Ex-Employee Misappropriation

FOURTH OF JULY EDITION [FROM THE ARCHIVES]: Family Fireworks: Plot to Steal Client Lists Goes Up in Smoke

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As Americans head for the beach or the barbecue to celebrate the Fourth of July (many with a bolstered sense of patriotism following the United States’ valiant World Cup efforts), Trade Secrets Watch marks this Independence Day by pulling an explosive story from its archives.

Pyro Spectaculars North, Inc. v. Souza is a case that’s full of fireworks—literal and figurative—as a family pyrotechnics business broke apart, with one member starting a rival company, apparently armed with a USB and a hard drive of purloined client lists and other company files. You can read our full post below the jump.

We wish all our readers and safe and happy holiday weekend. We’ll return to our regular blogging and tweeting schedules on Monday. READ MORE →

Plaintiff’s Trade Secret Lawsuit Backfires!

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We recently reported on good things (big verdicts) coming to trade secret plaintiffs that endure lengthy lawsuits.  But good things don’t always come to those who wait.  One trade secrets plaintiff received a starkly less favorable result after battling for ten years over misappropriation of its alleged trade secrets and related claims.  On June 18, Eaton Corporation and Triumph Group announced they settled their decade-long dispute arising from Eaton’s claims that its former employees stole trade secrets and used them at competitor Frisby Aerospace (later acquired by Triumph). Though the exact terms of the settlement are confidential, Eaton will reportedly pay about $135 million to Triumph and $12 million to be split among its former employees. READ MORE →

CAR JACKING: Former Nissan Employees in Japan Arrested for Suspected Trade Secret Theft

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On May 13, 2014, a former employee of Nissan in Japan was arrested by the Economic Affairs Division of the Kanagawa Prefectural Police on suspicion of trade secret theft.  The arrest was made under the trade secret provisions of Japan’s Unfair Competition Prevention Act (“UCPA”).

The former employee, identified as Kenichi Okamura, a Japanese national, worked at the Nissan Technical Center in Atsugi, Japan until he resigned in July 2013.  Before his resignation, he allegedly copied, on four different occasions, approximately five thousand electronic files pertaining to sales and marketing plans for Nissan’s popular “X-TRAIL” SUV.  He allegedly copied the files from Nissan servers to a private storage device that he took with him when he left the company.  READ MORE →

THINGS TO AVOID WHEN YOU LEAVE YOUR JOB: Using drone trade secrets to blackmail your former employer

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Trade secrets cases in the employment context usually provide valuable lessons on what not to do when leaving a job.  The recent conviction of Stephen Marty Ward by a Washington federal jury imparts one such lesson:  when you are terminated after working on a project for the Navy involving drones, don’t threaten to blackmail your former employer with trade secret disclosure.

Mr. Ward learned this lesson the hard way.  He worked as a contract employee for a Boeing subsidiary (Insitu, Inc. in Bingen, Washington) that contracted with the U.S. Navy to develop unmanned aircraft systems, or drones.  Mr. Ward worked as a technical writer preparing maintenance manuals for one of the drones. READ MORE →

RELEASED ON (VERY LITTLE) BOND: Suspect Accused of Preparing to Flee U.S. with Gore Trade Secrets is Released on Nominal Bond

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A federal magistrate judge has released on bond the accused trade-secrets larcenist and former W. L. Gore & Associates, Inc. employee Kwang Seoung Jeon, who was arrested as he allegedly tried to flee the United States for his home country of South Korea.

Jeon had notified the company—maker of Gore-Tex fabrics—that he was leaving the company to return to South Korea as a consultant after being told he would not receive a raise.  In a fact pattern becoming all too familiar in trade secrets theft prosecutions, Jeon then allegedly printed book-size documents from his work computer relating to the company’s camouflage technology, in violation of the Economic Espionage Act.  According to the criminal complaint, Jeon also attached three USB devices and two external hard drives to his work computer before leaving Gore, thereby accessing more than 800 company documents. READ MORE →

IN DA (TRADE SECRETS THEFT) CLUB: $15 Million Judgment Against Rapper 50 Cent

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The rapper known as “50 Cent” stole trade secrets to the tune of $15 million, an arbitrator found.

A filing in the U.S. District Court for the Southern District of Florida earlier this month disclosed the final award for theft of trade secrets relating to a headphone design from an audio company 50 Cent had helped finance.

While the decision grabbed mainstream news media headlines, the arbitrator’s legal findings are also newsworthy to the avid trade secrets practitioner:  The arbitrator relied on the inevitable disclosure doctrine and the similarity of products as evidence of liability. READ MORE →

Fourth Circuit Blows Away Nearly $1 Billion Kevlar Trade Secrets Award

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The Fourth Circuit has thrown out the second-largest trade secret jury verdict on record, an award of nearly $1 billion, on the grounds that the district court improperly excluded evidence relevant to the defense.

We have covered this case extensively, tracing its history of allegations of double agents, bribery, top-secret industrial facilities, and its (apparent) culmination with an enormous jury award.  Now, it seems, this epic legal saga will start anew.  On April 3,  the Fourth Circuit unanimously vacated the jury award and ordered a new trial. READ MORE →

Ex-SanDisk Employee Arrested in Japan, Civil Suits Filed in the Wake of Alleged Flash Memory Trade Secrets Misappropriation

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Technology firms SanDisk and Toshiba recently filed trade secrets lawsuits on opposite sides of the Pacific, each alleging misappropriation by a third party stemming from the two companies’ joint venture.

SanDisk filed in California (seeking damages and injunctive relief) and Toshiba in Japan for alleged misappropriation of trade secrets from SanDisk and a SanDisk-Toshiba joint venture. In Japan, the alleged perpetrator was arrested.  Engineer Yoshitaka Sugita, his former employer, SK Hynix, and two wholly-owned North American subsidiaries stand accused of misappropriation.  SK Hynix is accused in both the California and Japan actions. READ MORE →

CHRISTMAS EDITION: Trade Secrets Litigation Delayed to Save Christmas?

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On Christmas, Santa and his elves have their work cut out for them and sometimes even they can use help to get their jobs done.  During the holiday season, a variety of businesses assist Santa & Co. to import and distribute Christmas merchandise and other seasonal goods to retail stores in time for the holidays.  Unfortunately, those companies can be as susceptible to a trade secrets dispute as anyone else, and one year just such a dispute threatened to put a damper on Christmas. READ MORE →

Trade Secrets Watch 2013 Year-in-Review

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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 →