California Labor &
Employment Law Blog

Jan. 5 2010

Seller of Trade Secrets May Still Sue Former Employee for Misappropriation

Topics: Court Decisions

In a fascinating and lengthy opinion, a California appellate court held that a company that sells its trade secrets still has standing to sue for misappropriation that occurred prior to the sale. In Jasmine Networks, Inc. v. Marvell Semiconductor, Inc., Jasmine sued Marvell and several of Marvell's employees for misappropriation of trade secrets and related causes of action based on allegations that Marvel had wrongfully acquired Jasmine's trade secrets and hired away key employees, destroying or greatly reducing the value of Jasmine's trade secrets. Less than 1 year later, Jasmine filed a Chapter 11 bankruptcy proceeding and, as part of its reorganization, sold substantially all of its assets, including its trade secrets and intellectual property. However, Jasmine reserved its right to pursue its claims in the lawsuit against Marvell. With an analogy to a victim of an automobile accident who does not need to keep her damaged vehicle until trial to recover for the damages caused by a negligent driver, the Court of Appeal made it clear that the sale of the trade secrets or intellectual property to a third party, after commencing a lawsuit over the harm caused by misappropriation, does not destroy the Plaintiff's standing to pursue its case for misappropriation of trade secrets. The Jasmine Networks case is here.

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About the Editor

Robin Largent has a regular presence in California state and federal courts and has been lead defense counsel and appellate counsel for large and small California employers in litigation (and arbitration) ranging from individual discrimination and harassment claims to complex wage and hour representative and class actions. She also leads the firm’s appellate practice, having substantial experience and success handling appeals, writ petitions, and amicus briefs in both state and federal court on issues such as class certification (particularly in the wage and hour arena), manageability and due process concerns associated with class action trials, exempt/non-exempt misclassification issues, meal and rest break compliance, trade secret/unfair competition matters, and the scope of federal court jurisdiction under the Class Action Fairness Act.
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