Posts Tagged: "Trade Secrets"

When one thinks of cybercrime, it can be easy to imagine a mysterious figure in a dimly lit room sending out various phishing emails to unsuspecting victims. However, this is not always the most dangerous tactic used by hackers, according to the United Kingdom (UK) Government Communications Headquarters’ (GCHQ’s) cybersecurity arm. On June 14, the UK National Cyber Security Centre claimed that ransomware represented the biggest threat to online security for most people and businesses, with the number of incidents soaring worldwide in the last two years. And it is a problem and a threat that we must all be wary of.

We’ve all seen him when driving by the strip mall. Trying to focus on the traffic, our eyes are diverted by “Tube Man,” a 10-foot tall hollow, collapsible stick figure with a fan at the bottom, adjusted so that the body repeatedly folds and then jumps upright, with arms whipping around in a constant frenzy, trying to grab our attention. And that’s the point. Tube Man accomplishes nothing except to demand that we look at what he’s doing…. And that, in my view, describes very well the recent rush of legislative attempts to punish China. That is not to say that China is our best friend. We are in serious competition, and it’s obvious that our leading position in some critical technologies has been targeted. That “giant sucking sound” you hear in the direction of China may be some cutting-edge secrets being displaced. We should be deeply concerned. We need a thoughtful, long-term strategy to respond.

All the fuss surrounding the proposal by India and South Africa to suspend the TRIPS Agreement to help them produce vaccines to fight COVID-19 has obscured some critical truths. In spite of the rallying cry “Patents versus People,” it’s not really about patents. And merely lifting TRIPS obligations will do nothing to address the current suffering of the world’s poorer populations. In fact, it would hamper efforts to secure global distribution of vaccines, as well as cause real harm in the long term.

“Need to know” is a bedrock tenet of information security. You only get to see it if you need to see it. The reasoning is that the fewer people who know the details, the lower the risk that information will be compromised by reaching the competition. Another term used among professionals is the “principle of least privilege,” borrowed from the notion in computer science that a user account should be given only that level of privilege that is absolutely necessary to its operation within the system, making failures less likely. By whatever name, the principle increases control by limiting access. The idea that any one person in an organization probably doesn’t need to know much is rooted in the industrial revolution. When we moved from the age of craftsmen who made an entire product to the assembly line, the worker mounting the wheel didn’t have to know anything about the rest of the car…. Keeping secrets has long been viewed through the same lens: compartmentalization helps keep things under control. But interestingly, it doesn’t always make things more efficient or productive.

In over 40 years of handling trade secret disputes, I have seen plenty of “successful” results, but never a time when my client said, “Gee that was fun; let’s do it again!” They may tell me they’re happy with the outcome, but hey, I know that it also feels good to stop hitting yourself with a hammer. It’s a fact that more than 90% of trade secret cases settle without a trial. But too often those settlements only happen after years of litigation. There are ways to make that process less painful, and in an earlier article we looked at the advantages and limitations of arbitration and private judging as means to recapture some amount of control over the dispute. But unless the parties already had an arbitration agreement before the problem arose, one of them will probably see an advantage to playing it out in court….This is precisely why that other form of alternative dispute resolution, mediation, is the perfect method for resolving trade secret disputes.

Fundamental to building and executing any successful patent licensing program is the ability to find and prove evidence of infringement, often through reverse engineering methods. A product is purchased and deconstructed to understand how it was built, how it works and what it is made of. The process of reverse engineering usually involves multiple types of analysis; which type of reverse engineering to apply is determined by the type of technology and the industry in which the patented invention is being used.   Intellectual property law does not discourage innovators from dismantling the inventions of their competitors, whether the technology is software, electronic, chemical, or mechanical. But there are still limits on how the results of a reverse engineering effort can be exploited.

On March 12, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed the Middle District of Florida’s decision directing the clerk to unseal the amended complaint of Plaintiff DePuy Synthes Products, Inc., DePuy Synthes Sales, Inc. (Collectively Depuy), deciding that the district court did not abuse its discretion in ensuring public access to court documents (Depuy v. Veterinary Orthopedic Implants). The CAFC agreed with the district court that VOI “did not establish that it took reasonable measures to protect the Manufacturer Identity.” VOI didn’t enter into an agreement to keep the relationship confidential, but the lack of express agreement is not dispositive of the issue. Where an express agreement doesn’t exist, there must be some other indicia that both parties wanted to maintain a confidential relationship.

A common refrain is that an invention is only as valuable as the patent that protects it. But what happens when you cannot secure the patent? This is a frequent hurdle for inventors seeking to patent products utilizing artificial intelligence (AI). While still in its infancy, at least compared to the lofty expectations of technology enthusiasts, AI has proven integral to driving innovation, but it has also proven equally vexing to fit into the intellectual property legal regime.

The managers of most companies tend to see information security as a Lord of the Rings problem, with the focus on protecting the perimeter. This reflects the popular view. Indeed, from reading headlines about hackers, you might think that cybercrime –malign attacks from evil outsiders – represents the most common way that commercial information is lost. And you would be wrong. It’s not the overlooked vulnerability in the company’s firewall that gets exploited by determined external enemies. Instead, it’s the careless employee who overshares on social media, brags at parties, or leaves a sensitive document in an airport lounge. (Remember traveling on planes?)

My head was turned by the recent news of President Trump’s final-day pardon of Anthony Levandowski, the former head of Google’s self-driving car unit who was recruited into Uber with full knowledge that he had downloaded 14,000 confidential files on his way out, and who was later convicted of trade secret theft. I was struck by the White House statement of justification. It said that Levandowski – who hadn’t yet served a day of his 18-month sentence – “has paid a significant price for his actions.” I have no doubt that Levandowski has “paid a significant price” for his misdeeds, but it caused me to think about the price paid by others who were involved in this fiasco of a hiring, most specifically Uber. Salacious stories like this one serve as a reminder of all the things that can go wrong when we hire someone from the competition. Especially when we stop thinking about risk and see only upside. So, let’s talk about that risk and what you can do to keep yourself out of trouble – and never, ever need a presidential pardon.

One of the uniquely fascinating aspects of trade secret disputes is that they are laced with unbridled emotions, accusations of treachery, and actors who angrily disagree over basic facts. In other words, they provide a perfect metaphor for the year 2020. Let’s take a look back at the cases this year that are worthy of comment, either because they involved some unusual set of facts or because they provide useful guidance for behaving better in 2021.

In September, the International Trade Commission (ITC) decided to review an initial final determination (FID) in the Matter of “Certain Botulinum Toxin Products, Processes for Manufacturing or Relating to Same and Certain Products Containing Same,” Investigation No. 337-TA-1145, a complaint filed by Allergan against Botox products made by Daewoong and its partner, Evolus, a “performance beauty company”. On Wednesday, the ITC issued a Final Determination in the case, finding that the sale and importation of the products into the United States violated Section 337 of the U.S. Tariff Act. The Commission issued a Limited Exclusion Order (LEO) prohibiting importation of the products by Daewoong and Evolus for a period of 21 months, as well as a cease and desist order against Evolus preventing the Company from selling, marketing, or promoting the products in the United States for a period of 21 months. However, the Commission reversed the FID’s finding that a trade secret exists with respect to Medytox’s bacterial strain.

The conversation begins, “Can you keep a secret?” “Yes, of course,” they say. What happens next? Naturally, you tell them what it is that you are going to trust them with. That’s the way it happens in personal relationships. In business, it’s usually more complicated. And it depends a lot on who you’re talking to. Let’s first consider the employee confidentiality agreement. In some smaller businesses, especially in the “low tech” economy, employee non-disclosure agreements (NDAs) may not be necessary, because workers neither create nor are they exposed to company secrets. But if you’re making things from a private recipe, or if employees learn sensitive information about customers, it’s a good idea to have these contracts. And if you’re in a knowledge-based industry, they’re more or less essential.

In the wake of urban unrest in the early 1960s, local governments imposed nightly youth curfews, and a Massachusetts legislator suggested that all radio and television stations begin their 10:00 evening programming with an announcement: “It’s 10:00 PM. Do you know where your children are?” The phrase was quickly picked up across the country and became a common (and sometimes mocked) cultural artifact of the era…. For modern business, if you can indulge the metaphor, we may think of data assets as the children of the enterprise, at least in the sense that valuable information is vulnerable to loss or compromise. Reminding companies of the need to be vigilant makes a lot of sense.

Plaintiffs in trade secret cases are often faced with the difficulty of protecting their trade secrets, especially during trial, when different rules apply than during the pre-trial proceedings. It certainly makes little sense for a party to seek to prevent a defendant from disclosing their trade secrets only to have them disclosed to the public during discovery or trial. In recognition of this dilemma, Congress included Section 1835(b) (“Rights of Trade Secrets Owners) in the Defend Trade Secrets Act, which seeks to address this issue by requiring district courts to permit the trade secret owner the “the opportunity to file a submission under seal that describes the interest of the owner in keeping the information confidential.”