Posts in Trade Secrets

CIPU Survey Finds Fractured Views Among IP Community Over Negative Impacts of Infringement

Today, the Center for Intellectual Property Understanding (CIPU) released the results of a survey on viewpoints within the intellectual property (IP) community about acceptable behaviors surrounding IP rights, as well as guiding IP principles for business and consumers. Responses from inventors, attorneys and consultants across the IP sector revealed a significant disparity in beliefs on how IP protections impact sharing and the effects of IP infringement, though most agreed that IP has positive economic impacts in general.

When Protecting Everything Means Protecting Nothing

Tightening your grip on a company’s trade secrets can actually lead to losing them. Stay with me here; this kind of excessive protection is more widespread than you might think, and most companies don’t appreciate the risks that they are taking by overdoing it. The first category is legal risk. Recall that courts require, as part of any case for misappropriation of trade secrets, that you prove you have taken “reasonable measures” to maintain control over the information. Because most trade secret loss happens through employees, you might assume that judges want you to have strong confidentiality agreements. And you would be right; in fact, if you don’t have them, you are statistically likely to lose. But here’s the hidden problem: if your employee non-disclosure agreements (NDAs) are too broad, courts could throw them out.

AI and Trade Secrets: A Winning Combination

Generative AI (“Gen AI”) is everywhere, with all sorts of promises about how it can help the world. Let’s say a company has created new confidential methods for cancer treatments, but they are not really effective. They ask a Gen AI to come up with a cure for cancer using these new methods.  The gen-AI (using the billions of words and images available to it beyond human comprehension) conceives of the cure, and it works, saving many lives. [Note: Generative AI (“Gen AI”) as used herein will refer to deep-learning models that can generate high-quality text, images or other content based on the billions of pieces of data they were trained on].

SCOTUS Declines Solving Circuit Split on Awarding Avoided Costs in Trade Secret Cases

On November 20, the U.S. Supreme Court denied a petition for writ of certiorari filed in Tata Consultancy Services Ltd. v. Epic Systems Corp. The denial leaves in place an appellate court decision awarding $280 million for unjust enrichment and punitive damages in a trade secret misappropriation case where the plaintiff suffered no economic harm and the defendant gained no actual benefit from the misappropriated information.

BTIG Trade Secret Suit Against StoneX Group Alleges More Than $1 Billion in Unjust Enrichment

On November 13, global investment banking firm BTIG filed a lawsuit  in California state court against rival company StoneX Group, alleging trade secret and breach of contract claims related to a StoneX’s recruitment of several key BTIG employees in order to gain access to valuable proprietary software code developed at BTIG. BTIG’s suit seeks disgorged profits of $200 million as well as remuneration for StoneX’s unjust enrichment, which BTIG estimates could reach over $1 billion.

Trade Secret Management and the Fear of Missing Something

As I was participating in a recent conference of trade secret nerds (yes, we often refer to ourselves that way), I found myself thinking about the Titanic. More specifically, about the legend of the missing binoculars. It seems that on that tragic night in 1912 the lookout was unable to find a pair of binoculars that he thought had been stowed in the crow’s nest. According to the story, they were in a locked box in the quarters of the former second officer, who had been transferred to another ship just before departure (lucky guy) and apparently took the key with him.

CIPU Report Identifies Key Criteria Driving Strong Entrepreneurship & Innovation Programs at U.S. Universities

The Center for Intellectual Property Understanding (CIPU) has released a report that gauges the level of intellectual property (IP) engagement at the largest U.S. university entrepreneurship and innovation (E&I) programs. The nonprofit organization found that E&I programs at U.S. universities are increasingly incorporating IP into students’ business education. The report’s goal was in part to evaluate whether the observed increase in entrepreneurship in the United States is improving engagement with or is a result of intellectual property. CIPU wrote, “understanding the level of IP engagement among students enrolled at these schools provides insight into ways to increase support for the nation’s would be entrepreneurs.”

How the American IDEA Act Will Help Small Business

Intellectual property (IP) theft has severe consequences for U.S. business, and many companies—particularly small businesses—can feel overwhelmed at the seemingly insurmountable task of stopping IP theft that occurs overseas. Introduced by Senators Tammy Baldwin (D-WI) and John Cornyn (R-TX) earlier this summer, the American IP Defense and Enforcement Advancement Act, or the “American IDEA Act,” promises to protect U.S. businesses against international IP theft. It is not to be confused with the Inventor Diversity for Economic Advancement (IDEA) Act, which aims to improve demographic data-gathering efforts at the U.S. Patent and Trademark Office (USPTO).

The New Challenge to Employee Confidentiality Agreements

Noncompete agreements have always been controversial to some extent. Employers like them because they avoid messy litigation over whether the employee has breached confidentiality; a noncompete eliminates the risk as a practical matter. But it is a blunt instrument, preventing fair as well as unfair competition…. In contrast, employee confidentiality agreements have almost universally been embraced by courts, even though they usually operate in perpetuity to restrain use or disclosure of information. This is mainly because even without a contract, the common law recognized a duty of confidentiality by all employees to respect the trust implied by having access to secrets.

Pink Letter Law: How Barbie Has Helped to Shape IP Law in the Courts

Last Saturday, my friends and I practically bounced our way to the movie theatre, joining throngs of pink-clad youngsters to watch the year’s biggest global blockbuster: ‘Barbie.’ Well, Barbie has done it all, honestly. She has not only achieved unparalleled success as a toy, with over a billion units sold worldwide, but now as a movie, amassing an impressive $365 million global opening. She has defied traditional stereotypes by promoting career-focus and self-sufficiency, challenged the motherhood-aspiration notion for young women, and inspired Greta Gerwig’s modern take on the iconic character. However, we often overlook the doll’s profound contributions to the evolution of intellectual property (IP) jurisprudence, from its genesis to its movie adaptation.

Let the Jury Decide: Lessons from Syntel v. Trizetto

You always remember your first jury trial. Mine happened almost 50 years ago, and I still vividly recall sitting with the partner to work on the “instructions” that the judge would be giving. He explained to me that the jury would be told what the statutes said (this was a contract case), and they would be responsible for deciding the facts that determined their verdict. As it turned out, we didn’t win, and that was the end of it. Although an appeal was possible, overturning a jury verdict is very hard to do. And that’s as it should be…. That’s why I was surprised to see the recent opinion in Syntel v. Trizetto.

FTC’s Khan Pressed by House GOP on Noncompete Proposal, Meta and Twitter Actions

The U.S. House of Representatives’ Committee on the Judiciary yesterday held a hearing featuring Federal Trade Commission (FTC) Chair Lina Khan, who has recently come under fire from the Republican-led House leadership. Judiciary Committee Chair Jim Jordan (R-OH) repeatedly grilled Khan about testimony from the independent assessor for Twitter, Ernst & Young, in the Commission’s recent investigation into the social media platform, which Jordan characterized as “targeted harrassment.”

C4IP Report Urges Pro-IP Rights Agenda to Counteract U.S. Innovation Stagnation

On July 11, the Council for Innovation Promotion (C4IP), released a policy report advocating for a pro-innovation legislative and administrative agenda to counteract a series of shocks to the U.S. patent system over the past two decades. This pro-innovation agenda has the direct support of several C4IP members who formerly held high-ranking government positions and are now calling on the federal government to correct several areas of patent law that have improperly tilted the playing field in favor of corporate infringers and foreign counterfeiters.

SCOTUS Says Retrials are Appropriate Remedy in Improper Venue Cases

The U.S. Supreme Court today delivered a ruling that flows from a trade secrets theft case, holding that “the Constitution permits the retrial of a defendant following a trial in an improper venue conducted before a jury drawn from the wrong district.” The underlying case involves a software engineer, Timothy Smith, who stole trade secrets from StrikeLines, a company that uses proprietary technology to identify private, artificial reefs that individuals construct to attract fish and then sells the coordinates. Smith, an avid fisherman, was angered by this approach as he felt StrikeLines was profiting off of the work of private citizens. He therefore figured out how to obtain StrikeLines’ data and announced on social media that he was willing to share it.

The Ethics of Using Generative Artificial Intelligence in the Practice of Law

The use of Artificial Intelligence (AI) has taken center stage in popular culture thanks to the significant advances of tools like ChatGPT. Of course, the use of these new, high-powered AI tools presents real issues for businesses of all types and all sizes. Notably, Samsung employees shared confidential information with ChatGPT while using the chatbot at work. Subsequently, Samsung decided to restrict the use of generative AI tools on company-owned devices and on any device with access to internal networks. Concerned about the loss of confidential information, Apple has likewise restricted employees from using ChatGPT and other external AI tools. The actual or potential loss of confidential information is a matter of critical importance to technology companies, but it also must be of the utmost concern for all attorneys who have an ethical obligation to keep client information confidential.