Criminal

Trade Secrets Watch 2013 Year-in-Review

It’s been a hot year in the trade secrets field, with some huge verdicts and settlements, a renewed spotlight on cyberattacks, and an unusual flurry of trade secrets legislation.  Trade Secrets Watch’s 2013 Year-in-Review highlights the notable trade secrets activity from the past year. READ MORE

The “I Was Just Trying to Land a New Job” Defense to Criminal Trade Secret Theft Charges

On February 28, 2008, Hanjuan Jin, a Chinese-born former software engineer for Motorola, arrived at Chicago O’Hare Airport en route to Beijing.  During a random customs check, officials discovered that she had a one-way ticket to China, $31,252 in cash, thousands of confidential documents regarding Motorola’s iDEN cell phone technology, and ties to the Chinese military.  Her excuse for travelling with thousands of confidential and proprietary Motorola documents in her suitcase?  Jin said that she planned to refresh her knowledge of the work she had done over the past years with Motorola, “so that I can prepare myself for further career going [sic].” READ MORE

The Role of Alleged Trade Secret Forensic Evidence in the Amanda Knox Murder Case

Last week, Sen. Maria Cantwell and Rep. Adam Smith, both Washington Democrats, convened a Congressional briefing to discuss the ongoing murder case against Amanda Knox, the 26-year-old University of Washington foreign exchange student who was convicted in Italy of brutally murdering her 21-year-old British roommate, Meredith Kercher. The highly publicized and polarizing story of Kercher’s gruesome murder is stomach-churning and heartbreaking, especially for trade secret lawyers who are more accustomed to discussing source code and customer lists. Yet there is a trade secret component to this case. Boise State University, the employer of one of Knox’s consulting technical experts, is holding back relevant DNA analysis research on the grounds that it is a trade secret. READ MORE

GIVE AND TAKE: Lofgren’s Twin Trade Secret Bills Would Curtail Actions Under One Law, Expand Them Under Another

When Rep. Zoe Lofgren, the Silicon Valley Democrat, introduced a pair of bills last month on trade secret misappropriation, we puzzled over her purpose.  Was this a response to the White House’s call for improved federal legislation to protect U.S. trade secrets?  Did the measures mark the start of a comprehensive federal civil “Trade Secrets Act” that would put trade secrets on par with other federally protected intellectual property such as patents, trademarks, and copyrights?

Trade Secrets Watch decided to investigate and tapped our congressional sources for the back story.  Turns out our musings were wrong.

First, a quick backgrounder on federal trade secret protection (and lack thereof): The federal government has declined to go all-in on protecting U.S. trade secrets, leaving this area primarily governed by state law.  When it comes to trade secrets, federal law consists of a patchwork of acts that leave yawning gaps in legal protection.  For example, the federal Economic Espionage Act, known as the EEA, prohibits trade secret theft but is solely a criminal law — it doesn’t provide for a federal civil cause of action (i.e., a right allowing private parties to sue).  And the Computer Fraud and Abuse Act, known as the CFAA, only covers certain types of thefts involving unauthorized access to computers.  It provides for criminal prosecution and grants a victimized company the right to sue.  But in a case last year (United States v. Nosal), the Ninth Circuit U.S. Court of Appeals interpreted the CFAA narrowly, finding that it was primarily intended to curtail hacking and that it does not bar employees from stealing trade secrets from their employers’ computers in more run-of-the-mill cases of trade secret theft.  READ MORE

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

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

New Trade Secret Legislation in France? Mais oui bien sûr!

If your trade secrets get stolen in France, what protections would you have?  Most U.S. trade secret lawyers don’t have occasion to consider trade secret laws outside the United States, but there’s a whole world beyond the Uniform Trade Secrets Act!  Other countries also recognize the value of trade secrets and have taken steps to protect them.

For the first time in France, the National Assembly adopted a bill aimed at criminal sanctions for trade secret disclosure.  This bill, called the “Proposition de loi visant à sanctionner la violation du secret des affaires,” recognizes that the financial value of a company depends more and more on ideas, know-how, and trade secrets that give companies an edge over their competitors.  The bill imposes penalties of up to three years’ imprisonment, individual fines of up to €375,000 and corporate fines up to €1.875 million for the disclosure of trade secrets.  These penalties aren’t as stiff as the U.S.’s Economic Espionage Act, which was recently amended to increase individual fines up to USD $5 million and corporate fines up to USD $10 million or three times the value of the stolen trade secret to the organization READ MORE