Trade Secrets

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

Campaigning for Protection of Political Trade Secrets

As widely reported, on April 20, the Democratic National Committee (“DNC”) kicked off a twelve count lawsuit against a number of entities and individuals, including the Russian Federation, General Staff of the Armed Forces of the Russian Federation (“GRU”), WikiLeaks, Julian Assange, Donald J. Trump, Jr., and other political foes.  Amongst the wide swath of allegations, which include everything from computer fraud to RICO conspiracy, are allegations that the defendants misappropriated trade secrets in violation of both the DTSA and the Washington D.C. Uniform Trade Secrets Act. READ MORE

California Supreme Court Will Hear Arguments This Week in Defamation Case With Implications for Online Publishers, Trade Secrets Owners

On Tuesday, April 3, the California Supreme Court will hear arguments in Hassel v. Bird.  Case No. S235968.  While seemingly a defamation case, it has direct implications on trade secrets owners and the rights of internet publishers.

In that case, a lawyer, Dawn Hassell, sued her former client, Ava Bird, for defamation in California state court because of a negative Yelp review.  247 Cal. App. 4th 1336 (2016).  Bird never responded to the lawsuit, so the trial court entered a default judgment in Hassell’s favor. The court ordered Bird and Yelp to remove her the reviews, even though Yelp was not a party to the lawsuit.  Yelp appealed on numerous grounds, including that (1) the court denied Yelp due process because Yelp wasn’t a party; (2) the order was an improper prior restraint; and (3) Yelp had immunity under the Communications Decency Act.  The court of appeal rejected all of these arguments.

This fight between the rights of internet publishers and those allegedly aggrieved by third parties who post information or statements on the publishers’ websites is an ongoing battle.  While often fought in the defamation space, many of these disputes involve trade secrets owners who claim others, including former employees, posted trade secrets on an internet publisher’s site.  See, e.g., Glassdoor, Inc. v. Superior Court, 9 Cal. App. 5th 623 (2017).  The Hassell case will have direct impact on this ongoing battle.  If upheld, it will create a potential roadmap for trade secrets owners to take down offending content published on the internet.  For the internet publishers, it creates a serious headache because it allows plaintiffs to sidestep the publisher’s right to defend against an injunction.

Trade Secrets Watch will monitor the oral argument and report back.

That’s a Cut: “Textbook Reparable Harm” was “Showstopper” to Video-Streamers’ Preliminary Injunction Request

The lawsuit between Swarmify and Cloudflare recently produced an Order in which U.S. District Court Judge William Alsup denied Swarmify’s motion for a preliminary injunction, and also offers a cautionary tale about what activities might result in bloggers being hauled into Court.

In 2016, Swarmify, a start-up focused on affordable video streaming, and Cloudflare, a corporation that uses a network of data centers for content delivery, entered into confidential negotiations regarding Cloudflare’s potential acquisition of Swarmify. During these discussions, Swarmify disclosed to Cloudflare some confidential information about the company’s proprietary streaming method, including a pending unpublished patent application, but notably did not disclose any computer code. While the discussions were ongoing, Cloudflare offered employment to Swarmify’s CEO and the senior developer of Swarmify’s proprietary streaming method.  Both individuals declined, and informed Cloudflare any movement on their part would have to come through Cloudflare’s acquisition of their company. The companies ended negotiations and parted ways, but not for long. READ MORE

Mine Your Own Business: Multinational Mining Company Seeks Protection of Alleged Trade Secrets During Discovery

Last week, multinational mining giant Rio Tinto asked a federal court in Manhattan to shield its document disclosures to the Securities and Exchange Commission (SEC) from the public eye. Unlike the typical cases we discuss involving former employees working for competitors, Rio Tinto is defending against fraud claims brought by the SEC that implicated the company and two of its former top executives. READ MORE

Automation of Our Auto Nation: New Tech Requires a New Look at Trade Secret Laws

Self-driving cars—once a thing of the future—are now becoming a reality. And, as with any new technology, there is a learning curve. Once consumers are able to test out new products, they adapt, preferences change, and what once seemed absurd or over-the-top becomes commonplace. Manufacturers then face perhaps an even steeper learning curve, trying to stay one step ahead of what the public will demand—and two steps ahead of the competition. READ MORE

THANKSGIVING EDITION: Looking Back at Turkey Trade Secrets in the US and Understanding Employer Remedies in the UK

As our United States readers prepare for the holiday weekend, we look back to a post from the archives where we dished about franchise relationships gone awry and a trade secrets dispute over turkey sandwiches.  The takeaway:  Savvy franchisors should consider revisiting their agreements with an eye toward gaining admissions from franchisees that certain materials constitute trade secrets.

And while our readers in the rest of the world wrap up the work week, companies in the United Kingdom may have a reason to be thankful.  As our colleagues over at the Employment Law and Litigation blog discuss, a recent High Court decision granted an order allowing an employer to image a departing employee’s computer to see if it contained confidential information.

This post is a good read not only for those in the UK but for any company interested in protecting its trade secrets and confidential information.  For example, the post includes this tip, which has fairly broad impact:  You will be more likely to persuade a court to rule in your favor if you offer limitations and controls in the carrying out of a forensic search of a computer or other device.

Trade Secret Misappropriation by Ex-Employees in China: How to Confront “Inside Theft”

Article 123 of the General Provisions of the Civil Law of the People’s Republic of China (effective Oct. 1, 2017) confirmed that trade secrets are intellectual property, signifying China’s recognition of the importance of trade secret protection.  Nevertheless, trade secret misappropriation remains rampant in the country.  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

EU Study: Trade Secrets Top Patents in European Union

Just as the U.S. Patent and Trademark Office has shown a keen interest in better understanding policy concerns and the needs of business stakeholders in the area of trade secrets (see our coverage of both USPTO symposia here and here) against the backdrop of a new federal law, the EU’s IP office is also stepping up its focus on trade secrets following the EU Trade Secrets Directive in 2016 (our coverage here).  READ MORE