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Posts in Trade Secrets

‘Decoupling’ with China is Not the Answer

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.

SCOTUS Says Former Police Sergeant Did Not Violate CFAA, Snubbing Government’s Reading

The United States Supreme Court today ruled that a former police sergeant did not flout Section (a)(2) of the Computer Fraud and Abuse Act (CFAA) because that provision “does not cover those who…have improper motives for obtaining information that is otherwise available to them.” The opinion, authored by Justice Amy Coney Barrett, contradicts the U.S. government’s reading of the statute. Three justices dissented from the majority.

The Big Secret Behind the Proposed TRIPS Waiver

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.

Republican Senators Demand Answers from Biden on ‘Disastrous Decision’ to Support COVID IP Waiver

A group of 16 Republican senators sent a letter on Wednesday to U.S. Department of Commerce Secretary Gina Raimondo and U.S. Trade Representative (USTR) Katherine Tai denouncing the Biden Administration’s “disastrous decision” to support a proposal at the World Trade Organization (WTO) to waive intellectual property (IP) rights for COVID-19-related inventions and products.  The letter explains that the waiver is not limited to vaccines and “will do nothing to end the pandemic,” but will instead “undermine the extraordinary global response that has achieved historically remarkable results in record time and our nation’s global leadership in the technologies, medicines, and treatments of the future.”

CAFC Clears L’Oréal of Trade Secret Misappropriation, Orders New Trial on Patent Infringement

On May 6, the U.S. Court of Appeals for the Federal Circuit (CAFC), reversed in part, affirmed in part, vacated in part, dismissed in part, and remanded a judgment in an appeal from the U.S. District Court for the District of Delaware. L’Oréal USA, Inc., L’Oréal USA Products, Inc., L’Oréal USA S/D, Inc., and Redken 5th Avenue NYC, LLC. (collectively, “L’Oréal”) appealed the district court’s ruling in favor of plaintiffs Liqwd, Inc. and Olaplex, LLC, which sued L’Oréal for patent infringement, misappropriation of trade secrets, and breach of a non-disclosure agreement. 

Who Needs to Know? The Hidden Value of Transparency

“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.

Intellectual Property for Startups: Building a Toolkit to Protect Your Products and Design

Although it may seem like the name “startup” says it all, the reality for many inventors, engineers and companies is that it’s difficult to know where to start when what you have is just an idea for a product, a recently discovered process or an innovation. You may have the “million dollar idea,” but where do you start to move it from concept to market? While startups may be selling wildly different products, or developing different processes or innovations, one thing most have in common is a similar starting point, and a limited budget. Product design, branding and identity are always necessary, and protecting your brand, innovations and products from competition is essential.  But how do you allocate your limited resources while developing the best possible brand and product, and ensuring that your intellectual property is adequately protected?

How Mediation Can Help Both Sides Win a Trade Secret Case

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.

Reverse Engineering and the Law: Understand the Restrictions to Minimize Risks

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.

Ex Parte Seizures Five Years After the Enactment of the Defend Trade Secrets Act

Almost five years has passed since the enactment of the Defend Trade Secrets Act (DTSA) on May 11, 2016, which provides for civil relief for the theft of trade secrets. The most controversial provision, 18 U.S.C. § 1836(b)(2), authorizes a federal court to issue an order, in extraordinary circumstances, and upon an ex parte application based on an affidavit or verified complaint, to provide for seizure of property necessary to preserve evidence or to prevent the propagation or dissemination of the trade secret. Thus, the issuance of a seizure order is limited to “extraordinary circumstances.” According to the House Report, the “ex parte seizure provision is expected to be used in instances in which a defendant is seeking to flee the country or planning to disclose the trade secret to a third party immediately or is otherwise not amenable to the enforcement of the court’s orders.” In other words, it is intended to stop the dissemination of a trade secret, especially overseas, before its value has been lost through public disclosure. Thus, it provides a trade secret owner with the ability to mitigate the risk that trade secrets are irrevocably lost, transferred, or moved beyond the jurisdiction of the court.

Parties’ Names Should Generally be Disclosed to the Public, Says CAFC

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.

How to Safeguard AI Technology: Patents versus Trade Secrets

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.

Trade Secrets and the Insider Threat: Protection Beyond the Perimeter

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?)

Joint EPO-EUIPO Report Finds SMEs Stand to Benefit Most from IP Ownership

The latest in a series of reports by the European Patent Office (EPO) and European Union Intellectual Property Office (EUIPO) studying IP-intensive industries and their contribution to economic performance and employment in the European Union has found that companies owning at least one patent, registered design or trademark generate higher revenues per employee than companies that do not own IP rights and pay higher wages on average than other companies. The EPO-EUIPO report is titled “Intellectual property rights and firm performance in the European Union” and builds on research conducted in 2013, 2016 and 2019 regarding the contribution of IP-intensive companies to the EU economy, as well as a 2015 EUIPO study based on data from 12 Member States. The latest report analyzes over 127,000 European firms and compares the economic performance of firms that own IPRs with those that do not.

Ninth Circuit Gives Guidance on Specification of Trade Secrets Under the Defend Trade Secrets Act

Two of the most important issues in trade secret cases involve the timing of when the plaintiff is required to identify its alleged trade secrets and the degree of specificity with which they must be identified. However, the Defend Trade Secrets Act (DTSA) fails to address either of these issues, and most state courts have not agreed on unform standards. In comparison, for example, under Section 2019.210 of the California Code of Civil Procedure, a plaintiff is required to identify its alleged trade secrets with reasonable particularity “to limit the permissible scope of discovery by distinguishing the trade secrets from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade.” Now the Ninth Circuit in InteliClear LLC v. ETC Global Holdings, Inc., 978 F. F. 3d. 653 (9th Cir. 2020) has held that the DTSA also includes the requirement that the plaintiff must identify, depending on the stage of the litigation, with sufficient particularity to provide the defendant with notice as to the identity of the trade secrets at  issue.