Practical Tips

Ninth Circuit Upholds $5K Sanctions Award Against Attorney Based on Factual Misrepresentations in Trade Secrets Dispute

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Earlier this week, the Ninth Circuit approved a district court order from the Northern District of California imposing $5,000 in sanctions against a plaintiff’s attorney for factual misrepresentations made in an underlying trade secret case lawsuit brought by a toy inventor.

According to the complaint, California toy designer Jason Heller wanted to get a price quote for a prototype of a robotic hamster toy he had designed.  He entered into NDAs with two Hong Kong toy companies and handed over information about his hamster toy idea.  READ MORE →

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

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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 →

Perquisition Privée: France Ahead of U.S. in Allowing Trade Secret Owners to Seize Property from Suspected Thieves

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Can trade secret owners secretly petition a court to seize property from a competitor that they suspect of stealing trade secrets? In the United States, the answer is: “Not yet.” This is one of the issues that Congress is considering as it debates a myriad of proposed trade secret reform bills. But in France, ex parte seizure orders have been available for some time and can be a powerful tool for trade secret owners to preserve the status quo and prove a case of trade secret misappropriation.

In France, companies that suspect a competitor has stolen its trade secrets can bring an action for unfair competition before the “Tribunal de Commerce,” or Commercial Court. In these types of cases, trade secret owners can allege that their competitors are unfairly benefitting from the plaintiff’s research and development efforts. Although discovery in France is limited, Article 145 of the French Code of Civil Procedure can help plaintiffs obtain the necessary evidence through a pretrial investigative measure known as a “référé in futurum.” 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 →

It’s Not Just for Patents Anymore: Using the ITC to Combat Theft of Trade Secrets

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Trade secret theft knows no borders in an age of cybertheft and global corporate espionage.  But U.S. district courts are often too slow and procedurally ill-equipped to help in cases of international misappropriation, with several recent cases never getting off the ground because of problems serving foreign defendants.  Increasingly, victims of foreign misappropriation are turning to the U.S. International Trade Commission — a body armed to hit back at trade secret thieves anywhere in the world.

For companies seeking to remedy the theft of trade secrets by overseas perpetrators, the options have been limited, especially if the thief or the products the thief produces are outside of the United States.  Procedural hurdles like obtaining jurisdiction over a foreign company, or the perpetrator’s resident country being inhospitable to claims by an American victim, can thwart an American corporation’s ability to prosecute the foreign theft of its own trade secrets.

An ITC action doesn’t present these obstacles.  READ MORE →

I Thought We Broke Up Years Ago! Why You Should “Throw Out” Trade Secrets as Soon as a Business Relationship Ends

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The Fifth Circuit’s affirmance last week of a $44.4 million trade secrets award in the Wellogix v. Accenture case is a weighty reminder of the power of circumstantial evidence in trade secrets cases, and the importance of getting rid of your collaborator’s trade secrets after a co-development or joint venture project ends.

Although the oil and gas industry spends billions of dollars a year to construct oil wells, oil companies apparently clung to their practice of using paper records to track project costs.  Wellogix tried to modernize this practice by developing a computerized system for planning, procuring, and paying for “complex services” involved in such projects.  But it still needed others to perform accounting and marketing services, so it collaborated with two other companies: SAP and Accenture.

As with the most successful relationships, Wellogix remembered to READ MORE →