Key Takeaway

• Companies aiming to protect their trade secrets and confidential information would benefit from implementing both contractual controls on their employees, such as requiring employees to sign confidentiality agreements, and internal security measures, such as file-transfer monitoring systems, to prevent employees from exporting proprietary company information to their personal e-mail accounts and devices, and thereby satisfy the requirements for legal relief if the controls are violated.

The federal court for the District of New Jersey recently ordered an ex-employee of a biotech company to deliver all of his devices, online accounts, and hard copy documents for forensic inspection in a trade secrets case brought by his former employer. Legend Biotech USA Inc. v. Lianxing Liu, 2024 WL 919082 (D.N.J. March 4, 2024).

Plaintiff Legend Biotech – a biotechnology company that develops cell-editing therapies for cancer and other diseases based on DNA, RNA, plasmid, and amino acid sequences – hired defendant Lianxing Liu and required him to sign a confidentiality agreement in which he agreed not to use the company’s confidential information without written consent. Shortly after beginning his employment, however, Mr. Liu allegedly began emailing plaintiff’s trade secrets and confidential information to his personal Gmail account.

After discovering the transmissions, Legend Biotech fired Mr. Liu and sued him for misappropriation of trade secrets under the Defend Trade Secrets Act (“DTSA”) and New Jersey Trade Secrets Act (“NJTSA”). The company then moved to compel Mr. Liu to submit his devices to a third-party vendor for forensic inspection.

The court found that Legend Biotech had shown a likelihood of success on the merits of the case, a legal requirement for pre-final judgment injunctive relief. The company’s trade secrets consisted of scientific data for the development of medical treatments and proprietary manufacturing processes. The court stated that “Scientific data for the development of medical treatments is axiomatic trade secret information.” The court concluded that the company had taken reasonable steps to protect its information by implementing “a comprehensive computer security network” and contractual controls on employees to limit their use of the company’s information to that necessary to carry out their job duties.

The court went on to find that Legend Biotech had demonstrated a reasonable probability of proving unlawful misappropriation through its evidence that Mr. Liu had transmitted proprietary company information to his personal e-mail account. In light of Legend Biotech’s confidentiality agreement with Mr. Liu, its computer security network, and because there was evidence that Mr. Liu was speaking with competitors, the e-mails Mr. Liu sent to himself with company information were sufficient to establish misappropriation.

If you have any questions regarding the information covered in this blog, please contact John Baranello, Valeria Castanaro, Michelle Cho, or your primary attorney at Moses Singer.