Monthly Archives: September 2013

No Patent? No Problem!

The United States District Court, Northern District of California, recently issued a decision, which makes pleading trade secret protection for patent applications easier.  It also underscores the risk of liability to third parties receiving or using such information.

In Wang v Palo Alto Networks, Inc. (2013 WL 415615 (N.D.Cal.)), plaintiff Wang alleged the following in his complaint:  Wang invented a certain computer firewall technology and applied for a patent.  Wang entered into a joint venture with defendant Gong to commercialize his inventions.  Gong developed a thorough knowledge of the technology, understood that the information was confidential and agreed to maintain it in confidence.  Wang and Gong met with defendant Zuk and discussed potentially joining forces with Zuk’s company, defendant Palo Alto Networks, Inc. (PAN).  Wang and Gong told Zuk that Wang had a pending patent on his firewall technology.  Wang decided not to work with PAN.  Unbeknownst to Wang and without his consent, Gong disclosed Wang’s technology to Zuk.  Gong and Zuk replicated Wang’s ideas and patented them without naming Wang.  Wang alleged that Gong and Zuk misappropriated his trade secrets under the California Uniform Trade Secret Act (CUTSA).

Applying CUTSA’s definition of a trade secret, the Court rejected Zuk’s and PAN’s 12(b) motion challenging the sufficiency of Wang’s pleading of a trade secret infringement claim. The Court stated that “[b]ecause patent applications are usually confidential until published, it is reasonable to infer that Zuk should have known … Gong had acquired trade secrets in the context of a business relationship with Wang …”  Id at 3.

This observation drawn by the Court affects third parties, such as Zuk and PAN, who receive or use information that is subject to a patent application.  At the pleading stage, the court may infer that the information subject to a patent application is a trade secret.  Furthermore, in the context of discussing information that may be subject to a patent application, business parties are expected to know what a trade secret is and how to treat it.  In the very least, this should result in a heightened level of diligence when entering transactions where such information may be disclosed or used.

Homecare Business: Is Your Most Valuable Asset a Ticking Bomb?

Quality homecare for California seniors is a rapidly growing industry in response to the increasingly aging population and because it is a rewarding service. Homecare eases the burdens on the families caring for the elders and, most importantly, allows seniors to live in their homes as long as possible and to maintain their quality of life.

Yet, the industry has its challenges. Common issues include a high turnover rate in the caregiver pool, a lack of professionalism, poor attitude and even unlawful activity, any of which may cost a star homecare business its reputation, clients, or operating budget. California legislature recognizes that people 65 years and older are inherently more vulnerable to financial abuse. Statistics indicate that people over the age of 65 are targeted more heavily by financial predators. Over 70 percent of people over the age of 50 have been approached fraudulently, with no less than $3.8 billion lost by seniors to financial scams.1 California protects its seniors through various forms of legislation, including California’s financial elder abuse statute, Welfare and Institutions Code Section 15610.30.

A homecare business owner should know about this statute. If an employee causes financial loss by fraud or other bad faith conduct to a client who is 65 years or older, the employer may not only end up paying the elder’s losses, but also the elder’s attorney’s fees and costs, even if employer knew nothing of the employee’s “unfitness” for the job. If the employer knew of the wrongful conduct and consciously disregarded it, the business may be penalized with punitive damages. Examples of conduct which may give rise to employer liability include stealing from the elder, inducing the elder to loan the employee money or property, to give gifts, or to invest in the employee’s side business. The statute imposes liability regardless of the elder’s physical or mental capacity. Even a relatively small infraction by an employee may result in losses in tens of thousands of dollars, to say nothing of large or numerous claims.

Clearly, prevention is the key. Businesses that protect their clients protect themselves. Prevention starts with a legal audit of existing practices with regard to hiring the caregivers and training and educating them in the business’ policies and procedures. Once deficiencies are identified and corrected, next comes a rigorous implementation of such policies, including but not limited to regular oversight through customer feedback, meetings with employees and prompt investigation of any complaints. An honest litigator will tell you that the common stumbling blocks to paying for an audit and a set of working employment policies, of “time, cost and “we have never been sued (therefore it will never happen),”” pale in comparison to the time and cost of fighting disputes in court or paying judgments.

Experience shows that auditing hiring practices and properly training and supervising employees addresses problems before they come from the clients or their lawyers. And then your most valuable asset – your employees – ensure your stellar reputation, economic prosperity and much needed undisturbed sleep.

1 Elder Financial Abuse Task Team Report to the California Commission on Aging, available at (last visited August 27, 2013)