Category Archives: new jersey

What Remedies Would Be Allowed If New Jersey Adopts the Uniform Trade Secrets Act?

New Jersey is currently one of just four states that has not passed a version of the Uniform Trade Secrets Act, but that could all change soon.

On September 19, the Senate Commerce Committee unanimously recommended passage of A-921/S-2456. An amendment included by the committee required the bill to be returned to the Assembly for final legislative approval after it is approved by the state Senate. It has now been submitted to the Governor, who is expected to sign it.

Under current New Jersey law, trade secrets are largely protected by common law and the Computer Related Offenses Act. N.J.S.A. 2A:38A-3(a). The adoption of the Uniform Trade Secrets Act would grant trade secret protection in a manner that federal law does not provide. Currently, federal law protects patents, copyrights and trademarks. In New Jersey, there is no statute that directly protects trade secrets. The adoption of this uniform law would provide plaintiffs with the opportunity to receive civil remedies under New Jersey state law if their trade secrets are misappropriated.

New Jersey, New York, Massachusetts and Texas are the only states that have yet to pass versions of the Uniform Trade Secrets Act. However, the law is pending in Massachusetts.

The law would allow plaintiffs the opportunity to seek the following remedies:

  1. There would be damages for both actual loss suffered by the plaintiff and for any unjust enrichment enjoyed by the defendant as a result of the misappropriation. Damages may also include the imposition of reasonable royalty for unauthorized disclosure or use.
  2. There would be injunctive relief for actual or threatened misappropriation of a trade secret. (Under certain conditions, an injunction may condition future use upon payment of a reasonable royalty.)
  3. Where there is willful and malicious misappropriation of a trade secret, punitive damages in the amount of double the compensatory damages would be available under the statute to be awarded by the court;
  4. The award of attorney’s fees would be authorized if
    1. Willful and malicious misappropriation exists;
    2. A claim of misappropriation is made in bad faith; or
    3. A motion to terminate an injunction is made or resisted in bad faith.

http://www.njleg.state.nj.us/2010/Bills/A1000/921_S2.PDF

The amended bill also states that if a public entity or employee is the defendant in any action brought for the misappropriation of a trade secret, the provisions of the state’s Tort Claims Act supersede any conflicting provisions of the bill. So the very short deadlines for providing notice of a claim against a governmental entity would apply to this cause of action. Additionally, an amendment to the bill removes the presumption in favor of granting protective orders in connection with discovery proceedings pursuant to section 4:10-3(g).

The passage of this bill would be significant for New Jersey businesses because it would provide both legal relief if there is actual misappropriation of trade secrets and also injunctive relief if one believes there might be an actual or potential misappropriation. Of course, this law has not yet been passed, and even if it is (as is expected), it would be wise for businesses to still consider whether to include language in service and employment agreements that account for how trade secrets and similar confidential information is handled.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

May a ticket broker be sued for selling event tickets that it does not actually possess?

The Chancery Division of the New Jersey Superior Court in Essex County recently decided that ticket brokers who offer event tickets for sale without actually possessing those tickets are “service providers” entitled to immunity under the Communications Decency Act of 1996 (“CDA”).  Milgram v. Orbitz Worldwide, Inc., No. 09-4-9349 (Judge Costello, August 26, 2010).

Anne Milgram, New Jersey’s Attorney General, sued Orbitz and its ticket-broker affiliates for violation of New Jersey’s Consumer Fraud Act (“CFA”).  The grounds for that suit were two-fold.  First, Milgram alleged Orbitz was offering to sell tickets to attend a concert at Giants Stadium featuring Bruce Springsteen and the E Street Band without actually possessing those tickets.  Second, at least two of the tickets had section and row numbers that did not exist. Milgram alleged violations of the CFA and advertising regulations created pursuant to the CFA.

Orbitz argued that it was merely a “service provider” entitled to protection under the immunity provision of §230 of the CDA.  In other words, Orbitz was taking the position that the lawsuit for alleged violation the CFA was pre-empted by the immunity provision of the CDA.  The immunity provision grants immunity to service providers for posting information originating with a third-party user of its service.  Orbitz argued that the descriptions of the offered tickets were created by third-party sellers, not Orbitz.  Thus, Orbitz was simply a service provider entitled to immunity under the CDA.

The Court agreed with Orbitz and held that it was immune from suit pursuant to §230 of the CDA.  The Court noted that qualifying for immunity under the CDA requires three elements: 1) the entity seeking immunity must be a “provider or user of an interactive computer service;” 2) the alleged liability must be based on the entity having acted as a “publisher or speaker;” and 3) the entity may only claim immunity with regard to “information provided by another information content provider.”  Id.

The Court held that Orbitz satisfied all three elements.  First, there was no issue that it qualified as a “provider of an interactive computer service” as defined by the CDA.  Second, Orbitz acted as a “publisher or speaker.”  Per the Court, the plain language of §230 was designed to promote e-commerce and prevent lawsuits from shutting down websites.  Orbitz’ conduct in advertising and selling concert tickets to consumers without actually possessing those tickets is conduct that “fits squarely within the CDA’s purview.”  Id.  Third, Orbitz was not an “information content provider” under the CDA.  While such a designation would have been fatal to Orbitz’ immunity claim, the Court determined that Orbitz actions were “nothing more than the exercise of a publisher’s traditional editorial functions.”  Id.  Orbitz was not responsible for creating the inaccurate or misleading ticket listings as the information originated with the third-party sellers using Orbitz’ website.  Thus, the Court held that Orbitz was entitled to immunity under the CDA as “a provider of interactive computer service that served as a conduit for information provided by another information content provider.”  Id.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Can an employer legally check an employee’s password-protected social networking site?

In a recent decision, a Federal District Court for the District of  New Jersey upheld a jury’s verdict that a chain restaurant violated the Federal Stored Communications Act and a similar New Jersey law by knowingly and intentionally accessing its employees’ private chat group on MySpace.com.

The managers of Houston’s Restaurant learned of the chat group from employee Karen St. Jean and gained access to it using her password.  As a result, several employees lost their jobs based upon comments made about Houston’s on the site. 

Those employees sued Houston’s and a jury trial was held.  The jury decided the managers’ access to the site was unauthorized after hearing testimony from St. Jean that she felt pressured to provide her password to her managers.  In addition, the jury decided that the managers knew St. Jean felt pressured to provide her password.  As a result, the jury rejected Houston’s argument that its managers genuinely believed they had authority to access the chat group.  The fact that the managers accessed the site on five separate occasions was sufficient to establish that they knowingly and intentionally accessed the site without authorization.  In fact, the jury determined that the managers’ actions were so malicious as to justify an award of punitive damages in addition to compensatory damages.  Pietrylo v. Hillstone Restaurant Group, No. 06-5754, 2009 WL 3128420 (D.N.J. 2009).

This case illustrates the importance of creating a clear policy regarding an employee’s use of social networking sites, especially when comments about that person’s employer may be contained on the site.

When is a billboard too racy?

A billboard in Atlantic City, New Jersey has recently garnered national attention.  The billboard for “Moonshine Follies”, a show running at the Resorts Casino Hotel (“Resorts”) from February 20th to April 17th, pictures a woman’s bare bottom as part of the advertisement.   NJ Transit owns the land on which the billboard is situated and received several complaints about the explicit nature of the advertisement.

NJ Transit informed Resorts that it wanted it to take down the billboard.  Resorts then filed a lawsuit seeking an injunction to keep the billboard up.  Judge Nelson C. Johnson of the Superior Court of New Jersey, Atlantic County, preliminarily ruled that the billboard would stay up until he could convene a March 10th hearing to determine its fate.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Does a person have to show that his reputation was harmed to bring a lawsuit for per se online libel or slander?

The NJ Supreme Court is currently considering an appeal that may determine once and for all whether a person can proceed with an online per se libel suit even though there is no evidence that his reputation has been actually harmed.

In W.J.A. v. D.A., 416 N.J. Super. 380 (App. Div. 2010), the nephew created a website in which he posted allegations that his uncle had molested him years ago. The uncle then sued his nephew for defamation.

Defamation is when the defendant communicates to another person a false statement about the plaintiff that harms the plaintiff’s reputation in the eyes of the community or causes others to avoid him. There are two types of defamation, libel which is when the false statement is written or printed and slander which is when the false statement is spoken.

New Jersey law provides that someone suing for defamation must show actual damages. However, there is an exception to that requirement in which damages will be presumed. It is called “per se” slander or libel. The usual examples are set out in the standard New Jersey jury charges:

  • The statement charges someone with the commission of a crime. 
  • The statement accuses someone of having an offensive or loathsome disease that would tend to deprive the person of companionship. 
  • The statement concerns matters that are incompatible with business, trade, profession or office.
  • The statement charges serious sexual misconduct.

In this case, the Appellate Division of the Superior Court of New Jersey determined that per se defamation is not limited to the spoken word (slander), but also applies to the written word (libel). The Court reasoned that:

“[F]or purposes of summary judgment, no one disputed that the defamatory statements attributed to defendant were defamatory. Thus, dismissal of the action at that stage-merely because plaintiff presented no proof of actual damage – provides defendant with a license to defame. If there has been a wrong, there should be a remedy, and the time-honored approach of allowing such a case to be decided by a jury, which may then assess a proper amount of damages based upon their experience and common sense, does not offend us.”

W.J.A. v. D.A., 416 N.J. Super. At 606-607 (App. Div. 2010)

The opinion is also notable because it clarifies that a defamatory Internet posting is libel, not slander.

This case is now on appeal to the NJ Supreme Court, which should issue its ruling sometime this term.

Download W.J.A. v D.A., 416 N.J. Super. 380 (App. Div. 2010)

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC