Skilled in the Art: A New Kind of Trade Secret | Fenwick Feasts on Salmagundi
Diversity hiring strategies have never been more important, particularly for technology companies. But are they trade secrets? That's the premise of IBM's suit to block Microsoft from hiring its chief diversity officer.
February 13, 2018 at 10:49 PM
6 minute read
Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham, and this week I'll try to answer the question: Have big companies' diversity metrics become so valuable they might now be considered trade secrets? As always, email me your thoughts and tips on anything IP and find me on Twitter @scottkgraham.
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IBM's Key to a Diverse Workforce? It's a Trade Secret
Trade secrets. When you hear those words, what comes to mind? The secret formula for Coca-Cola? Waymo's self-driving vehicle technology? Listerine?
We might soon have to broaden our definition, now that IBM has sued to block Microsoft from hiring away its chief diversity officer. In seeking to enjoin the hire of Lindsay-Rae McIntyre for one year, IBM argues that the company's “diversity data, strategies and initiatives” are confidential information it doesn't want falling into the hands of a competitor. Microsoft argues they're the kind of thing companies like IBM proudly advertise to the world, rather than keep locked in a vault.
“It's uncommon,” said Keker, Van Nest & Peters IP partner Warren Braunig, who's not involved in the case but watching it. “Typically you see trade secrets cases involving either technology, customer lists or business strategies.” The case might reflect that companies are increasingly “thinking about their diversity efforts as something that can provide them a competitive advantage.”
Here's IBM v. Microsoft in a nutshell: After a 20-year career with IBM, most recently as its chief diversity officer, McIntyre accepted the same job with Microsoft last month. IBM, which is represented by Paul, Weiss, Rifkind, Wharton & Garrison, charges that the move would violate a non-compete agreement McIntyre signed and inevitably result in the disclosure of trade secrets to an arch-competitor.
McIntyre has “in-depth knowledge of highly confidential and competitively sensitive information about IBM's diversity strategies, initiatives, hiring targets, representation data, and technologies and innovations,” states the complaint signed by Paul Weiss partner Bob Atkins and filed in the Southern District of New York. That includes “artificial intelligence-based tools” for recommending promotions and monitoring diversity metrics, according to the complaint.
Perhaps anticipating Microsoft's response—or maybe simply to maximize humiliation—IBM points out that in defending a class action accusing it of gender discrimination, Microsoft has persuaded a Seattle federal judge to keep its own diversity data and strategies under seal. Microsoft has “thus conceal[ed] from its competitors the very same type of confidential data and information that IBM seeks to protect in this action,” IBM states.
“It's a great 'gotcha,' that's for sure,” says Keker's Braunig. While not dispositive because of the different legal standards, the language Microsoft used to seek confidentiality will probably help IBM's position, he said.
Orrick, Herrington & Sutcliffe and Morgan, Lewis & Bockius are helping Microsoft fight the proposed injunction. McIntyre is an HR leader with no technical training who's taken no confidential information, they argue. “IBM yet again seeks to enforce a breathtakingly broad non-competition agreement for the improper reason of preventing talent from walking out the door,” Orrick partner Mike Delikat writes in opposition to IBM's proposed injunction.
Delikat argues that IBM already discloses “a vast amount of information regarding its diversity program and diversity statistics in order to establish itself as a leading company with respect to diversity,” Microsoft doesn't need IBM's non-public information “because Microsoft needs diversity programs that work for its specific culture, not IBM's,” he argues.
Keker's Braunig said it will be interesting to see how the case plays out. Though he's not aware of a case holding diversity data to be a trade secret, “that doesn't mean that it couldn't be, if it's something they've kept confidential and it would be valuable to a competitor.”
A hearing on the proposed injunction is scheduled for March 12 before U.S. District Judge Vincent Briccetti.
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Who Got the Work?
This is a new feature on who's getting hired in IP matters. Let me know what you think and email me with your new engagements.
Lawyers in the Silicon Valley office of Fenwick & West will try to help Amazon.com snuff out a barrage of patent infringement suits by NPE PersonalWeb Technologies and networking company Level 3 Communications. Sherman Oaks, California, lawyers at IP Law Group LLP and Houston's SethLaw appear to be the go-to firms for PersonalWeb so far.
➤ The dispute: PersonalWeb filed 56 suits in six different jurisdictions last month. They target what Amazon and Fenwick call “a salmagundi of unrelated entities engaged in a wide range of unrelated business,” ranging from Airbnb to GoPro to Square to MWM My Wedding Match Ltd. But they're all customers of Amazon Web Services, and they're being sued over the use of content-based identifiers generated by the AWS system. So Amazon brought a declaratory judgment action in the Northern District of California on Feb. 5. Amazon contends that PersonalWeb and Level 3 already sued Amazon and 2011 over patentably indistinct claims, and that all 56 suits are barred by claim preclusion and the Kessler doctrine.
The lawyers: Amazon has turned to one of its regular patent litigation firms. Fenwick partners J. David Hadden and Saina Shamilov are listed on the DJ complaint along with associates Todd Gregorian, Phillip Haack and Chieh Tung. No appearance has been entered yet for Personal Web and Level 3.
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Gibson Dunn Beefs Up Tech Transactions
After a short stop at White & Case, Silicon Valley tech transactions specialist Carrie LeRoy is on the move to Gibson, Dunn & Crutcher.
LeRoy's credits include advising Broadcom on the IP issues in its $37 billion purchase by Avago Technologies and SanDisk in its $19 billion sale to Western Digital. Both of those transactions occurred when she was at Skadden, Arps, Slate, Meagher & Flom. A year ago she joined White & Case, and is now landing at Gibson.
“Gibson Dunn has an exceptional platform for IP transactions and M&A, which is important to my practice and client base,” LeRoy told my ALM colleague Xiumei Dong.
Gibson's partner in charge of the office, Benjamin Wagner, notes that LeRoy also worked in house at Marvell Semiconductor Inc. before her nine-year stint at Skadden. “There are not a lot of people with her balance of technology skills and in-house experience,” Wagner said. “Those are rare commodities.”
I'll be back on Friday with more IP news. In the meantime, those Fenwick lawyers have gotten me hungry. I might have to throw together a salmagundi.
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Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
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David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
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