Trade Secrets Trends

Trade Secrets Trends

Analysis and commentary on the latest developments in trade secrets protection, disputes, and enforcement

Waymo v. Uber: An Update on the Ongoing Trade Secret Dispute

Posted in Defend Trade Secrets Act (DTSA), U.S. Litigation

Waymo’s recently filed case against Uber continues to unfold with some potentially important developments.  The case, which began in late February when Waymo (which shares a corporate parent with Google) accused Uber of misappropriation of trade secrets under the DTSA, patent infringement, and unfair business practices (covered by this blog here) had three recent decisions issue, all on the same day.

First, on May 11, U.S. District Judge William Alsup issued an order granting in part and denying in part Waymo’s motion for a preliminary injunction.  The court’s order is sealed, and neither Uber nor Waymo have commented on its contents.

Second, Judge Alsup sua sponte referred the case to the United States Attorney for investigation of possible trade secret theft.  Judge Alsup based this decision on the evidentiary record, which was described in detail in the aforementioned injunction decision (and therefore sealed). Continue Reading

Trump Administration’s Focus on IP Webinar

Posted in Defend Trade Secrets Act (DTSA), Event, Legislation & Policy

The America Invents Act, the Defend Trade Secrets Act, and recent Court decisions demonstrate the ongoing changes affecting intellectual property. The new Trump administration is expected to continue this trend from the legislative perspective, and is expected that Congress will consider further legislation that may rival the size of the America Invents Act. At the same time, there are several key cases before the Federal Circuit and the Supreme Court that will continue to shape how the courts interpret the laws that Congress enacts. IP practitioners need to be aware of the state of play and how it may affect their business. What challenges could you face?

Tune into the Trump Administration’s Focus on IP Webinar, and join Terry Rea and Mike Songer from Crowell & Moring as they discuss key issues and trends affecting intellectual property including a discussion of the administrative and judicial trends that have a direct impact on all forms of intellectual property, including patents and copyrights. Please click here to listen to the webinar or here to access the webinar event page.

Employee Who Stole the Cookie Recipe From the Cookie Jar Fined €1 (Yes, that’s one single Euro)

Posted in Criminal Prosecution, Cyberhacking, EU Regulation

Fig cookiesThe Criminal Court of Mechelen (Belgium) ruled in favor of Bofin Biscuits against a former production assistant accused of having stolen the assistant director of the cookie baker’s laptop. The laptop allegedly contained the secret recipes of all the cookies produced by Bofin Biscuits. This case is interesting because of the nature of the secrets and also when compared to that of the “fig spread”-case discussed here two weeks ago. It also confirms that trade secret misappropriation cases do not necessary only involve complex matters on state of the art technology owned by large multinationals.

The facts of the case are rather straight-forward. On November 12, 2013 the assistant-director of Bofin Biscuits noticed that his laptop had gone missing during his absence from November 6 to November 11. Images from the surveillance video system of Bofin Biscuits showed that the actual taking of the laptop had not been filmed. The camera hanging outside the assistant-director’s office did show a production assistant walking down the hallway where the office was located, entering it and leaving with something clearly hidden under his coat. During the trial the production-assistant did not contradict that he was the person that had been filmed, but he denied that he had taken the laptop. When asked what he then was hiding under his coat, he claimed not to recall anything.

For the public prosecutor this was a clear cut case and he requested the court to sentence the former production assistant to a six month effective prison sentence and a 4.800 EUR fine. Bofin Biscuits, who had joined the proceedings by suing its now ex-employee for civil injury, requested 1.500 EUR for the still missing laptop, 2.500 EUR for the time spent on recovering the information stored on the laptop, 500 EUR moral damages and a provisional damages amount of 25.000 EUR for having stolen the secret cookie recipes.

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The First DTSA Verdict: $500,000 for Misappropriation of a Fig Spread Recipe

Posted in Defend Trade Secrets Act (DTSA), Legislation & Policy, U.S. Litigation

In less than a year from its enactment, the Defend Trade Secrets Act (DTSA) has now yielded its first jury verdict with a victory for the Florida-based company Dalmatia Import Group, Inc. The center of controversy revolved around a gourmet fig spread made with a secret recipe and process.  The jury returned a $500,000 award for theft of trade secrets, with another $2 million awarded for other claims.  This case raises several important issues regarding damages and pleading both a state trade secret claim and a DTSA claim in the same lawsuit.

The facts of the case highlight the issues involved with disclosing trade secrets to vendors or distributors. Launched in 1999, Dalmatia’s Fig Spread by all accounts has become a popular gourmet article for many households.  The recipe and production processes used to make the spread are claimed to be proprietary and extensively safeguarded.  Dalmatia engaged New York-based company FoodMatch as an exclusive distributor and began using Pennsylvania company Lancaster Fine Foods as a contract manufacturer to expose the fig jam to a wider audience.  To protect its trade secrets on the recipe and production process for the fig spread, Dalmatia required non-disclosure and non-competition agreements from FoodMatch and Lancaster.

The trio’s collaboration proved to be very successful for several years. However, in 2015 Dalmatia became dissatisfied with the quality of the fig spread from Lancaster and FoodMatch. Dalmatia then chose to engage another company for its manufacturing and distribution needs.

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Waymo v. Otto: Self-Driving and Self-Dealing

Posted in U.S. Litigation

Last week, Waymo LLC (a subsidiary of Google’s parent company Alphabet, Inc.) filed suit in the Northern District of California against Uber Technologies, Inc. and Otto Trucking LLC for misappropriation of trade secrets, patent infringement, and unfair business practices. The case is sure to become one of the first high-profile cases alleging claims under the federal Defend Trade Secrets Act (DTSA) (another being the claims brought against Google and Alphabet by Space Data in June 2016, which this blog covered here). Waymo describes itself as a “self-driving technology company,” which for the last seven years has been developing technology related to self-driving cars, including a laser system used to help the car navigate known as LiDAR (“Light Detection And Ranging”). In January 2016, one of Waymo’s managers, Anthony Levandowski, left Waymo and launched Otto, a new company focused on self-driving car technology. Then, in August 2016, Uber acquired Otto for $680 million.

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Oculus: Looks Like Trade Secret Theft

Posted in U.S. Litigation

On February 1, 2017, a Texas jury awarded Zenimax $500 million following trial in Zenimax’s longstanding dispute with Oculus, the creators of the Oculus Rift virtual reality system. Zenimax and Oculus had initially worked together on the Oculus Rift, with Zenimax programmer John Carmack (a well-known figure in the video game industry) working with Oculus founder Palmer Luckey (at the time a college student) to improve the Oculus Rift. As part of this collaboration, Zenimax shared certain confidential information and technology with Luckey pursuant to a Non-Disclosure Agreement (NDA). Eventually, however, Oculus stopped its collaboration with Zenimax and was in 2014 purchased by Facebook.  Shortly after that purchase, Carmack and several other Zenimax employees left Zenimax and joined Oculus, with Carmack being named Oculus’s Chief Technology Officer. In its Complaint, Zenimax alleged that Oculus improperly took and used Zenimax proprietary and confidential information, including the improvements and code that Zenimax had contributed to Oculus Rift during their prior collaboration. Zenimax sought over $4 billion in damages for misappropriation of trade secrets, copyright and trademark infringement, and breach of the non-disclosure agreement. Continue Reading

Not So Fast: Ex-Goldman Sachs Employee’s Conviction For Stealing Source Code Reinstated

Posted in U.S. Litigation

Yesterday, an intermediate New York State appellate court, the First Department of the Appellate Division of the New York Supreme Court, reinstated the conviction of an Ex-Goldman Sachs programmer, Sergey Aleynikov. At issue here are allegations that Mr. Aleynikov violated the New York penal code by copying source code for a proprietary high frequency trading system at Goldman Sachs before he left to join a competitor.  This case is noteworthy for the twists and turns it has taken through the federal and state criminal justice systems and how it evidences the trade secret protection challenges faced by employers on Wall Street and in other industries. Continue Reading

AIPLA to Host Annual Trade Secret Law Summit

Posted in Event

Join Crowell & Moring at the American Intellectual Property Law Association in hosting its annual Trade Secret Law Summit on March 2-3 in Atlanta, GA. It will cover everything from the fundamentals of trade secret protection to protecting confidential information from cyber-attacks. Registration is now open; please click here to register at AIPLA.org. Crowell partner, Mark Klapow, is the vice chair of AIPLA’s Trade Secret Law Committee.

DTSA UPDATE: Tips for Santa to Maintain Trade Secrets at the North Pole

Posted in Legislation & Policy

1.  Clearly label Christmas cards as “Confidential” if these contain secret wishes.

2.  Amend Confidentiality Agreements and Employee Manual to include the required Whistleblower language – those elves have rights.

3.  Have robust exit interviews with all departing elves, reminding them of their obligations to keep “reindeer games” secret.

4.  Insist that expert toy makers are warned not to reveal secret information while enjoying (too much) mulled wine with ‘Happy Holidays’-industry peers.

5.  Further restrict access to the Sleigh Packing Room with candy cane key fobs.

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Flash Crash Fears Subvert Trade Secret Protection of Source Code

Posted in U.S. Litigation

On November 4, 2016, the U.S. Commodity Futures Trading Commission approved a supplemental notice of proposed rulemaking concerning its access to algorithmic trading source code in a 2-1 vote. The supplemental notice amends proposed Regulation AT and outlines a new mechanism by which the CFTC can obtain the source code and related records of the automated traders it regulates as part of its routine surveillance of the market.

Algorithmic source code is the foundation of an automated trader’s business model, and as such it is usually the most valuable asset and fiercely protected trade secret an automated trader has. Currently, the CFTC may obtain source code only by issuing a subpoena, which provides the subpoena recipient with certain procedural safeguards such as the ability to challenge the subpoena before a federal judge. Continue Reading