It was a busy week for trade secret and non-compete law and an especially busy week in the cybersecurity realm. Here are some of the most noteworthy stories:
Trade Secrets and Non-Competes:
- In what promises to be a contentious new trade secret case, Ocean Tomo, LLC, a self-described IP merchant bank, has secured a TRO in California against former employee Steven Lee. Lee was allegedly going to divulge its trade secrets and privileged information to another former employee, Jonathan Barney, who is embroiled in an Illinois arbitration with Ocean Tomo. This promises to be a nasty one and I will keep everyone posted on future developments.
- Todd Sullivan’s Trade Secret Blog is reporting that Western Digital is now attempting to appeal from the $630 million arbitration award against it in its trade secret dispute with Seagate Technology. As the post notes, one of the supposed benefits of arbitration is finality, until of course you think you got hosed by the arbitrator.
- I wrote last week about the recent criminal case against Walter Liew who is accused of stealing DuPont’s trade secrets. Reuters is reporting that federal prosecutors have now indicted a state-owned Chinese manufacturer, Pangang Group, as the party that directed him to steal that technology. While there have been plenty of criminal cases involving Chinese nationals over the past few years, I can’t recall prosecutors so directly calling out the Chinese government in a trade secrets case. The timing is particularly interesting as Chinese Vice President Xi Jinping is scheduled to visit the U.S. next week on a range of economic, trade, regional and global issues.
- In what has been characterized as a landmark decision, the Canadian Supreme Court defined a trade secret for purposes of an exemption under Canada’s Access to Information Act. Justice Thomas Cromwell rejected Merck’s efforts to prevent the disclosure of certain documents, holding Merck failed to demonstrate that they qualified as trade secrets. Justice Cromwell ruled that a trade secret “is known only by one or a relatively small number of persons,” “must be capable of industrial or commercial application,” and “the possessor must have an interest worthy of legal protection.”
- Kenneth Vanko’s fine Legal Developments in Non-Competition Agreements Blog provides some practical advice for both employers and employees when it comes time to terminate employment. The post notes the importance, particularly for employees, of ensuring that any termination is “without cause,” which some courts hold guts a non-compete.
- Russell Beck’s Fair Competition Law Blog has been doing a very, very thorough monthly compilation of trade secret, non-compete and cybersecurity posts, cases and issues. It is a great source of relevant information and commentary.
- Cyberattacks targeting lawyers continue to be in the news; this week, representing an unpopular client may be enough to make a law firm a target. Ericka Berg of Nelson Mullins posted an article from SC Magazine entitled “Anonymous raids law firm over its defense of Marine” that details a cyberattack by Anonymous on the law firm Puckett & Faraj, which represents a Marine accused of killing 24 Iraqi civilians in 2005. After the firm secured a favorable deal for the soldier, Anonymous raided the firm’s site and boasted that it stole “court mails, faxes, transcriptions, etc.”
- The Massachusetts Data Privacy Law Blog quotes Symantec for the following staggering statistic: $113 BILLION was stolen by cyberthieves last year. To give you a sense of the vastness of that number, bank robbers stole a mere $43 billion.
- Symantec was the subject of an extortion effort by Anonymous hackers. According to Andy Greenberg’s “As Hackers Leak Symantec’s Source Code, Firm Says Cops Set Up Extortion Sting Operation,” the hostage (the source code) is now dead as the sting effort failed to nab the bad guys. It is a good read.
News You Can Use:
- Andrew Martin of Scott & Scott has put together a nice article entitled “Five Top Provisions in Technology Vendor Agreements.” It’s a useful cross-reference.
- If you use the popular Internet photo sharing service Path with your iPhone, watch out for your contact information! CNET first reported that Path has uploaded a number of iPhone user’s contacts without their permission. Path initially said it did so to enhance its customers’ use of the site, and then, realizing a brewing PR storm, apologized yesterday.
- And, finally, at long last, a device to better enable employees to transfer trade secrets from their tablets and smartphones: Say “hello” to Airshaft!