Criminal

UPDATE: Home Remedies Remain Best Medicine for Politically Charged IP Theft

In July 2018, a federal judge in Wisconsin imposed a $1.5 million penaltythe maximum statutory fine—against Chinese wind turbine manufacturer, Sinovel Wind Group Co. Ltd., for stealing trade secrets from Massachusetts-based technology company, AMSC Inc. In addition to the fine, Sinovel was sentenced to 1 year probation and ordered to pay $57.5 million in restitution to AMSC, an amount the companies had settled on prior to the ruling. Sinovel also agreed to pay $850,000 to Massachusetts wind turbine operators. READ MORE

Constitutional Challenge to CFAA Survives Motion to Dismiss as D.C. Court Weighs in on Circuit Split

On March 30, 2018, in Sandvig v. Sessions, the U.S. District Court for the District of Columbia allowed one of several constitutional challenges to the Computer Fraud and Abuse Act to survive a motion to dismiss.  In doing so, the district court highlighted and analyzed the split between circuits in interpreting the “exceeds authorization” provision and joined the Second, Fourth, and Ninth Circuits in finding that exceeding authorization means exceeding authorized access and not merely authorized use. READ MORE

To Be Or Not To Be: NY High Court Rules that Data Copied to a Server is a Tangible Reproduction under the New York Penal Code

On May 3, 2018, the New York Court of Appeals held that data copied onto a server constitutes a tangible reproduction for purposes of liability under the New York Penal Code, marking the end of Sergey Aleynikov’s nine year battle with federal and state prosecutors.  Trade Secrets Watch has kept you up to date with the seemingly never-ending saga – most recently here, here, and here.

As a refresher, Programmer Sergey Aleynikov was accused of copying thousands of lines of code from his former employer, Goldman Sachs Group Inc. in July 2009.  The Second Circuit upheld Aleynikov’s conviction under the National Stolen Property Act (NSPA) and the Economic Espionage Act (EEA), but later prompted legislative changes when it reversed, finding that Aleynikov had not stolen a “good” as defined by the NSPA, nor a trade secret intended for use in interstate or international commerce, as required by the EEA. READ MORE

Seedy Business: Chinese Scientist Sentenced to Ten Years for Stealing Proprietary Rice Seeds

In 2013, U.S. Customs and Border Protection agents caught researchers attempting to smuggle a $75 million trade secret from the United States to China.  Unlike the trade secrets we usually discuss, the trade secrets in tow were rice seeds.  But not just any rice seeds:  these valuable seeds were genetically modified to create proteins used to treat gastrointestinal disease, antibiotic-associated diarrhea, hepatic disease, osteoporosis and inflammatory bowel disease.  READ MORE

Home Remedies for Politically Charged IP Theft

In January of this year, Chinese wind turbine manufacturer Sinovel Wind Group Co. Ltd. was convicted of stealing trade secrets from U.S. company AMSC Inc. The theft caused AMSC, more than $800 million in losses and forced the company to lay off more than half its global work force. Sinovel’s sentencing—which could include fines exceeding $1 billion and a multiyear probationary period—is scheduled for June 2018. READ MORE

David Nosal Raises Unusual Fairness Argument in Yet Another Attempt to Avoid 366-Day Prison Sentence

Just over four years ago, in January 2014, a court sentenced former Korn/Ferry regional director David Nosal to one year and one day in prison for violations of the federal Computer Fraud and Abuse Act and the Espionage Act.  Nosal appealed the sentence, but his appeals ultimately failed: the U.S. Court of Appeals for the Ninth Circuit upheld Nosal’s sentence, and the U.S. Supreme Court denied review of the case.  Luckily for Nosal, his 2014 motion for release pending appeal was granted, so he has not served any time during the four years of appeals. READ MORE

Nosal Reply Brief Sets Stage for SCOTUS Cert Decision

The U.S. Supreme Court, which just began a new term on Monday with a full complement of nine justices, is expected to soon decide whether it will hear the appeal of David Nosal, the former Korn Ferry executive whose conviction under the Computer Fraud and Abuse Act was upheld in a controversial and closely-watched Ninth Circuit decision last year.  Nosal submitted his reply brief in support of certiorari on September 19, 2017, responding to the Department of Justice’s opposition submitted two weeks earlier.

READ MORE

Accounts Frozen: DOJ Alleges Seven Defendants Conspired To Misappropriate Trade Secrets

Competition from Chinese companies shows no signs of slowing. Likewise, allegations of trade secret theft against Chinese companies are increasingly common. In this case, the U.S. Department of Justice linked allegations of trade secret theft with wire transfers from a Chinese company in order to freeze bank accounts and real property held by several defendants charged with conspiracy to steal trade secrets. READ MORE

ECONOMIC ESPIONAGE AND PROTECTING TRADE SECRETS: Ninth Circuit Holds That Reasonable Measures to Guard Technology are Sufficient

How can you protect your trade secrets from a vast and well-concealed international effort to steal those secrets? What constitutes a “reasonable” effort to protect that information where at least one competitor may already have the information?  The Ninth Circuit recently opined on these matters in the ongoing saga of U.S. v. Liew.

In 2014, Walter Liew and his company, USA Performance Technology, Inc., were convicted of multiple offenses, including claims under the Economic Espionage Act and conveying misappropriated trade secrets to a third party. The trade secrets related to DuPont’s technology for producing titanium dioxide, which is used in a wide range of products such as paint and Oreo cookies. READ MORE

The Saga Continues: New York’s Highest Court Will Weigh in on Aleynikov’s Fate

On April 20, 2017, the New York Court of Appeals issued a brief order continuing former Goldman Sachs programmer Sergey Aleynikov’s eight-year voyage through the state’s and country’s legal systems.  Here’s the issue:  does making a digital copy of misappropriated source code instead of physical copy constitute a “tangible reproduction or representation” of the source code?   READ MORE