Posts Tagged: "Trade Secrets"

Employers often assume that they have the same weapons in their arsenal to prevent theft of virtual trade secrets as they have against other types of loss. As the prosecution of Sergey Aleynikov in Federal and New York courts showed, however, that simply isn’t true. Even though juries in both courts found him guilty of downloading confidential computer code from his employer, judges ultimately found that the laws under which he was prosecuted did not cover the acts he committed. A careful employer should therefore make sure it puts precautions in place that prevent theft of computer code, rather than relying on the threat of criminal prosecution.

Aleynikov was a computer programmer employed by Goldman Sachs to write high-frequency trading code. In 2009, he accepted a job offer to join a potential competitor, where he would create a new high-frequency trading platform from the ground up. Before he left Goldman, however, he sent portions of Goldman’s high frequency trading code to a German server for his own future use. After Goldman found out, it went to the FBI; Aleynikov was then arrested on a flight home from a visit to Chicago. With that arrest began his circuitous journey through the U.S. legal system, governed by two different sovereigns and under two different legal regimes.

Fears about trade secret trolls are based in mythology, not on fact. If those claiming federal trade secret legislation would lead to trade secret trolls actually understand trade secret law they simply couldn’t possibly come to a conclusion that there is any risk there will be a single trade secret troll, let alone some kind of zombie-like rise. Simply stated the fear is pure fiction. In addition to seeing absolutely no evidence of trade secret trolls on the State level, trade secrets require a relationship or some nexus between the parties to the dispute. You simply cannot commoditize trade secret litigation in the same way patent trolls can and do commoditize patent litigation.

The titans of the 19th Century made fortunes because they controlled access to the raw materials and infrastructure of commerce: steel, oil, lumber, railroads, canals, shipping. In contrast, the Third Industrial Revolution creates value not just from ideas that improve our ability to transform materials, but from information itself. This shift to intangible assets has been profound, but so swift that few have paid sufficient attention to the magnitude of the change. In the Information Age, your secrets – a new technology, a business plan, insights extracted from data analytics – define your competitive advantage. And because business is global, competition can emerge anywhere, anytime.

The definition of indigenous innovation is “enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies.” Those familiar with China’s joint venture rules for foreign businesses, which require them to transfer some patent licensing powers to Chinese companies in order to enter their market, are wary of statements like this that essentially support a siphoning of foreign intellectual property.

There was a lot of action on this in the last Congress. There is a group of law professors that have expressed some opposition to the proposal to add a civil remedy, in spite of widespread support among industry stakeholders. There was some controversy around some seizure provisions that were suggested in one version of the legislation. And I think those discussions will usefully inform what will be done in this Congress. But I believe there is a great deal of support for making that basic change to allow companies to have another—not a displacement, not preemptive of state law but an additional place to go to get the benefit of nationwide service of process and other special advantages of being in federal court.

House Judiciary Committee Chairman Bob Goodlatte (R-VA) will keep copyright high on the Judiciary Committee’s agenda in the 114th Congress. Given that Chairman Goodlatte has already held nearly twenty hearings as part of his copyright review, it is safe to say that the initial hearing stage of the review is coming to a close, although he is expected to hold several additional hearings early this year. The Copyright Office has recommended that Congress should consider providing new and more efficient processes to enable the resolution of small claims. Moreover, senior House Judiciary Committee staff has expressed support for a small copyright claims remedy.

It’s important, particularly for technology companies in fast moving industries, to keep their eyes focused on the future and competing in the marketplace rather than focused on the past and competing in the courtroom, other than in a small number of cases where that focus really is absolutely necessary… When we deal with nonpracticing entities in mediation, we have to take them seriously. They are the parties to the lawsuit. They operate the kinds of businesses that they operate. They take positions and have underlying interests that need to be acknowledged as real and sincere. And the parties opposing the nonpracticing entities have to deal with them straight up and sometimes make some difficult decisions as to whether to settle and how much money to pay.

Generally speaking, “intellectual property” is probably best thought of (at least form a conceptual standpoint) as creations of the mind that are given the legal rights often associated with real or personal property. The rights that are obtained by the creator are a function of statutory law (i.e., law created by the legislature). These statutes may be federal or state laws, or in some instance both federal and state law govern various aspect of a single type of intellectual property. The term intellectual property itself is now commonly used to refer to the bundle of rights conferred by each of the following fields of law: (1) patent law; (2) copyright law; (3) trade secret law; (4) the right of publicity; and (5) trademark and unfair competition law.