Here are the noteworthy trade secret, non-compete and cybersecurity stories from the past week, as well one or two that I missed over the past few weeks (better late than never):
Noteworthy Trade Secret and Non-Compete Posts and Cases:
- Manhattan District Attorney Cyrus Vance has arrested ex-Goldman Sachs programmer Sergey Aleynikov for the alleged theft of Goldman’s proprietary code for its high frequency trading program. Aleynikov was previously convicted by a Manhattan jury under the Economic Espionage Act but that verdict was overturned by the U.S. Court of Appeals for the Second Circuit in February. (My take on the Second Circuit’s opinion (hint: I didn’t agree) can be found here). The New York Times quotes Vance as follows: “This code is so highly confidential that it is known in the industry as the firm’s ‘secret sauce.’ Employees who exploit their access to sensitive information should expect to face criminal prosecution in New York State. According to The Times, Vance charged Aleynikov with the unlawful use of secret scientific material and duplication of computer-related material, both felonies under New York State law. If convicted, he could serve 1 to 4 years in prison.
- In the final chapter of another noteworthy criminal trade secret proceeding, former-Intel engineer Biswamohan Pani was sentenced to a 3 year prison term after pleading guilty to stealing Intel’s computer chip manufacturing and design secrets. Prosecutors say the 36-year-old Pani downloaded secret documents from Intel in May 2008, shortly after he announced he was leaving to join rival Advanced Micro Devices. Intel valued those documents at between $200 million and $400 million.
- And in yet another criminal trade secrets case, a former Bridgestone scientist, Xiaorong Wang, has pleaded not guilty to charges that he stole trade secrets from his former employer in Akron and then lied to federal investigators. Wang’s trial is set for September 25, 2012.
- If you are advising companies in the healthcare industry, you will want to read an article by Kathryn Hacket King of Snell & Wilner about the “Enforceability and interpretation of agreements prohibiting ‘direct and indirect’ solicitation of health care employees.” In ProTherapy & Associates, LLC v. AFS of Bastian, Inc., the Fourth Circuit not only upheld the non-solicitation provisions in question but enforced a liquidated damages clause as well.
- “Avoiding Trade Secret Litigation in the Life Sciences” by Choate Hall & Stewart LLP’s Eric J. Marandett and Margaret E. Ives provides some sound tips when negotiating collaboration agreements with potential partners.
- “Mergers & Acquisitions: Don’t Forget About Employee Compliance with Nondisclosure Agreements” advises The Michigan Employment Law Advisor.
- And speaking of mergers and non-disclosure agreements, the Delaware Supreme Court has issued its formal opinion affirming the Chancery Court’s injunction against Martin Marietta for breaching its NDA and using confidential information in its hostile bid for Vulcan Materials. The Delaware Corporate & Commercial Law Blog has a post about the decision and link to the opinion. (For more on this case, see my posts here and here).
Computer Fraud and Abuse Act Posts
- Confusion over the scope of the Computer Fraud and Abuse Act continues, as there is now a split within the First Circuit according to Foley & Hoag’s Massachusetts Noncompete Blog. The U.S. District Court for the District of New Hampshire has recently adopted the narrow reasoning of U.S. v. Nosal, thus separating itself from an earlier decision by the U.S. District Court for the District of Massachusetts, which had applied the broader rule permitting the use of the CFAA for violations of computer-use policies.
Cybersecurity Posts and Articles
- “Cybersecurity Becoming No. 1 Concern for GCs and Directors” notes Catherine Dunn forCorporate Counsel.
- “Why It Pays to Submit to Hackers” explains Wired.
- “How To Create and Remember Strong Passwords” advises Larry Magid for Forbes.
- “Don’t forget these 5 security issues in your BYOD policy” reminds Jon Hyman’s Ohio Employer’s Law Blog.
News You Can Use:
- “How to make your lost phone findable” by David Pogue of The New York Times.