John “Jay” Neukom

Neukom leads Skadden, Arps, Slate, Meagher & Flom and Affiliates’ West Coast IP litigation practice.

He was chair of the trade secrets practice group at Quinn Emanuel Urquhart & Sullivan LLP before moving to Skadden in February 2018. He said trade secrets litigation has evolved significantly.

“It’s changed a lot in the last five years as courts have gotten smarter in evaluating forensic data. Judges have learned to take a harder look.”

In the past, if employees departed and their bosses found files downloaded from their work computers, “that was enough to get past the smell test as to whether something bad had happened. But today, courts have learned that you can interpret the movement of files in different ways. Sometimes the porting of files is to move personal information or to back up files to the cloud” with no sinister intent. “That can appear suspicious, but when you dig into it, maybe there’s auto backup at work or antivirus programs operating that scan files and alter the metadata.”

Such may have been the case as Neukom served as lead counsel for environmental remediation provider Accuworx West LLC in defending a direct-competitor trade secrets suit in Los Angeles Superior Court. The plaintiff, Patriot Environmental Services Inc., was the company from which Neukom’s client departed; Patriot lawyers sued and immediately filed for a temporary restraining order and an order to show cause on a preliminary injunction.

“Patriot looked at the metadata on the departing employee’s computer and decided to file a trade secrets claim,” Neukom said. “We knew we were looking at an all-nighter to understand the forensics so we could make the classic defensive move to oppose the TRO. Patriot Environmental Services Inc. v. Scranton, BC716929 (L.A. Super. Ct., filed Aug. 6, 2018).

After arguments, the court denied the TRO in its entirety and declined to set an order to show cause hearing on the preliminary injunction.

Neukom’s clients faced similar circumstances in Santa Clara County Superior Court.

“When the clients were represented by prior counsel, the court entered a TRO. We substituted in and opposed the preliminary injunction and procured a protective order putting a stay on all discovery relating to all trade secrets,” Neukom said. “Our successful argument was that the plaintiff had failed to identify any of its asserted trade secrets with reasonable particularity.” SunPower Corp. v. DeBono, 19-cv-349042 (S. Clara Super. Ct., filed June 14, 2019).

In both cases, he said, “We were able to slow things down, get the courts to look at the files at issue with specificity and prevail on our argument that there may have been smoke, but there’s no fire.”

— John Roemer