Posts in Trade Secrets

Tesla recently filed two lawsuits for theft of trade secrets. In March, the auto maker sued several former employees and the two companies they joined, Zoox and Chinese EV automaker Xiaopeng. The trade secrets involved their driverless vehicle technology. Haliburton just sued a former employee for stealing information, getting a patent on it, and then trying to sell it back to Haliburton. Phillips is suing a former employee for stealing secrets that will give competitors a “decades long head start.” Waymo, Google’s self-driving car program, settled with Uber for theft of trade secrets. The settlement was reported by CNN Business to be a portion of Uber’s equity, estimated at $245 million. In In August, the United States Attorney’s Office (USAO) for the Northern District of California charged former Google employee Anthony Levandowski with 33 counts of theft and attempted theft of trade secrets from Google under 18 U.S.C. § 1832 of the Economic Espionage Act (EEA). These cases, and many more like them, involve employees leaving and taking trade secrets with them. Employees come and go, but they shouldn’t take your valuable secrets. You can stop them if you have systems in place, but you have only yourself to blame if you don’t.

This week in Other Barks & Bites: the Federal Circuit issued precedential decisions regarding secondary considerations of non-obviousness, limits to design patents and collateral estoppel of antitrust claims in patent cases; the CASE Act moved out of the House Judiciary Committee towards a floor vote; AIPLA reported increasing prices for trade secret and pharmaceutical patent lawsuits; the PTAB designated a pair of precedential decisions that limit IPR institutions; the DOJ identified two foreign nationals in GE Aviation trade secret case; LeBron James and Ohio State University lost their respective trademark bids; USPTO Director Iancu talked about balancing innovation and preventing hold-up in the SEP context; Google agreed to a $1 billion fine over European tax evasion; and the UKIPO reported lower patent application filing levels for 2018.

In August, the United States Attorney’s Office (USAO) for the Northern District of California charged a pioneer of self-driving car technology, Anthony Levandowski, with 33 counts of theft and attempted theft of trade secrets from Google under 18 U.S.C. § 1832 of the Economic Espionage Act (EEA). According to the indictment, Levandowski downloaded more than 14,000 files containing critical information about Google’s autonomous-vehicle research before leaving the company in 2016. The indictment alleged that Levandowski then made an unauthorized transfer of the files to his personal laptop. Some of the files that Levandowski allegedly took from Google included private schematics for proprietary circuit boards and designs for light sensor technology, known as Lidar, which are used in self-driving cars. Levandowski joined Uber in 2016 after leaving Google when Uber bought his new self-driving trucking start-up, “Otto.” Levandowski has repeatedly asserted that he never disclosed the download, nor made use of the information while he was at Uber.

This week in Other Barks & Bites: the PTAB institutes IPRs despite arguments that the Chinese government was an unnamed real party-in-interest; the Federal Circuit dismisses appeals of PTAB decisions denying institution on three IPRs; USPTO seeks public comments on examination guidance for artificial intelligence inventions, announces a public hearing on proposed trademark fee adjustments, and is facing backlash for seeking proof of citizenship for trademark applications; Tesla avoids a 10% tax on auto sales in China; the Department of Defense gets closer to establishing an IP protection team; former Google engineer Anthony Levandowski is charged with trade secret theft; trademark protection cases in Dubai have risen 63%; the Copyright Royalty Board announces an intent to audit Sirius XM Radio; and Amazon’s Audible faces copyright infringement suit over text captioning feature.

There is a lot of focus—and rightly so—on China’s stealing of U.S. intellectual property (IP). Recently, Trump economic adviser Larry Kudlow stated on CNBC’s Squawk Box that China has stolen at least $600 billion in American IP. Additionally, one in five North American-based corporations on the CNBC Global CFO Council said that Chinese companies have stolen their IP within the last year. In all, 7 of the 23 companies surveyed said that Chinese firms have stolen from them over the past decade. The annual cost to the U.S. economy for these actions is estimated to be greater than $600 billion. While this is a serious matter that must continue to be addressed, domestic theft of U.S. IP is just as bad if not worse. It is easy to point fingers at China, given their track record, but small U.S. companies and inventors are not having their dreams extinguished by the Chinese. They are being victimized by Silicon Valley’s big tech companies, which make billions of dollars using their stolen IP.

This week in Other Barks & Bites: The Federal Circuit has asked USPTO Director Andrei Iancu to brief the appellate court on deference that should be paid to precedential PTAB opinions; China announced that it will create a credit rating mechanism for patent agents; Russ Slifer Op-Ed revives 101 debate; the FCC will approve the proposed T-Mobile/Sprint merger; amicus briefs filed at the Supreme Court support the abrogation of state sovereign immunity against copyright claims; Nintendo ramps up copyright campaign against YouTube accounts using video game music; Guns N’ Roses settles trademark dispute over craft beer brand; and copyright troll entity Malibu Media faces investor lawsuit.

To the superstitious, July is often considered an unlucky month for weddings. In a nod to such lore, and to the leisurely and whimsical days of summer, this is a satirical “love” letter from a fictitious client to its fictitious outside intellectual property counsel, a domestic or foreign law firm. The firm has been providing IP representation to the client for quite some time. Unbeknownst to the firm, but acutely felt by the client, their relationship is on the rocks. In a final act of desperation, the client penned these words in hopes that the firm will move swiftly to help heal the brokenness.

Management of trade secrets is fraught with competing interests. There is the tradeoff between security and inconvenience—for example, the annoying wait for a special code to allow “two-factor identification” when you already have your password handy. There is trusting your employees while knowing they might leave to join a competitor. And there is the tension between corporate secrecy and the public interest, such as when the fire department insists on knowing what toxic chemicals are used in your facility. And now we have the cloud (like “internet,” its ubiquity merits lower case), which offers unparalleled convenience and flexibility to outsource corporate data management to others. But moving IT functions outside the enterprise creates new vulnerabilities for that data, which happens to be the fastest growing and most valuable category of commercial assets. So understanding this environment has to be a high priority for business managers.

Happy 4th! This week Barks & Bites comes early, starting with a bite: The Federal Circuit denies rehearing of Athena Diagnostics v. Mayo Collaborative Services, shattering the hopes of many amici and diagnostic companies; Huawei warns against politicization of IP law after the Trump Administration rolls back part of its ban against Huawei’s U.S. suppliers; Chinese President Xi Jinping talks IP theft compensation at G20 summit; USPTO announces new rule for attorneys representing foreign-domiciled trademark applicants and amends its software acquisition plan; the University of California earns a seventh patent covering CRISPR-Cas9 gene editing; Toshiba registers the UK’s first motion trademark; major U.S. tech firms plan to move production away from China; and Ed Sheeran’s copyright case is stayed until the “Stairway to Heaven” case is resolved at the Ninth Circuit.

This week in Other Barks & Bites: The Supreme Court today agreed to hear two trademark cases next term; Senators Thom Tillis and Chris Coons issue a statement regarding the recent round of patent eligibility hearings by the Senate Intellectual Property Subcommittee; four bills that would impact pharmaceutical patents and practices have passed out of the Senate Judiciary Committee; Huawei publicly calls out negative impact of Senator Marco Rubio’s legislative amendment preventing it from seeking U.S. patent infringement damages, one day after losing its trade secret case against CNEX Labs; Spotify settles a pair of major copyright suits targeting its music streaming service; Intel will reportedly auction thousands of IP assets related to wireless device technology; and revised data shows that U.S. GDP grew 3.1% during the first three months of 2019.

Coverage of the ongoing patent reform debate in the Senate Judiciary Committee by the popular press has been alarmist and largely incorrect. For example, even just yesterday—five days after the final hearing on patent eligibility reform concluded—the top story in Google’s patent alert results was “Corporations shouldn’t be able to patent your DNA,” which leads with the sentence, “The practice of patenting genes, once banned by the Supreme Court, may come back soon despite a measure of horror the very idea once inspired.” It would seem that those companies and entities that oppose reform to patent eligibility requirements are not going to meaningfully participate in the political process, and instead will wield their considerable PR machines in an effort to confuse, conflate and misdirect the public as part of their ongoing scheme to suppress innovation in America. Indeed, we know that the high-tech industry was invited to testify before the Senate Judiciary Committee, but refused, as Senator Thom Tillis (R-NC) explained at the second hearing. Why would the high-tech industry choose to ignore these Senate hearings, where many dozens of witnesses both for and against reform were invited to share their views?

This week in Other Barks & Bites: the Supreme Court’s decision in Return Mail prohibits the federal government from petitioning for America Invents Act (AIA) patent validity trials; the TERM Act is introduced into the House of Representatives to reduce patent evergreening; the leadership of the Senate IP Subcommittee calls for a restoration of America’s patent system before wrapping up its third patent eligibility hearing; Huawei asks Verizon to license more than 200 patents; the Ninth Circuit decides to rehear “Stairway to Heaven” copyright case en banc; Princeton University and Facebook are targeted with copyright and trade secret claims for scraping 3D image database; and the U.S. ban on supplying components to Huawei leads to decrease in Broadcom’s revenue.

IPWatchdog will host its first Annual Meeting and Conference from March 15-18, 2020. The event will take place at the Renaissance Dallas Richardson in Dallas, Texas. Registration will begin on Sunday, March 15, followed by an opening General Session, and then an Opening Reception. We will begin Monday, March 16 and Tuesday, March 17 with breakfast. Each morning will feature two General Sessions, followed by lunch, and then a series of breakout panels in the afternoon. A Networking Cocktail Reception will be held both Monday night and Tuesday night. We hope everyone will stay and celebrate St. Patrick’s Day with us on Tuesday evening, March 17. We will conclude with an ethics breakfast on Wednesday, March 18, which will provide two hours of ethics credit for those attorneys in attendance.

In late May, news reports surfaced regarding allegations of trade secret theft committed by Chinese telecom giant Huawei Technologies that had been made in an Eastern District of Texas case. The claims targeted an executive working for Huawei who is accused of participating in a scheme to misappropriate trade secrets from California-based semiconductor startup CNEX Labs. The recent filings mark a new turn in the case, which was originally filed in 2017 by Huawei when it accused CNEX of committing trade secret theft and poaching employees in an effort led by a former Huawei employee and CNEX co-founder. CNEX Labs might be a startup, but it has been attracting venture capital funding for its cloud software and solid-state drive controller products from major names in the tech industry, including Dell and Microsoft. While Huawei has made its own allegations against CNEX, news reports indicate that Huawei’s attempt to access a closely guarded research project by working through a Chinese university professor isn’t an isolated incident. In fact, such activities may be a major factor behind the company’s rapid rise in recent years.

After three hearings and 45 witnesses, there were few new fundamental arguments advanced for or against reforming patent eligibility law at today’s final Senate IP Subcommittee hearing on the topic, but several key—and some alarming—messages were underscored. A few takeaways off the bat: there are going to be considerable changes to the working draft. In particular, there were four issues that Senator Thom Tillis (R-NC) noted were raised repeatedly. First, both sides agreed the new proposed definition of “utility,” which requires “sufficient and practical utility in any field of technology through human intervention” needs to be further defined; those for reform felt that the language could be too narrowly interpreted, while those against feared it was not definite enough. “Clearly, those terms need better definition or more meat on the bones,” Tillis said. Secondly, everyone was concerned with Section 112(f). Tillis pointed to the practical argument made by inventor Paul Morinville about the impossibility of meeting that requirement in the context of software coding language, for example, while Tillis said the tech companies were afraid the language wasn’t strong enough to weed out overbroad software and business method claims that most agree should not be patent eligible.