New Federal Trade Secret Law

The Federal Defend Trade Secrets Act was signed into law on May 11, 2016.  Prior to this act, victims of trade secret theft had to rely on state court trade secret remedies, which are generally mirrored on the Uniform Trade Secret Act.  Under the new trade secret law, to be a trade secret, the information must get independent value “from not being generally known to, and not being readily ascertainable through proper means by another person who can obtain economic value from the disclosure or use of the information.”  To constitute a trade secret, reasonable measures must be taken to protect the information.  Examples of trade secrets are customer lists, non-public financial information, cost and pricing information, plans designs and computer software.

Under the new law, misappropriation of a trade secret is the acquisition, disclosure or use of a trade secret of another without consent, by a person who knows or has reason to know that the trade secret was acquired by improper means or mistake or under circumstances giving rise to a duty to maintain the secrecy of the trade secret.

One of the most important provisions of the new federal trade secret law, other than that it opens the federal courts to this type of claim, is that it allows ex parte seizures of property on application to the court in “extraordinary circumstances” where the seizure is necessary to prevent the dissemination of the trade secret.  There are, however, provisions for wrongful or excessive seizure of property.

The law also includes protections for whistleblowers in the confidential disclosure of trade secrets.  Under the law, employers are required to include information concerning this whistleblower immunity in their contracts.  Failure to do so subjects the employer to a waiver of exemplary damages of up to two times the amount of compensatory damages and an award of attorney fees in any action against an employee who was not provided the required information.

On of the biggest reasons for the new law is the recognition that there is significant economic espionage coming from non-US companies and governments.  Hackers, rogue inside employees and nation states represent a significant threat to United States prosperity and security.

Vita Coco Sued over Born in Brazil

All Market Inc., owners of Vita Coco coconut water are being sued in a class action lawsuit in the Southern District of Florida.  The lawsuit alleges that the term “Born in Brazil” on the packaging of the product is misleading to consumers as the company no longer solely uses Brazilian coconuts but now produces from Sri Lanka, the Philippines and other countries.

The company claims that the term is not misleading and is merely refers to the company’s origin.  The company claims that no reasonable consumer would believe that the term indicates that the product is only made in Brazil.  This is particularly so as the company’s website describes the origins of the product, where the product is made is disclosed in press releases and events, and each container of the product indicates the country of origin of the product.

This lawsuit follows in the steps of lawsuits filed against Anheuser-Busch InBev (AB InBev) claiming that it had “committed unfair and deceptive practices and has been unjustly enriched by marketing and selling beer in a way that misleads consumers into believing that Beck’s Beer is German, still imported from Germany, claiming that Beck’s Beer ‘originated in Germany’ with ‘German quality’ while ‘brewed under the German Purity Law of 1516.”  The lawsuit claims that consumers paid a premium price over what they would have paid for a different beer given the labeling of the product.

The actual Beck’s beer is now brewed in St. Louis, Missouri, and the fine print on the labels state that it is made in America.  Nonetheless, a settlement was reached in which consumers of Beck’s beer were entitled to refunds for beer purchased under this ‘deception’.  Those who did not keep receipts have a refund capped at $12.00.   The company also agreed to change its labeling to more prominently display that the product is brewed or made in the United States.  While Anheuser-Busch InBev settled the suit, they denied any wrongdoing.

AB InBev also settled a claim involving Kirin beer where it was claimed that consumers were led to believe that the beer was from Japan.  Similar suits have been filed against other companies.  Coors Brewing Company was sued in Miami-Dade County on the basis that Coors claims that the beer is brewed in the Rocky Mountains, even though it is also brewed elsewhere.  Further, the company has slogans promoting “Proudly brewed in the Rocky Mountain tradition”, “Our Mountain is brewing the World’s most refreshing beer”, and “Born in the Rockies”.  Other lawsuits claiming certain beers are “craft” beers have been less successful.

A lawsuit filed against Blue Moon Brewing, a division of MillerCoors, claimed that consumers were misled by the claim that the beer was “Artfully Crafted”, while hiding the fact that it is made by one of the largest brewers in the world.  MillerCoors successfully argued that there is no legal definition for “craft beer”.  The court in that case also found that there was no reason for MillerCoors to list its company name on the bottles or cans as the fictitious company set up by MillerCoors to sell Blue Moon, Blue Moon Brewing Co., is sufficient to allow consumers to ascertain that MillerCoors is the actual maker of the beer.