Posts Tagged: "Trade Secrets"

Court Throws Out Trade Secrets Lawsuit Filed Against IBM China

The U.S. District Court for the Southern District of New York last week dismissed a trade secrets lawsuit against International Business Machines Corp (IBM) and IBM China by Beijing Neu Cloud Oriental System Technology Co. The Chinese firm alleged that IBM stole trade secrets from its joint venture in order to sell IBM products to the Chinese market. IBM China and Beijing Teamsun Technology Co. originally formed Beijing Neu Cloud in 2014 as a joint venture to distribute IBM technology in China. But in a 2021 complaint, Beijing Neu Cloud alleged that IBM induced “Neu Cloud and its majority owner through later-breached contracts to expend resources and provide IBM with access to sensitive, confidential customer information, which IBM then secretly used to create competing ventures in China.”

Lessons from the Levandowski Case: Reimagining the Exit Interview as Risk Management

It was February 2017 when Waymo, Google’s self-driving car unit, sued Uber in what would become the biggest trade secret case of the century. Waymo alleged that its former manager, Anthony Levandowski, had organized a competing company while still at Waymo, and before leaving had downloaded 14,000 confidential documents. As it turned out, Uber had known about this when it agreed to pay $680 million for Levandowski’s brand new startup; and we’ve already looked at how the hubris of that hasty transaction provides lessons for hiring in new markets driven by emerging technology.

Understanding IP Matters: How Trade Secrets Foster Collaboration and Sharing

National Science Foundation research shows that many R&D-oriented companies believe that trade secrets are more important than patents and copyrights. How did this happen, and why are trade secrets growing in importance? Bruce Berman, host of the “Understanding IP Matters” podcast, sought out trade secrets expert Jim Pooley to find out why. Pooley is the world’s foremost expert on trade secrets, a mysterious area of the law that has been the focus of employer disputes. A successful Silicon Valley trial lawyer, Pooley served for five years as Deputy Director General of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland. His commentary pieces on the controversial COVID vaccine patent waiver and other topics have appeared in The Wall Street Journal and The Financial Times, and he is a regular contributor on IPWatchdog.

First Circuit Affirms Dismissal of Trade Secret Claims Under Forum Selection Clause But Allows Amended Claims Against U.S. Subsidiary

On September 2, the U.S. Court of Appeals for the First Circuit issued a decision in Amyndas Pharmaceuticals, S.A. v. Zealand Pharma AS affirming the District of Massachusetts’ decision to dismiss trade secret misappropriation claims between former drug development partners. However, the First Circuit found that the district court abused its discretion in denying Amyndas’ motion to file an amended complaint and vacated the dismissal of trade secret claims against Zealand’s U.S. subsidiary.

Third Circuit: Costs Avoided Due to Trade Secrets Misappropriation Can Be Basis for Damages Award

The U.S. Court of Appeals for the Third Circuit on Monday said in a precedential decision that Jiangsu Tie Mao Glass Co. Ltd. (TMG) should have shown up sooner in a trade secrets misappropriation lawsuit brought against it by PPG Industries if it wanted to have a chance at winning. But by failing to enter the litigation until after PPG asked the district court to enter default judgment and award damages for unjust enrichment, “its protestations were and are too little and much too late,” said the appellate court.

Understanding ‘NNN’ Agreements in China

An “NNN” agreement is short for Non-Disclosure/Non-Use/Non-Circumvention agreement, which means the information cannot be shared with anyone, it cannot be used in any way, and “behind-the-back” or design around tactics are forbidden. In recent years, signing NNN agreements has become widely adopted and is now the standard initial step in dealings with Chinese companies, particularly original equipment manufacturers (OEMs). An NNN Agreement is much more than just a Non-Disclosure Agreement (NDA). An NDA focuses narrowly on preventing secret information from being revealed to a third party or to the public, which is not sufficient for OEMs in China. In contrast, an NNN agreement not only contains confidentiality provisions, but also prevents misuse of confidential information.

The Artificial Distinction Between Trade Secrets and ‘Confidential Information’

One of the most frustrating questions I get from clients asks “what is the difference between ‘confidential’ and ‘proprietary’ information?” Or, “how do I help employees distinguish between either of those terms and real ‘trade secrets?’” Then there are people, including some judges, who trivialize the importance of some useful business information by saying it doesn’t “rise to the level of a trade secret.” That last one makes no sense these days, as we’ll see shortly. But first let’s identify the source of this nomenclature problem: it’s an outfit you’ve probably never heard of called the American Law Institute.

Big Awards Underscore Importance of Bolstering Your Company’s Trade Secrets Protocols

Corporate espionage is as old as the day is long. The modern digital world has made it easier than ever to gain access to sensitive “secret sauce”, such as software, customer and vendor lists, business methods, techniques, formulas and recipes. With a significant shift to a remote working environment and the relative ease of employee portability, protecting and defending confidential information and trade secrets must be at the top of the priority list for any organization. In May 2022, in Appian v. Pegasystems, a jury awarded likely the largest sum in the history of Virginia state court proceedings, finding that Pegasystems was liable for $2 billion-plus in damages to Appian for planting a corporate spy at Appian for over 10 years…. While the facts of the Appian case are not particularly unusual, the measure of damages is quite stunning.

Protecting AI-Generated Inventions as Trade Secrets Requires Protecting the Generative AI as Well

Editor’s Note: Dean A. Pelletier of Pelletier Law, LLC co-authored this article with Erik Weibust.

Legal, technology, business, and academic professionals currently are debating whether an invention autonomously generated by artificial intelligence (AI) should be patentable in the United States and elsewhere. Some proponents of patentability argue that if AI, by itself, is not recognized as an inventor, then AI owners will lack protection for AI-generated inventions and AI innovation, commercialization, and investment (collectively, AI innovation) will be inhibited as a result. Some of those proponents further argue that, without patent protection as an option, AI owners increasingly will opt for trade secret protection, which by design reduces public disclosure of corresponding inventions and, as such, still will inhibit AI innovation. Some opponents of patentability, on the other hand, argue that patenting AI-generated inventions will promote those inventions and discourage human-generated inventions, thereby reducing human innovation and ultimately competition, because patent ownership will become concentrated, or more concentrated, in fewer entities—in particular, large, well-funded entities.

‘Reasonable Efforts’ Require Care and Consistency

At this moment, there is a fellow riding a bus in London who will determine the fate of your secrets. To be more precise, he’s on the Clapham bus; but he has no name. In fact, he’s a fictional character originally imagined by 19th Century journalist Walter Bagehot, who thought that “public opinion” was best described as the “opinion of the bald-headed man at the back of the omnibus.” The idea was picked up by the English courts as a metaphor for the “reasonable person” standard that is applied in all sorts of cases, from criminal to personal injury to contract interpretation. It also has special application to trade secrets, which we’ll get to in a minute.

Using Trade Secret and Patent Protection in Tandem for Comprehensive IP Coverage

Your company (or your client) creates an innovative idea that is going to blow the market away. While still safeguarding your invention as a trade secret, you file a patent application with the United States Patent and Trademark Office (USPTO) and get the product ready for launch. After product development, a key designer leaves the company for a competitor. Not long after you issue a press release on your innovative product, that competitor launches a copycat product. Do you have to wait for the patent to (hopefully) issue prior to filing suit against the competitor? Or can you take immediate action on trade secret misappropriation grounds? Ultimately, it depends on where you file suit.

Government-Forced Technology Transfer Is Almost Always Wrong

What does the invasion of Ukraine have to do with COVID-19? Would you believe intellectual property is the link? Stay with me on this; it’s an interesting story. Recently, it was confirmed that the Main Intelligence Department of the Ministry of Defense of Ukraine – apparently with some help from volunteer hackers – managed to breach the network of Russia’s most guarded nuclear power facility and make off with extremely valuable trade secrets. The Beloyarsk Nuclear Power Plant contains the world’s only two operational “fast breeder” reactors. More than 20 countries, including the U.S., Japan and France, have been working for decades on this technology, which is supposed to be able to extract close to 100% of the energy from uranium, compared to about 1% for light water reactors. In other words, this is a process that can produce large amounts of energy while completely consuming the fuel and creating virtually no nuclear waste. Whoever is able to commercialize it will make a fortune. So far, no one has come close to the Russians.

(Not-So) Amicable Separations: Preventing, Investigating, and Responding to Trade Secret Misappropriation by Departing Employees

The end of even the best employer-employee relationship can be fraught with challenges, not the least of which is the possibility that the employee may — unintentionally or with malice — depart with valuable trade secrets, proprietary data, or sensitive information. To minimize the likelihood of such misappropriation, employers should establish, communicate, and follow clear policies and procedures at each stage in the hiring, employment, and separation process: When recruiting employees, at regular intervals during an individual’s employment, when the employment relationship is terminated, or if evidence of theft or misappropriation is uncovered during routine and follow-on investigations. Trade secrets are protected under the federal Defend Trade Secrets Act (DTSA), which defines a trade secret as business or technical information that derives value from not being generally known or readily accessible to the public through proper means and which the owner has taken reasonable measures to protect. Trade secrets are also covered by numerous state laws, the overwhelming majority of which have been based on the model Uniform Trade Secrets Act.

The SECRETS Act Adds a Critical New Defense Against IP Theft Threatening U.S. Tech Leadership

Intellectual property (IP) theft, especially of trade secrets, remains a significant threat to advanced U.S. industries, global competitiveness, and national security. It is foundational to the U.S. trade dispute with China, given state-sponsored efforts to steal as much American know-how as possible. Yet, instead of new laws and regulations, the United States has relied mainly on tariffs in an indirect effort to convince China to curb these illegal practices. That is, until now. As Congress and the Biden administration prepare to finalize competitiveness bills and set the country’s annual defense budget, they have an opportunity to advance another bill that will benefit American businesses and workers by combatting the Chinese threat to U.S. industries—the SECRETS Act, introduced last summer by Sens. John Cornyn (R-TX), Chris Coons (D-DE), and Todd Young (R-IN).

GIPC’s Tenth International IP Index: Reasons to Be Hopeful, But More Work to Do

The U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) today revealed its 2022 International IP Index, “Compete for Tomorrow,” which is now in its tenth edition. Last year, the report focused on the role of effective intellectual property (IP) frameworks in helping economies to combat and recover from the COVID-19 pandemic and identified several emerging economies that had made significant improvements. This year, the report analyzes ten years of data, which reveals that the global IP environment has steadily improved overall, including in the last two years of turmoil, and that emerging economies are particularly making a conscious decision to bolster their IP regimes.