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:
Noteworthy Trade Secret and Non-Compete Posts and Cases:
- A former programmer for futures exchange operator CME Group has pleaded guilty to stealing trade secrets in connection with plans to improve a trading platform in China, according to a report by The Wall Street Journal this morning. Chunlai Yang, a senior software engineer who worked at CME for 11 years, admitted to downloading more than 10,000 files from CME computers, and planned to offer improved technology to the Zhangjiagang Exchange.
- Executives of Chinese telecom companies Huawei and ZTE were grilled by the U.S. House Intelligence Committee over allegations that Huawei stole Cisco and Motorola’s trade secrets, reports Todd Sullivan in his Sullivan’s Trade Secrets & Employee Defections Blog. Mike Rogers, the House Intelligence Committee Chairman expressed concern that “Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems.” Congressman Rogers further noted that “under Chinese law, ZTE and Huawei would likely be required to co-operate with any request by the Chinese government to use their systems or access for malicious purposes.” For more on the hearings, The New York Times and The Wall Street Journal’s articles can be found here and here.
- For those in Kentucky, Kenneth Vanko, Robert W. Milligan and Russell Beck all have posts on an important opinion laying out the six factors that a court should apply when deciding whether to enforce, not enforce or narrow a covenant not to compete. In Charles T. Creech, Inc. v. Brown, 2012 Ky. App. LEXIS 142 (Ky. Ct. App. Aug. 17, 2012), the court of appeals provided various “guiding principles” for the considerations underlying each of those six factors.
- The U.S. International Trade Commission will review a finding that a former Twin-Star International Inc. employee violated the Tariff Act when he used stolen proprietary information to start a rival fireplace manufacturer in China, reports Law360. In July, an administrative law judge had found that former Twin-Star employee Yue Qiu Sheng violated a confidentiality agreement by stealing plans for an electric fireplace prototype as well as customer and supplier lists to launch his own company, Shenzhen Reliap Industrial Co. Ltd.
- Have a trade secret case that is going to trial in Florida? Then you should read a recent post by Peter Vilmos in Burr & Forman’s Non-Compete & Trade Secrets Blog about the importance of jury instructions under Florida’s version of the Uniform Trade Secrets Act.
- Want “A Look At 16 Years Of EEA Prosecutions”? Check out Peter Toren’s fine summary for Law360.
- Mark Terman provides “A Litigator’s perspective on trade secret protection plans” for Inside Counsel.
- “Do Maids Have to Sign Non-Compete Clauses?” wonders John Kelly of The Washington Post.
- The big trade secrets news this week was the Ohio Supreme Court’s decision in American Chemical Society v. Leadscope, a decision that at least one Ohio commentator described as the most eagerly awaited case of the year. The ACS case held that a claim of unfair competition could be based on a theory of malicious litigation by a competitor and it announced the legal standard for that claim. However, the ACS case also provides a cautionary tale for litigators in high profile trade secret cases — namely, the potential of a defamation claim against lawyers for statements about the litigation to the media. In ACS, Leadscope alleged that one of ACS’s lawyers defamed it by stating “Our motivation in filing suit is to acquire back the protected information that they took from us” to a local business paper, Business First. The Supreme Court ultimately dismissed the defamation claim, reasoning that the article as a whole simply provided an accurate summary of the legal proceedings (both sides were quoted about the litigation and made substantive statements about their positions). For a very thorough analysis of the opinion and its key components, check out former Appellate Court Judge Marianna Brown Bettman’s post in her Legally Speaking Ohio Blog.
Computer Fraud and Abuse Act Posts and Articles:
- Seyfarth Shaw’s Trading Secrets Blog has two posts about two recent federal decisions out of California. Daniel Joshua Salinas details a ruling denying reconsideration of an important ruling that allowed CFAA case to proceed despite the recent decision in U.S. v. Nosal as well as a case out of the Northern District of California dismissing a CFAA claim for “click fraud” because the plaintiff failed to provide adequate factual basis for that claim.
Cybersecurity Posts and Articles:
- In need of a comprehensive summary of the various pieces of cybersecurity legislation and executive orders? Check out “An Analysis of Proposed Federal Cybersecurity Legislation” by Todd Taylor for Corporate Counsel.
- “Senator Presses On Cybersecurity” reports The Wall Street Journal.
- “Never trust a stranger: Secure social networking” warns Rob Rachwald for SC Magazine.
- “Your smartphone will (eventually) be hacked” predicts David Goldman for CNNMoney.
News You Can Use:
- “Extra Security for Gmail” from The New York Times Personal Tech Blog.