Posts Tagged: "Trade Secrets"

Intellectual Property Plays a Big Role in Silicon Valley Deals

How big of a role does IP play in Silicon Valley deals? “In almost any size transaction involving a technology company, our client asks us to look carefully at the company’s IP and the agreements the company has entered into with third parties to secure rights in IP and to permit others to use that IP,” said John Brockland, a technology and IP transactions partner at Hogan Lovells. “Depending on how a transaction is structured, the terms on which IP is assigned or licensed between the parties in a deal can also be a critical area of focus for our client.”

Waymo v. Uber Shows Even Epic Battles Can Be Resolved

There are many lessons to be drawn from the Waymo v. Uber litigation. This is perhaps the most important. Lawsuits are about history, while business is about the future… Most trade secret litigation is fueled by emotional reactions to perceived wrongs. Plaintiffs feel betrayed and abandoned, and defendants feel blamed and misunderstood. Each side wants to fight in order to validate its perspective. So the lawsuit begins with great energy. But over time, new facts emerge, and the parties begin to reconsider the cost/benefit analysis of continuing the struggle.

Some Lessons From the Waymo (Alphabet) Versus Uber Theft of Trade Secret Litigation

Although the amount of the settlement was far less than $2.7 billion in amount sought by Waymo, the settlement apparently did include a payment from Uber of 0.34% of Uber equity—or about $244.8 million in stock based on a $72 billion valuation of Uber… Both sides had a lot riding on the outcome of the trial. In addition to the billions in damages, Waymo was seeking an injunction to prevent Uber from using any technology that may have originated from Waymo, which would have been a huge set back for Uber’s program. Indeed, during his first day of being questioned, the former CEO of Uber, Travis Kalanick, agreed that developing autonomous vehicles amounts to an “existential question” for Uber, and that the market for driverless cars is likely to be “winner-take-all.”

Why the IP system works against the small

The decision whether to secure technology using a trade secret or a patent hinges as much on the technology as it does on access to capital. Small companies need funding to commercialize new inventions. A patent provides a private property right that can be leveraged to attract funding. However, most large companies like Waymo, one of the richest on the planet, do not need funding. This is no doubt why Alphabet and its Google subsidiary have lobbied to weaken the patent system. It is understandable because it is in the best interests of their well-funded enterprises. It is, however, not in the best interest of innovation more generally speaking, nor is it in the interest of society… The IP system as it currently exists acts to protect huge monopolistic enterprises at the expense of everyone else – employees, startups, job creation, innovation, and society at large. It is no wonder that startups in America continue to decline, as recently reported by none other than the NY Times.

Uber settles trade secret case with Waymo for $245 million

Earlier today Alphabet subsidiary Waymo settled with Uber in the midst of a trade secret infringement trial. This lawsuit originated when Waymo brought suit against Uber in 2017, alleging that a former Waymo engineer Anthony Levandowski, who was hired by Uber to lead Uber’s self-driving car project, took with him thousands of confidential documents… The U.S. Department of Justice is conducting a separate, criminal investigation into the alleged theft of trade secrets. Levandowski has claimed a Fifth Amendment privilege and has not spoken about the events leading to this dispute.

The Legal Reality of Social Media IP: Who Owns What?

Today, as social media becomes more essential for businesses, there will almost certainly be an increase in intellectual property disputes about social media account ownership. Lawsuits relating to Twitter followers, LinkedIn connections, or Facebook friends are not off limits. These intangible assets — social media IP assets — are becoming increasingly more valuable to businesses… According to Ball, companies should be clear about who owns a social media account and what an employee can do with the account… Sarfati says that employers also need to recognize that social media is not just one thing – but rather a grouping of various websites that represent unique threats and opportunities to the employer’s bottom line.

Searching for the Secrets of a Stradivarius

When the auctioneer’s hammer went down, the violin sold for almost $16 million. It was one of the masterpieces of Cremona, the small northern Italian town that was the 18th-century center of violin-making. Some critics of trade secret law have cited Cremona as an example of progress “lost” because it was buried instead of published through a patent application. There are several reasons why that argument fails, but for today let’s consider the possibility that the violin makers couldn’t have passed on their “secrets” if they wanted to, simply because they didn’t know what made their violins sound so good.

How IP-Protected Innovation is Driving Economic Growth

IP-protected innovation is now the principal driver of corporate value and is driving economic growth nationally. Developing an IP portfolio is now a basic requirement even for tech startups that hope to raise early stage financing… A large portion of the market cap of Silicon Valley companies can be directly attributed to intangible – or in other words intellectual property – assets. IP law is the primary tool used to protect the value of that innovation, and as we see from countries without meaningful IP laws there is simply no way to protect innovation absent a strong intellectual property system.

What is a Confidentiality Agreement and Why are they So Important?

A Confidentiality Agreement, which is also known as non-disclosure agreement or simply as an NDA, is simply a contract between two or more parties where the subject of the agreement is a promise that information conveyed will be maintained in secrecy… These types of agreements are particularly useful when one is disclosing information that is valuable so long as secrecy is maintained (i.e., a trade secret), which can include both invention related information and business related information.

When Failure Becomes an Asset

Failure is success if we learn. So why shouldn’t failure qualify as a trade secret? Competitors would love to avoid making the effort and taking the risk… Negative information is most commonly put at risk not by theft of the records of R&D, but by departing employees who are familiar with how a particular technical solution was created or optimized. Eager to help their new colleagues, a recent arrival may wince at a suggested development path and blurt out a warning not to go there. Even very general pointers about an engineering direction to try or to avoid can help a competitor reduce risk and shorten development time. That is why hiring someone who has worked on a similar project for a competitor can lead to trouble.

The Art of Reverse Engineering

Recently a client asked me for advice on setting up a “reverse engineering” project. He no longer had access to any trade secrets of his former employer; what could possibly go wrong?… In most circumstances, there is nothing wrong with reverse engineering. The recently-enacted Defend Trade Secrets Act declares that it cannot be an “improper means” of acquiring information. (In fact, if you properly reverse engineer a product, the information you discover can be held by you as your own trade secret.) The reason behind the rule is apparent when you consider the limits of trade secret protection: selling a product that reveals the design and method of its manufacture means the secret is imperiled. If it is very easy to discern, then the secret is lost immediately. If it might take some time to figure out, then that’s called reverse engineering, and anyone is allowed to do it.

Corporate Counsel Should Carefully Consider the Company’s Trade Secret Position and Form a Game Plan to Protect the Company

Among the most disastrous mistakes with trade secrets is believing you own them when you do not.  A number of highly-contentious trade secrets disputes have arisen when joint ventures and similar business partnerships were dissolved.  Even companies with forward-thinking legal departments who carefully document such deals may find that they inherit new issues with acquisitions of companies where the prior legal department wasn’t as careful or complete.  Compounding these issues is the fact that documentation varies globally – and over time.  Even in a well-documented deal, upon dissolution of the relationship, it can turn out that the ownership of trade secrets the company thought belonged to it is unclear, or is joint.  In a poorly-documented deal, it may be unclear who owns contributed or even jointly-developed trade secrets – or it may never have been considered in the first place. Even where the documentation is clear, the facts may not be, because over time the history of “contributions” can be lost or muddied by time, additional facts, or complexity.

Choosing Between Patents and Trade Secrets, A Discussion Worth Revisiting

Patenting and secrecy are the two major methods of protecting technology that supports competitive advantage. Trade secrets protect a wide range of confidential information, ranging from customer lists to strategic plans and business methods.  While this has been true for decades, the legal landscape in which businesses must choose between them has changed dramatically in recent years, mainly as a result of two forces. The first of these was a series of court rulings that collectively have narrowed the scope of patentable subject matter and have made patents more difficult to enforce. The second was the America Invents Act of 2011 (the “AIA”), which effectively eliminated or reduced certain risks of choosing secrecy, while providing new ways to challenge patents in administrative proceedings.  Considered together, these forces require innovators to reconsider their cost/benefit models for evaluating protection mechanisms. This paper discusses risk factors counsel should weigh when advising clients on these issues. I do not advocate one method over the other, but instead suggest that decisions should be guided by clients’ business needs and priorities rather than by patent eligibility alone.

The Most Dangerous Hire: Lessons from Waymo v. Uber

Every trade secret case is built around a story. Sure, the plaintiff’s story is different than the defendant’s, even though each draws on the same facts. For the rest of us that don’t have a dog in the fight, helpful lessons are available. But sometimes you have to look hard to find them. Here’s one. When Waymo, the Google self-driving car company, filed its lawsuit against Uber earlier this year, the story was remarkable enough… This case is instructive for any business considering hiring an executive from a competitor: be aware that the cost of this recruitment might include the legal fees, disruption and liability risk of a trade secret claim.

Strategies for Turning Intangible Assets into Profits: What Every Corporation Needs to Know

Does your CEO, CFO, CTO and General Counsel have the most relevant information regarding the innovation in process to make informed choices about what to pursue? Do your scientists and engineers know enough about what can be protected as proprietary to identify when they have created something of value? Do your middle managers understand enough about the science, engineering and law to ensure they don’t weed out the next billion-dollar idea as something not worth pursuing? Does your corporation have policies in place to determine the best path to proprietary protection once an innovation of consequence has been realized? Join me for a free webinar on Thursday, October 19, 2017 at 12pm ET to discuss these critical questions and decision-points on the path from idea to intangible asset to tangible profit.