supplied by U.S. Company B. The device is covered by a U.S. patent, but its component(s) are not. Moreover, Company A does not have patent protection in Europe. Patent protection is not extraterritorial—in other words, a U.S. patent confers no rights in Europe. So, what do you do? As discussed below, a recent decision by the U.S. Supreme Court, WesternGeco v. Ion Geophysical Corp., provides that damages may be available for sales outside of the United States.

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Evolution of the Defend Trade Secrets Act (Daily Journal)

By Jordan D. Grotzinger and Jena MacCabe

As the Defend Trade Secrets Act turns three, we reflect on how it has evolved and issues that continue to develop. The remedy of ex parte seizure, unavailable under the Uniform Trade Secrets Act, was one of the most controversial provisions when the DTSA was enacted. This provision allows U.S. marshals to seize trade secrets from the alleged thief without notice. Critics worried that this remedy could be used to harass competitors and disrupt their business. Supporters delighted in this method of preserving evidence for trial.

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Proposed Amendments To The CCPA Look To Expand Liability (CLA Antitrust UCL and Privacy Section)

By Rebekah S. Guyon

In late February 2019, Attorney General Xavier Becerra and several state legislators proposed substantial amendments to the California Consumer Privacy Act, Cal. Civ. Code §§ 1798.100 et seq. (CCPA), that, if adopted, would expand the scope of the private right of action under the Act and scale back procedural safeguards enacted in the original statute that would have potentially shielded companies from greater liability.

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Anticipating the Flood of Cybersecurity Litigation Under the CCPA—What to Do About It (The Recorder)

By Ian C. Ballon and Rebekah S. Guyon

Unless amended by the legislature, modified by regulations to be promulgated by Attorney General Xavier Becerra, or preempted by federal legislation, the California Consumer Privacy Act, Cal. Civ. Code Sections 1798.100 et seq. (CCPA), which is set to take effect on Jan. 1, 2020, will invite an explosion of class action litigation, as plaintiffs’ counsel seek to recover statutory damages between $100 and $750 for each California resident affected by a security breach.

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ASBCA Decision Underscores Need for Federal Government Contractors to Protect Data Rights and Trade Secrets (GT Alert)

By Kurt A. Kappes and Daniel D. Straus

Most federal government procurement contracts require contractors to grant the government “unlimited” license rights in certain technical data and computer software related to contract performance. After granting the government unlimited rights, contractors retain valuable ownership rights in their trade secrets, technical data, and computer software. A recent case from the Armed Services Board of Contract Appeals (ASBCA, or the board), The Boeing Company (Boeing), highlights the importance of contractors taking proactive steps to protect their ownership rights in trade secrets, technical data, and computer software during contract formation, rather than waiting to resolve such issues during contract performance.

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Circuit Split Underscores the Need for Strategic Thinking in Defending Cybersecurity Class Actions (Daily Journal)

By Ian C. Ballon

There is currently a substantial circuit split on the appropriate standard for finding Article III standing in putative cybersecurity breach class actions. The 6th, 7th, 9th and D.C. Circuits have set a lower bar for what satisfies the requirements for Article III standing in a cybersecurity case than the 2nd, 3rd, 4th and 8th Circuits. The conflict among the circuits cries out for Supreme Court resolution and compels companies and their lawyers to think strategically about ways to handle – and avoid – cybersecurity litigation.

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Summary of New USPTO Subject Matter Eligibility Guidance (GT Alert)

By James J. DeCarlo and George David Zalepa

On Jan. 4, 2019, the United States Patent and Trademark Office (USPTO) announced revised guidance for subject matter eligibility under 35 U.S.C. § 101. The document, which took effect Monday, Jan. 7, 2019, is entitled “2019 Revised Patent Subject Matter Eligibility Guidance” (Guidance). This Guidance represents the current methodology for analysis of claims under 35 U.S.C. § 101 in view of Mayo v. PrometheusAlice v. CLS Bank Intl., and subsequent cases. The Guidance states that it is intended to provide a more concrete framework for analyzing whether claims, as a whole, are merely “directed to” an abstract idea, and it explicitly supersedes certain analysis methods articulated in previous guidance, particularly the Examiner’s “Quick Reference” that previously sought to categorize abstract ideas.

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Beware of Trademark Notice Scams (New Jersey Business Magazine)

By Joseph Agostino

Scams are everywhere. They are prevalent online, including in seemingly reputable looking emails and on social media. As such, business’ trademark properties are not immune to scams. One of the most common scams that trademark owners face is the receipt of misleading notices from private companies offering trademark services relating to the owner’s trademark application or registration filed with the United States Patent and Trademark Office. Applications and registrations are obtainable online, and these private companies collect and use this information to generate notices that are sent by traditional mail or email.

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Labor & Employment

Department of Labor Proposes Changes to Overtime Rules (GT Alert)

By David Long-Daniels and Joshua Y. Joel

The U.S. Department of Labor (DOL) on March 7, 2019, issued a new proposed rule raising the annual minimum salary requirements for the Fair Labor Standards Act (FLSA) overtime exemptions for executive, administrative, and professional employees. Under the new rule, the salary level for these “white collar” exemptions will increase from $23,660 per year ($455 per week) to $35,308 per year ($679 per week). The proposed rule will also raise the annual compensation requirement for an employee to be considered a “highly compensated employee” and exempt from overtime from the current $100,000 per year to $147,414 per year. The DOL did not, however, propose any changes to the duties test. In addition, the DOL did not propose automatic adjustments to the salary threshold, nor did it create differing salary levels based on region or size of employer.

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House Zeros in on Workplace Violence in Health Care and Social Service Industries (GT Alert)

By Michael T. Taylor and Brett A. Castellat

House Democrats have set their sights on workplace violence in health care and social service industries. According to congressional findings, the health care and social service industries suffer the highest rates of injuries caused by workplace violence. Health care and social service workers made up 69 percent of all workplace violence injuries in 2017 and were nearly five times as likely to suffer a workplace violence injury than workers overall. To address this problem, on Feb. 27, 2019, the House Subcommittee on Workforce Protections considered a bill mandating that the Occupational Safety and Health Administration (OSHA) implement workplace violence protections for health care and social service workers.

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2018 Year in Review: California L&E (GT Alert)

By Tiffany S. Fordyce, James M. Nelson, and Lindsay E. Hutner

There are myriad special rules for employers operating in California, and even more were signed into law last term. 2018 was Jerry Brown’s last year of his second “two-term” round as governor. Both legislatively and judicially, 2018 was a busy year, with the legislature sending more than 1,000 bills to the governor. This GT Alert discusses the bills signed into law that will affect California employers and pertinent case-based developments in California labor and employment.

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California Appellate Court Casts Doubt on Enforceability of Nonsolicitation Agreements (The Recorder)

By Kurt A. Kappes and Mark D. Lurie

A California appellate court, in a recent published opinion, invalidated a nonsolicitation clause restricting employees of a health care staffing company from pirating their former colleagues. The opinion calls into question an employer’s ability to rely on nonsolicitation agreements. California-based employers or those with employees in California, as a result, would be well-advised to consider whether provisions not to solicit employees should continue to be included in agreements. Furthermore, employers should carefully consider whether to attempt to enforce such agreements, as this opinion has made the outcome of such litigation less certain. In fact, the degree to which the court was willing to go to invalidate such a provision demonstrates that exceptions to non-compete agreements will continue to be narrowly construed to include only those contained in certain statutory exceptions. And, the court’s willingness to award the defendants’ their attorney fees should also be included in the calculus of whether to attempt to enforce such agreements.

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California Employee Can Agree to Non-Compete Clause When Represented by Counsel (The National Law Review)

By Kurt A. Kappes and Mark D. Lurie

Many employers and attorneys assume that covenants not to compete found in employment agreements are not enforceable against California residents absent narrow exceptions, and that courts would reject any attempt to apply another state’s choice of law provision to draft around this issue. A recent case from the Delaware Chancery Court, NuVasive, Inc. v. Patrick Miles, 2018 WL 4677607 (Del. Ch. Sept. 28, 2018), has recognized, however, that under certain circumstances, non-competes and non-California choice of law and forum provisions may be enforced against California residents.

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Class Action Litigation

Cy Pres Survives, but for How Long? (GT Alert)

By Alan W. Hersh and Stephen L. Saxl

Cy pres awards – where money goes to nonprofit organizations instead of class members – are an increasing and often criticized component of class action settlements. On March 20, the United States Supreme Court decided Frank v. Gaos, a case that was expected to be the high court’s first opportunity to address the validity of cy pres settlements. Although the court ultimately ruled on an unrelated standing issue, the justices’ questions during oral argument and seeming eagerness to weigh in suggest that the days of large cy pres awards may soon come to an end.

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United States Supreme Court Holds that Claimants Cannot Force Class Arbitration Absent Express Consent (California Lawyers Association Antitrust, UCL and Privacy Section)

By Michael E. McCarthy

Employers and business owners breathed a collective sigh of relief on April 24, 2019, when the United States Supreme Court issued its highly anticipated ruling in Lamps Plus, Inc. v. Varela, No. 17-988, ___ U.S. ___, 139 S. Ct. 1407 (2019), and held, in a 5-to-4 decision, that under the Federal Arbitration Act (FAA), an ambiguous agreement cannot provide the basis for concluding that the parties agreed to submit to class arbitration. The Varela opinion reaffirms the Court’s decision in Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), which held that a court may not compel class arbitration when an agreement is silent on the availability of such proceedings.

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Pharmaceutical, Medical Device & Health Care

Conklin v. Medtronic, Inc. (Food and Drug Law Institute)

By Ginger Pigott and Richard Tabura

Conklin made the list of “top food and drug cases” in 2018 because in it the Arizona Supreme Court effectively invalidated Stengel v. Medtronic Inc., 704 F.3d 1224 (9th Cir. 2013), a troublesome decision by the Ninth Circuit. In Stengel, the Ninth Circuit reversed the district court’s order granting a motion to dismiss based on preemption. In so doing, the Ninth Circuit, sitting in diversity and purporting to apply Arizona law, had concluded that claims based on an alleged failure to report adverse events to the FDA (“failure-to-report claims”) were neither expressly nor impliedly preempted. 

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Media & Entertainment Litigation

California Appeals Court Departs from Predominate Standard of Review for Libel by Implication Claims (Media Law Resource Center MediaLawLetter)

By Nina D. Boyajian, Kelly L. McNamee, and Jena MacCabe

In March 2019, on somewhat unusual grounds, a California state appeals court granted an otherwise paradigmatic anti-SLAPP motion to strike a complaint asserting libel by implication. Sonoma Media Investments, LLC v. Superior Court, Nos. A151968, A152008, A152320 (Cal. App. 2019). Rather than apply fully what is now considered to be the controlling legal standard for such claims, the court's directive granting defendants' anti-SLAPP motion and striking the complaint turned on plaintiffs' failure to prove the falsity of the alleged defamatory implication. The court's reasoning, however, may prove problematic insofar as it ignores the need for a plaintiff to demonstrate the author's intention or endorsement of the purported defamatory inference and, instead, suggests that falsity alone provides the dispositive element in libel by implication cases. 

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White Collar Defense & Special Investigations

DOJ Issues Cooperation Guidance for False Claims Act Matters (GT Alert)

By David G. Barger, Matthew J. Cannon, Pamela J. Marple, Carolyn Fitzhugh McNiven, Nathan J. Muyskens, Michael J. Schaengold, Jennifer S. Zucker, and Kip B. Randall

On May 7, 2019, the United States Department of Justice (DOJ) issued formal guidance regarding its award of credit to companies and individuals who cooperate in DOJ False Claims Act (FCA) investigations. In conjunction with the announcement, DOJ included a new section in its Justice Manual to reflect the guidance. See Justice Manual § 4-4.112. This guidance explains how companies and individuals can receive credit – in the civil context – for disclosing, cooperating, and remediating matters involving FCA allegations. Assistant Attorney General Jody Hunt explained, “The Department of Justice has taken important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations; enforcement of the False Claims Act is no exception.” See Department of Justice Issues Guidance on False Claims Act Matters and Updates Justice Manual, U.S. Dep’t of Justice (May 7, 2019), available here.

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International Arbitration & Litigation

The United States Supreme Court Hands Victory to Arbitration (GT Alert)

By Nicole Y. Silver and Tomás Leonard

On Jan. 8, 2019, the United States Supreme Court issued a unanimous decision in Henry Schein, Inc. v. Archer & White Sales, Inc., holding that courts may not override a contract delegating to arbitrators the threshold question of arbitrability. The decision, the first to be written by Justice Brett Kavanaugh, eliminates the ability of parties to argue that a matter should remain in court if the opposing party’s arbitration bid is “wholly groundless.”

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The Japan Commercial Arbitration Association Amends Its Commercial Arbitration Rules and Adopts New Rules for ‘Interactive Arbitration’ (GT Alert)

By Thomas G. AllenAndrew Van Duzer, and Daniel E. Parga

On Dec. 7, 2018, the Japan Commercial Arbitration Association (JCAA) amended its Commercial Arbitration Rules and enacted new “Interactive Arbitration Rules.” The new rules come into force on Jan. 1, 2019…. One of the most significant revisions to the Commercial Arbitration Rules deals with the selection of the presiding arbitrator. Having a meaningful say in who hears a dispute is one of the key advantages to arbitration. The prohibition on communicating ex parte with one’s party appointed arbitrator regarding the selection of the presiding arbitrator, absent consent of all parties, limits this advantage. Those who are selecting the JCAA Commercial Arbitration Rules in their contracts should consider whether to adopt this provision. Because the parties may generally modify the rules by agreement, a modification of this rule in the arbitration clause itself would be effective in allowing this important aspect of the arbitrator selection process to continue even if the proceeding is subject to the amended rules.

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Antitrust Litigation

Revised Jurisdictional Thresholds Under the HSR Act and for the Prohibition of Interlocking Directorates (GT Alert)

By Andrew G. Berg and Stephen M. Pepper

On Feb. 15 the Federal Trade Commission (FTC) published a notice to revise the premerger notification thresholds for mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The FTC also published revisions to the thresholds that trigger, under Section 8 of the Clayton Act, a prohibition preventing companies from having interlocking memberships on their corporate boards of directors. These revisions represent the annual adjustment of thresholds based upon changes in the GNP.

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Financial Regulatory & Compliance

FINRA’s 2019 Risk Monitoring and Examination Priorities Letter (GT Alert)

By William B. MackPaul Ferrillo, and Vincent Lewis

On Jan. 22, 2019, the Financial Industry Regulatory Authority (FINRA) released its 14th Annual Risk Monitoring and Examination Priorities Letter (Priority Letter) where it identifies its areas of examination focus for 2019. The FINRA president’s cover note points out the addition to the title of a reference to “risk monitoring.” While the Priority Letter describes the multiple issues and concerns on which FINRA will continue to focus during examinations, the president’s note points out that this year’s Priority Letter reflects two changes. The first change is the clarification of how the examination process helps to fulfill the risk assessment function of FINRA. The second change is the shift in emphasis from extensive discussions of continuing concerns that have been the focus of examinations for many years to a more detailed explanation of certain new key priorities that now appear in the new letter.

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Gaming

DOJ Reverses Wire Act Opinion as It Applies to Non-Sports Gambling (GT Alert)

By Daniel P. Filor, Mark Hichar, Jessica Natali, and A. John Pappalardo

On Jan. 14, 2019, the Department of Justice released a memorandum opinion reversing a 2011 opinion interpreting the federal Wire Act (18 U.S.C. § 1084(a)) (see memorandum opinion here). The 2011 opinion had carved out sports betting as the only type of gambling to be covered by the Wire Act. The new opinion instructs that the Wire Act is applicable to any form of gambling that uses a wire communication and crosses state lines. As drafted, this includes online gambling and online lotteries.

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Benefits and Compensation

Prepare Yourself for an IRS or DOL Plan Audit (GT Alert)

By Jeffrey D. Mamorsky and Terry L. Moore

How confident are you that your company’s retirement plans are being run in accordance with all legal requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC)? Are you comfortable with the integrity of the annual representations made to your plan auditor that key benefit-plan controls are in place to make sure that your retirement plans are operated pursuant to their terms and applicable law? This Alert addresses what questions you should be asking when attempting to potentially minimize monetary sanctions, serious consequences to your employees, and personal liability for company officials who are ERISA-plan fiduciaries responsible for the investment of plan assets and plan administration that can stem from an IRS or DOL Plan audit.

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Awards and Mentions

Susan L. Heller and Gretchen A. Ramos were named among the “Top Women Lawyers” for 2019 by the Daily Journal

Jeff E. Scott is quoted and Greenberg Traurig is mentioned in a Litigation Daily article titled “Breach of Contract Litigation Is Way Down—but Greenberg Traurig Stays Strong.” Citing a new report, the article stated, “Greenberg Traurig has had the busiest contracts litigation practice for the past decade, acting as counsel on a total of 1,369 cases since 2009.”

Mark D. Kemple was named a 2019 Employment Law Trailblazer by the National Law Journal. 

Daniel H. Black, Vincent H. Chieffo, Mathew S. Rosengart, and Jeff E. Scott were featured in “Variety’s 2019 Legal Impact Report.”

Ian C. Ballon and Susan L. Heller were recognized by the Daily Journal among its “Top Intellectual Property Lawyers of California” for 2019. 

GT San Francisco sponsored a Black History Month event keynoted by former San Francisco Mayor Willie Brown and featuring a lively panel discussion with diversity and inclusion heads from major Bay Area tech companies. “Diversity catalyzes innovation by fostering a workplace environment where unique ideas and perspectives are heard and valued,” said Nikki Lewis Simon, GT Shareholder and Chief Diversity Officer. “Diversity and inclusion must be engrained in a company and its culture rather than treated as ‘just another HR program.’” The event was featured in ALM’s The Recorder.

The 2019 Chambers USA Guide included eight attorneys from GT’s California offices: Charles S. BirenbaumJay L. Cooper, Richard F. Davis, Michelle Ferreira , Bruce Fischer, Sandy Presant, Howard J. Steinberg, and Daniel J. Tyukody. Greenberg Traurig was noted as a “Recognized Practitioner” for Tax statewide and for Real Estate in Southern California. Firmwide, more than 150 attorneys were recognized.

Daniel H. Black, Jay L. Cooper, Francoise Gilbert, and Ginger Pigott were among the nine GT attorneys listed as “Best of the Best” in Euromoney’s 2019 Expert Guides.

Francoise Gilbert was shortlisted as “Best in Technology” for Euromoney Legal Media Group’s annual “Women in Business Law Awards,” and Lisa Li was shortlisted as a Rising Star for Intellectual Property.

GT was nationally and regionally recognized by the World Trademark Review (WTR) in the ninth edition of the WTR 1000. In addition to receiving firmwide rankings, 17 attorneys in the firm’s Trademark and Brand Management Group were recognized for their trademark legal practice including California shareholders Ian C. Ballon, Susan L. HellerJeff Joyner, and Candice E. Kim.

GT’s Ian C. Ballon and Gretchen A. Ramos were named among the “Top Cyber Lawyers in California” for 2019. The Daily Journal’s award honors California attorneys on the cutting edge of cybersecurity, privacy, and data protection. 

Law360 profiled Kate Black, former 23andMe Privacy Officer; class action litigator Lisa Simonetti; IP litigator L. Scott Oliver; and employment trial lawyer Charles O. Thompson.

Kate Black was featured in a Forbes article titled “Meet The Woman Behind 23andMe's Plan To Keep Your Data Safe.”

ALM’s The Recorder covered the strategic expansion of GT’s Litigation Practice in California in an article titled “Greenberg Traurig Bolts on Litigators in Sacramento, Silicon Valley.” The article featured new shareholders L. Scott Oliver, Todd A. Pickles, David A. Cheit, Deepi K. Miller, and Charles O. Thompson.