Posts Tagged: "trade secret misappropriation"

In Zup v. Nash Manufacturing, ZUP filed suit, alleging contributory infringement and induced infringement of the patent-at-issue, trade secret misappropriation under Virginia law, and breach of contract.  Nash counterclaimed, seeking declaratory judgment as to non-infringement and invalidity… Prior art references aiming to overcome problems similar to those addressed by a patent can support a motivation to combine invalidating references, and for evidence of a long-felt but unresolved need to be considered, the need must be solved by an invention that is more than minimally different from the prior art… Judge Newman dissented, finding that the majority applied an incorrect analysis of the obviousness factors. In her view, the prior art provides no suggestion to make the specific modifications made by the patent-at-issue, and the only source of those modifications is judicial hindsight.

Generally, a breach of confidence under English law does not give rise to criminal liability (and the recently implemented Trade Secrets Directive only addresses civil remedies for misappropriation of trade secrets). Sometimes the conduct giving rise to the breach may constitute an offense in its own right (for example an offense under the Computer Misuse Act 1990) but in the absence of such a scenario sanctions will be limited to inter partes remedies. However, as recently seen, if an order for inter partes relief is breached, criminal sanctions may still be imposed following a finding of contempt of court.

Certain innovations—known as enabling technologies—provide the foundation for progress across a range of industries. Enabling technologies include mobile wireless, the laser, CT scanners, the microprocessor, artificial intelligence, and freight containerization. Such technologies drive wealth creation throughout the economy. However, the difficulties associated with monetizing this type of IP, which I explore in this article, mean that private enterprise tends to underinvest in new enabling technologies. Public policy needs to be more supportive, and firms need to be willing to support more blue-sky projects. As a nation, we are harvesting the fruits of old enabling technologies without investing sufficiently in new ones. We are eating our seed corn.

In Texas Advanced Optoelectronic Solutions v. Renesas Electrics, a jury found Renesas liable for both patent infringement and trade secret misappropriation. The jury awarded a reasonable royalty for infringement and a disgorgement of profits for misappropriation. The Federal Circuit affirmed a jury finding that Renesas was liable for trade secret misappropriation and patent infringement for a set of apparatus claims, but vacated the damages awards in the case and remanded for further proceedings… There is no right for a jury to award a disgorgement of profits in trade secret misappropriation cases under the Seventh Amendment. Double recovery of damages for essentially same injury is not justified by presenting two legal theories for relief.

Today, the biggest reason to have a strict regime in place to protect trade secrets, according to Gambhir, is because technology has made misappropriation of trade secrets so much easier than ever before. Compare the days when trade secrets resided in physical forms (blue prints, coca cola formula etc.) and were stored in locked file cabinets, safes etc. with the trade secrets in the digital world. “In most situations, they may be stored in a computer file that has restricted access on a secure network,” he said. “Yet, even given all that, an unhappy employee can easily download that file on a USB drive and walk out of your building directly to your competitor’s office. Access to trade secrets has become so much easier. In turn, misappropriation has become so much easier.”

Dallas, TX-based online dating app developer Match Group filed a suit in the Western District of Texas alleging claims of utility and design patent infringement, trademark infringement, and trade secret misappropriation against Austin, TX-based dating app provider Bumble. Match alleges that Bumble, which was founded by former employees of Match’s Tinder dating service, copied major elements of the interface from Match’s app including swiping elements used to identify potential matches.

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.”

Chicago, IL-based wireless power solutions provider NuCurrent filed a complaint alleging trade secret misappropriation and patent infringement against Korean tech giant Samsung Electronics (KRX:005930). The case, filed in the Eastern District of Texas, alleges that wireless charging technologies incorporated by Samsung into their Galaxy S7 and S8 product lines copies technology which was presented to them by NuCurrent under the terms of a confidentiality agreement.

Experience shows that most unfair competition or trade secret theft issues can be resolved without the need for litigation; often, an exchange of letters between the parties’ respective attorneys is sufficient to resolve the matter. However, litigation is sometimes unavoidable, and when it occurs, the employers involved are often surprised by how fast an unfair competition case can move to a practical conclusion, and how little time there might be to prepare for the crucial court hearing… The TRO hearing is often the be-all and end-all of unfair competition litigation because, if it is granted, the unfair competitive activities are immediately stopped, any stolen trade secrets are returned, and the competitive damage to the plaintiff-employer is contained or stopped. The case is usually thereafter resolved by a settlement. Essentially, if the TRO is granted, there typically is not much else of consequence to litigate between the parties.

Is it reasonable to say that the U.S. got an unfair head start on the Industrial Revolution by stealing secrets from Britain? I don’t think so. Industrial espionage had been practiced in Europe throughout the 18th Century, with the British and French particularly active, even using diplomats to get access to valuable commercial information. Moreover, Britain, like some other European countries, frequently granted “patents of importation,” which didn’t require the applicant to be an inventor, if the invention was new within the country’s borders. In this way, governments regularly encouraged people to “steal” ideas from abroad and bring them home. This opportunistic behavior by nations was seen as acceptable only because of the mercantilist attitude of the time, where national interest was all that mattered. It would be another hundred years before international treaties were established to guarantee respect for foreign intellectual property laws, creating the more integrated environment for IP that promotes global commerce today.

As discussed elsewhere in this Take 5, although California employers generally cannot restrict an employee’s ability to work elsewhere, California employers can protect their trade secrets and confidential information. One pillar of a successful plan to do so is having an employee departure protocol.

The current extraterritorial reach of U.S. trade secret law may seem ironic given trade secret law’s “local” roots. In the United States, common law trade secret principles emerged through a diverse patchwork of state court decisions addressing local commercial disputes. These local common law principles were first distilled in the Restatement of Torts and the Restatement of Unfair Competition and then codified in the Uniform Trade Secrets Act in 1979. Underscoring the local prerogative of trade secret law, state legislatures modified and tailored the Uniform Trade Secrets Act to reflect their state-specific concerns and needs. For many years, despite a push for national uniformity, a number of states chose not to adopt a statutory scheme at all (some still haven’t).

Earlier this year, President Obama signed into law the new federal “Defend Trade Secrets Act of 2016.” It arms with substantial new weaponry those whose trade secrets have been taken. What has been less heralded, but might just affect you more directly, are new requirements that might lead you to revise your standard confidentiality and non-disclosure agreements.

American water treatment company Purolite of Bala Cynwyd, PA, recently filed a federal complaint over misappropriated trade secrets against the American division of Japanese conglomerate Hitachi (TYO:6501). Purolite alleges that Hitachi broke business agreements by sharing Purolite’s confidential trade secrets related to the decontamination of water including radioactive waste with other companies in the hopes of securing a major contract. Purolite filed its lawsuit in the U.S. District Court for the Southern District of New York (S.D.N.Y.).