Posts by: Editorial Board

BILL BANDWAGON: Senators Draft Measure to Expand the Economic Espionage Act

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Yet another federal trade secrets bill may soon join the growing stack of legislation already under consideration in Congress.  This proposed bill would make modest changes to the Economic Espionage Act (“EEA”), which designates the theft of a trade secret a federal crime.

We emphasize that the “discussion draft” by Sens. Sheldon Whitehouse (D-R.I.) and Lindsey Graham (R-S.C.) is merely that—a draft bill that has not been introduced.  Still, the fact of the proposed bill, and the fact that the co-sponsors felt compelled to issue a press release about the measure while it is still on the drawing board, confirm that trade secret thieves (along with patent trolls) are the boogeymen du jour on Capitol Hill.

This proposed bill, if introduced and enacted, would incrementally extend the EEA’s application to foreign trade secret theft.  READ MORE →

This Day in Trade Secrets: “Sawing a Woman in Half” Trade Secret Protected by NY Appellate Court

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On this day in 1922, the New York appellate division granted magician Horace Goldin an injunction against Clarion Photoplays, Inc., preventing it from disclosing in a motion picture his trade secret for “Sawing a Woman in Half.”

The trial court record included an affidavit by Harry Houdini, who testified that this trick did indeed originate with Goldin:

shutterstock_84091750a“Harry Houdini, a producer of magical feats and illusions since 1882, and president of the Society of American Magicians and of the Magicians’ Club of London, states that, so far back as his memory and records go, he is positive that he never witnessed a production of the illusion ‘Sawing a Woman in Half’ by any one other than the plaintiff.”

The appellate court credited this and other affidavits, and rejected the defense that this trick actually originated in ancient Egypt: READ MORE →

The Short Arm of the Law: U.S. Problems Prosecuting Foreigners for Trade Secret Theft

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Revised post available here.

They say politics stops at the water’s edge. Increasingly, so does the power of the United States to thwart trade secret theft.

As the nation struggles to bolster its defenses against cyberattacks, recent cases have highlighted legal loopholes in prosecuting foreign-based companies and individuals for the theft of trade secrets. Defendants have grown adept at exploiting American procedural rules governing such things as service of process to stall prosecutions indefinitely.

Late last month, a federal grand jury in Wisconsin returned an indictment charging Sinovel Wind Group Co. and two of its executives with stealing trade secrets from American Superconductor Corp. (AMSC). Sinovel is China’s third-biggest maker of wind turbines, and until March 2011, AMSC supplied Sinovel with turbine-control software.

According to the indictment, Sinovel owed AMSC more than $100 million for delivered software, products, and services, and had contracted to buy another $700 million worth. But instead of paying its debts and making good on its orders, Sinovel and two of its executives plotted with a former AMSC employee to steal AMSC’s turbine-control source code and use it in Sinovel’s turbines. READ MORE →

Italian Renaissance: Birthplace of Invention Updates Its Trade Secrets Laws

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Italy, the country that enlightened the world with the Renaissance, has given us some of the greatest inventors and geniuses in history, from Leonardo da Vinci and Galieo Galilei to Georgio Armani.

But Italy is learning that a great invention is sometimes only as good as the trade secret laws that protect it.  Italy is modernizing its trade secret laws to bring them into greater conformity with international standards such as the TRIPS Agreement. A quick primer of Italy’s trade secret laws is available here.

White House Issues Another Strategy Plan to Protect U.S. Trade Secrets

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Last week, the White House unveiled its “2013 Intellectual Property Enforcement Coordinator Joint Strategic plan,” a roadmap to help the Department of Homeland Security combat intellectual property theft in the next three years.  This is the Administration’s second joint strategic plan on IP (its first plan issued in 2010), and its fourth statement this year on protecting U.S. trade secrets.

The latest plan reviews the progress made since 2010 and lays out 26 specific action items to strengthen IP protection, increase enforcement efforts, and encourage multi-national coordination.

The 88-page plan covers a lot of ground, taking on issues such as patent trolls and counterfeit drugs.  Trade Secrets Watch reviewed the plan’s implications for trade secret protection—especially in light of the White House’s recent efforts and requests for public comments earlier this year. READ MORE →

LEGISLATIVE UPDATE: Rep. Zoe Lofgren Proposes New Legislation, Including a Civil Cause of Action for Trade Secret Misappropriation

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We previously reported on the downpour of recent trade secret activity in Congress.  Last week, Congresswoman Zoe Lofgren (D-Cal.) added to the deluge by introducing two bills bearing on trade secret misappropriation: (1) the Private Right of Action Against Theft of Trade Secrets Act of 2013, a bill to amend the Economic Espionage Act to provide for a federal civil cause of action, and (2) Aaron’s Law Act of 2013, a bill to amend the Computer Fraud and Abuse Act in light of computer programmer Aaron Swartz’s suicide.

We’ve updated our primer on the recent trade secret-related legislation READ MORE →

Rubber Match? Resin Trade Secret Battle Results in a Multi-Jurisdictional Draw

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On the same day last week, two rival rubber resin companies issued press releases — each claiming legal victory in the same trade secret dispute.

SI Group, a developer of rubber resins and tackifiers, touted its “significant victory” over Sino Legend before the U.S. International Trade Commission.  On the same day, Sino Legend also claimed victory in a parallel Chinese action when the Shanghai No. 2 Intermediate People’s Court rejected SI’s claims concerning the same dispute.

SI ’s ITC complaint alleged that Sino Legend misappropriated SI’s secret manufacturing processes by poaching one of SI’s Shanghai-based employees, Xu Jie.  Xu was allegedly the only person at the plant who had access to the entirety of SI’s secret manufacturing processes.  Shortly after Xu’s departure from SI, Sino Legend began producing competing products.  SI accused Sino Legend of using SI’s secret processes and of filing patent applications that contained misappropriated Sino Legend information.

READ MORE →

[EVENT] It’s Not Just Boilerplate! Best Practices for Drafting Agreements to Protect Your Trade Secrets and Other IP

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Tuesday, July 2, 2013, 12 noon – 1 p.m.

Presented by the State Bar of California, Trade Secret Interest Group

You must register in advance in order to attend. This program will offer 1 hour participatory MCLE credit. This program will highlight best practices for exchanging information during a collaboration, and will include a discussion of pitfalls to avoid in drafting agreements, in particular:

  • Confidentiality / non-disclosure obligations and exceptions
  • IP ownership, inventorship, and improvements clauses
  • Scope of license and permitted uses of licensed technology
  • Restrictive Covenants

The program will also discuss best practices for addressing trade secrets in due diligence.

Moderated by: Robert Milligan, Chair, State Bar of California Intellectual Property Law Section Trade Secrets Interest Group, and partner in Seyfarth Shaw’s Los Angeles office

Panelists:

Mike Spillner is an intellectual property litigation partner in Orrick’s Silicon Valley office. He focuses on trade secret misappropriation and patent infringement disputes, and other complex commercial litigation.

Elizabeth Howard, an intellectual property partner in Orrick’s Silicon Valley office, co-chairs Orrick’s life sciences practice. Dr. Howard focuses on patent infringement litigation, with an emphasis on the life sciences. Her practice also includes trade secrets disputes and handling anti-counterfeiting matters in the pharmaceutical industry.

Angelique Kaounis is Of Counsel in the Los Angeles office of Gibson, Dunn & Crutcher where she practices in the Firm’s Litigation Department, with a focus on intellectual property and technology-related issues. Ms. Kaounis is a member of the Firm’s Antitrust and Trade Regulation, Media and Entertainment, and Intellectual Property Practice Groups.

Pols Gone Wild: Congress Discovers Trade Secret Theft and Cybersecurity are Problems; We Sort Through the Explosion of Legislation

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The revised post is available here.

Trade secret theft and cybersecurity are hot topics in Congress these days, spawning legislative initiatives left and right.  Amid this flurry of legislation, it’s hard to keep all the bills straight.  Trade Secrets Watch took a look at the legislation currently under review, and put together this primer:

Bill Sponsors What’s It About? Status
Cyber Economic Espionage Accountability Act Rep. Mike Rogers
(R-Mich.)Rep. Tim Ryan
(D-Ohio)
  • Introduced June 6, 2013, the bill broadly aims to secure the United States against cyber attacks sponsored by foreign governments.
  • The bill calls for the President to identify foreign government officials whom the President determines, “based on credible information,” are responsible for cyber theft of United States intellectual property.
  • The bill makes the identified persons ineligible to be admitted to the United States.
  • The bill directs the Secretary of State and Secretary of Homeland Security to revoke the visa of any such identified person.
  • The bill imposes financial sanctions, enabling the President to freeze property transactions by the identified individuals.
 Referred to the Foreign Affairs, Judiciary and Financial Services Committees.
Deter Cyber Theft Act Sen. Carl Levin
(D-Mich.)et al.
  • Introduced May 7, 2013, the bill would establish a “watch list” and “priority watch list” of countries that facilitate or engage in cyber theft of trade secrets from the United States.
  • As we previously reported, the bill would also require the President to direct U.S. Customs and Border Protection to bar imports from foreign countries on the watch list.
 Referred to the Committee on Finance.
Strengthening and Enhancing Cybersecurity by Using Research, Education, Information, and Technology Act (“SECURE IT”) Rep. Marsha Blackburn
(R-Tenn.)
  • Introduced April 10, 2013, SECURE IT seeks to, among other things, facilitate the sharing of cyber threat information and create new deterrents for cyber criminals.
  • For instance, the act creates a limited exemption from antitrust laws for the sharing of cyber threat information between private entities.  It further provides that an entity may disclose cyber threat information to any entity to assist with the investigation of threats to cybersecurity.  (This portion of the bill might face the same opposition as CISPA — see below.)
  • SECURE IT further requires that federal agencies be informed of significant cyber incidents involving their federal information systems and that agencies adopt technologies to detect and remediate cyber intrusions.
  • The bill aims to amend certain provisions of the Computer Fraud and Abuse Act to include new criminal penalties for “aggravated damage” to certain “critical infrastructure” computers, such as those that control water supplies, electrical power delivery, and financial transactions.
 Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations.
Cyber Intelligence Sharing and Protection Act (“CISPA”) Rep. Mike Rogers
(R-Mich.)et al.
  • First introduced in the House on November 30, 2011, and most recently re-introduced on February 13, 2013, the act aims to permit information sharing about possible cybersecurity threats among government agencies and private companies.
  • CISPA has divided the House and Senate and has faced opposition by privacy and civil liberties organizations.
 The bill passed the House and was referred to the Senate but has not shown signs of advancement.  We reported earlier that the Senate would not be taking up the bill and that President Obama threatened to veto the bill because of privacy concerns.

 

What trends can we discern from these bills?   READ MORE →

[EVENT] Battling IT Theft and Unfair Competition: Enforcers Use A New Approach

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Presented by the State Enforcement, Intellectual Property, International and Media & Technology Committees of the American Bar Association’s Section of Antitrust Law.

The California, Massachusetts and Washington AG offices recently announced innovative enforcement actions using their unfair competition statutes against manufacturers in Thailand, India and China who lowered their costs by using stolen technology and competed unfairly against law-abiding companies in their states. Other AG offices and the FTC have also expressed interest in this area. A panel of experts will discuss these cases and the growing trend to combat unfair competition from overseas manufacturers by discouraging the theft of US technology.

June 26, 2013
12:00pm – 1:30pm Eastern Time
3:00pm – 4:30pm Pacific Time

Click here to register.

All pertinent dial-in information will be provided in your confirmation.

Moderator
• Rob McKenna, Orrick, Former Attorney General of Washington & President of NAAG, Seattle, WA

Panelists
• Bill Kovacic, George Washington University Law School, Former Chairman of the Federal Trade Commission, Washington, DC
• Tiffany Adams, National Association of Manufacturers, Washington, DC
• Emilio Varanini, California Department of Justice, San Francisco, CA

READ MORE →