Posts in Trade Secrets

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).

Learning to Live with ‘Zero Trust’: It’s Not as Depressing as it Sounds

Trust is getting a lot of attention these days. Of course, it’s always been important in the United States. We declare trust in God on our currency, Scouts have to be trustworthy, and we even seem to trust the algorithm behind cryptocurrencies. On the other hand, we worry about what feels like a decline, if not complete rupture, in social trust. For businesses that depend on controlling the confidentiality of data shared with employees and outsiders, these are perilous times. Our most important assets are stored and transmitted through digital systems that are imperfect; and that’s without accounting for the frailties of the people with access to those assets. Information security has come a long way since I started my career in the 1970s. There were no networks to worry about then, no powerful computers in the pockets of employees. Data was transmitted on paper. You just needed to watch the front door and photocopier. Employees with their badges as markers of trust could go pretty much anywhere they wanted within the facility.

Patent vs. Trade Secret Strategy: A Four Factor Decision Framework

Patents and trade secrets are both valuable assets that companies can utilize to protect their innovations and establish competitive advantages in the market. Strategic IP portfolio development and management leverages both patents and trade secrets where they are most effective with the goal of maximizing protection while minimizing costs.

Electronic Frontier Foundation’s Attempt to Unseal Uniloc Licenses Falls Flat at CAFC

In its second appeal to the U.S. Court of Appeals for the Federal Circuit (CAFC) regarding the sealing of documents in several related cases against Apple, Uniloc scored a win when the CAFC said today that the United States District Court for the Northern District of California failed to comply with its original remand instructions, constituting an abuse of discretion. The appellate court for a second time ordered the district court “to make particularized determinations as to whether the third-party licensing information sought to be sealed should be made public.”

Lessons From Theranos and the Trade Secret Defense

What a strange and compelling story. Brilliant young inventor conceives revolutionary machine, raises staggering amounts from investors, is fawned over by the press for a decade, then crashes to earth on revelations of faked demonstrations and technology that doesn’t work. When I learned of the recent jury verdict, I naturally turned over in my mind how all this could have happened to such a well-meaning person as . . . John Ernst Worrel Keely. Okay, you were expecting someone else. But since you may not have heard of Keely, let me fill you in and explain the role that secrecy played in one of the country’s most elaborate and long-running scams. I assure you that the Theranos investors wish they had boned up on Keely’s operation.

Abusive IP Litigation Poses Threat to Innovation at Home and Abroad

The World Trade Organization (WTO) was scheduled in December to hold its 12th Ministerial Conference (MC12) in Geneva, bringing together officials from 164 countries to negotiate the future of global trade. Concerns over the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) were expected to feature in discussions, however, in-person deliberations have been tabled until at least March as a result of growing health concerns related to the Omicron COVID-19 variant. In the meantime, it is important leaders consider how TRIPS can be strengthened and refined as needed. TRIPS plays a crucial role in driving global innovation, but ambiguities surrounding the agreement’s dispute settlement mechanism have led some to conclude that it is vulnerable to abuse by countries seeking to advance their national interests.

Iancu and Kappos: TRIPS IP Waiver Proposal Will Kill More People Than It Saves

A webinar hosted on Tuesday, January 12, by The Federalist Society’s Regulatory Transparency Project featured former U.S. Patent and Trademark Office (USPTO) Directors Andrei Iancu and David Kappos, as well as Duke University Professor of Law and former USPTO Administrator of the Office of External Affairs Arti Rai, discussing the proposal to the World Trade Organization (WTO) to waive IP rights under the Trade-Related aspects of Intellectual Property Rights (TRIPS) Agreement for certain COVID-19 technologies. While all three panelists agreed that the IP waiver discussion has become a distraction that will not solve the fundamental problems, Iancu and Kappos were especially passionate that the precedent set by the U.S. government’s decision to back the proposal could do very real harm, rather than good.

Machine Learning Models and the Legal Need for Editability: Surveying the Pitfalls (Part II)

In Part I of this series, we discussed the Federal Trade Commission’s (FTC’s) case against Everalbum as just one example where companies may be required to remove data from their machine learning models (or shut down if unable to do so). Following are some additional pitfalls to note. A. Evolving privacy and data usage restrictions Legislators at the international, federal,…

What You Need to Know About Trade Secrets in 2021

Last year at this time we thought we had been through the worst of it and, with the new vaccines arriving, that life would return to normal in 2021. Hahaha, how naïve we were! But take heart; some things hold steady through the storm, such as the popular sport of trade secret litigation. Unlike most patent and copyright cases, every dispute is guaranteed to unfold as a morality play—a story of good guys and bad guys. Let’s now look back on the year when remote work dug in to become a permanent fixture, and remind ourselves of the broad sweep of trade secret law by looking at some of the more instructive and interesting opinions issued by the courts – and one inexplicable decision by our government.

When the Secret Enables the Brand: The Long-Lasting Listerine License

Question: how do you make money from a secret formula for a product that smells and tastes horrible and that no one wants? Answer: you make everyone believe they have a medical problem that only this stuff can solve. Back in 1879, Joseph Lawrence, a St. Louis doctor, was experimenting with surgical disinfectants. This was a new thing. In the 1860s, a British surgeon named Joseph Lister was the first to perform surgery antiseptically, using carbolic acid as a disinfectant. Inspired by Lister, Lawrence came up with a compound of alcohol and essential oils that seemed to kill whatever bugs it touched. To honor Lister (and presumably to take advantage of his fame), Lawrence named the concoction “Listerine.”

FDA Resists FOIA Request for Vaccine Approval Info as Biden Administration Offers to Share it with the World

From the “one hand doesn’t know what the other hand is doing” category, believe it or not, the Food and Drug Administration (FDA) is effectively refusing to release documents it possesses relating to the approval of the Pfizer-BioNTech COVID-19 vaccine. More precisely, Public Health and Medical Professionals for Transparency (PHMPT), a group of doctors and scientists, submitted a Freedom of Information Act (FOIA) request for documents relating to the approval of the Pfizer COVID-19 vaccine. After the FDA denied a request by the PHMPT to expedite release of the documents, a lawsuit was filed. In response to that lawsuit, the FDA proposed to release 500 pages per month, which would allow the agency time to redact material as necessary. Given that there are 329,000 pages responsive to the PHMPT request, at the proposed FDA rate of 500 pages per month it would take 55 years for the FDA to fully release the Pfizer COVID-19 vaccine documents.

Acquisition Contamination: The Mythology of the ‘Clean Team’

Have you ever shopped for something dangerous? Back in the 1950s, my mother wanted to buy a pressure cooker to make dinner faster (and use cheaper cuts of meat). That wasn’t an easy decision, because the early models had a reputation for occasionally exploding (there was no Consumer Product Safety Commission then). My father, a self-taught steam engineer, was skeptical that a kitchen appliance could safely contain double the normal atmospheric pressure. But Mom did her homework, researching what the problems were (usually a single pressure valve prone to clogging) and finding cookers with redundant pressure relief systems. It worked for years, and no one went to the hospital. Companies shopping to buy other companies, or to acquire a license to their technology, also entertain risk. That’s because in the process of interviewing potential targets they can become exposed to highly valuable trade secrets. If any particular transaction doesn’t go forward, but the shopper implements similar technology, the disappointed seller may file a lawsuit claiming misappropriation.

Noncompete Agreements: Finding the Balance Between Reasonable Restraints and Free Range Talent

You may remember 2014 as the year when we all discovered a plague of noncompete agreements threatening our economy. No? Let me help you. In June that year, the New York Times published an expose of sorts relating the story of a 19-year-old summer camp counselor who couldn’t get hired by a certain camp because the year before she signed a contract with another camp that blocked her from working for any nearby competitor. Noncompete contracts, the article suggested, had previously been reserved for high level corporate executives, and suddenly (and “increasingly”) they were being foisted on rank and file employees engaged in event planning, investment management, and even yoga instruction. A follow-on piece in the Times confirmed the emerging crisis by revealing that the Jimmy John’s fast food chain had forced noncompete clauses on all its sandwich makers (acknowledging, however, that there was no evidence that the company had ever tried to enforce the contracts).