Anthony Levandowski, one of the founding members of Google’s self-driving car program and a former Uber executive, was sentenced to 18 months in prison and ordered to pay restitution after pleading guilty to one count of stealing self-driving car trade secrets from Google. This sentencing comes after years of civil and criminal matters relating to this lucrative technology.
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China Proposes Harsher Penalties for Trade Secret Theft in Draft Amendment
China’s National People’s Congress has released a draft law for comment that would impose harsher criminal penalties for any trade secret theft from Chinese companies that benefits foreign companies.
China’s current law imposes a maximum sentence of 3 years imprisonment for “serious” instances and 10 years for “particularly serious” instances of trade secret theft. The proposed law would impose harsher sentences for trade secret theft benefiting a foreign entity, resulting in 5 years for “serious” instances and a minimum of 5 years with no maximum for “particularly serious” instances.
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Companies Protecting Trade Secrets Should Consider Role of NIST’s Enhanced Security Requirements
Companies looking to protect valuable trade secrets and confidential information routinely employ multiple precautions ranging from employee training to technological safeguards.
Another potential tool in the arsenal, and worth careful consideration for companies operating in the government contract space, is the National Institute of Standards and Technology’s (NIST) recently released final public draft of enhanced security requirements. NIST Special Publication (SP) 800-172, formerly known as Draft NIST SP 800-171B, provides 34 enhanced requirements to protect Controlled Unclassified Information (CUI) associated with critical programs or high value assets from the risks posed by advanced persistent threats (APTs).
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Misappropriation Claims Brought Over Tax Trade Secrets
A recent case is a helpful reminder to companies with valuable intellectual property to be diligent in protecting trade secrets and monitoring compliance by employees with access to this confidential information.
On June 15, 2020, Ryan, LLC (“Ryan”) filed a lawsuit in Texas state court against S.K. Thakkar (“Thakkar”), who was employed by a company acquired by Ryan, and Ernst & Young, LLP (“Ernst & Young”), his new employer, seeking a temporary restraining order and permanent injunction based on alleged (1) trade secret misappropriation, (2) tortious interference with contract, and (3) breach of contract.
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L’Oreal Appeals $66 Million Trade Secret Judgment
The legal saga between L’Oreal USA Inc. and Olaplex LLC (“Olaplex”) over a hair-coloring product continues. In August 2019, a Delaware federal jury found that L’Oreal misappropriated Olaplex’s trade secrets, willfully infringed two Olaplex patents, and breached a nondisclosure agreement. The jury awarded Olaplex $22.3 million for willful infringement of trade secrets, $22.3 million for breach of contract, and $47 million for patent infringement. On March 24, 2020, the court entered a $66.2 million final judgment including attorneys’ fees and prejudgment interest.
Earlier this month, L’Oreal appealed and asked the Federal Circuit to reverse this judgment based on purported errors by the district court in (1) improperly excluding two witnesses and (2) improperly granting summary judgment on patent infringement.
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Are You Ready to Respond to Trade Secret Theft in the COVID-19 Age?
The COVID-19 pandemic is shining a new light on the risk of trade secret theft to businesses worldwide from greater employee mobility associated with rising unemployment and a looming recession, cyberattacks by opportunistic hackers, and a growing remote workforce with technological threats from increased use of smart devices that may leave little to no data trail.
Companies should not only consider what to do to safeguard their trade secrets now, as explored in our earlier post on Trade Secret Protection During the COVID-19 Pandemic, but how best to create and communicate the plan for responding to any discovery of trade secret misappropriation.
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English Court Addresses Intersection of Trade Secrets Directive and Common Law Breach of Confidence Claims
A recent English court decision for the first time explores the overlap between trade secret claims under the EU Trade Secrets Directive 2016/943 and English equitable and common law claims for breach of confidence.
In Trailfinders Limited v Travel Counsellors Limited & Ors [2020] EWHC 591 (IPEC), travel agency Trailfinders brought a case against competitor TCL and four former employees who allegedly exploited customer lists and accessed Trailfinders’ customer database after joining TCL to exploit confidential information to their and TCL’s benefit.
In analyzing whether information taken by employees rose to the level of trade secrets, the judge turned to “the definition of ‘trade secret’ in art.2(1) of Directive 2016/943 (always bearing in mind the broad interpretation of ‘trade secret’ in the Directive).” Trailfinders Limited v Travel Counsellors Limited & Ors [2020] EWHC 591 (IPEC), [29]. Trade secrets under the EU Trade Secrets Directive, implemented in the United Kingdom by Trade Secrets (Enforcement etc.) Regulation 2018, must meet all of the following requirements: “(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) it has commercial value because it is secret; (c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.” The judge recognized that there were different categories of information that employees could be exposed to during employment which were entitled to varying levels of protections.
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English Trade Secrets Proceedings: Experts May Be Permitted Access to Information In Confidentiality Rings
We continue our coverage of English Confidentiality Protections in Trade Secret and IP Cases by exploring a recent decision involving access of party experts to confidential information and trade secrets as part of confidentiality rings.
In Infederation Limited v Google LLC & Ors [2020] EWHC 657 (Ch), Infederation Limited a/k/a Foundem – a provider of online shopping comparison services – brought a case against Google alleging Google’s search result algorithms purportedly reduced its “ranking” in violation of competition law. The parties agreed to three confidentiality rings: (1) a top “confidential” ring including the founding members of Foundem, external solicitors, counsel, and economic experts; (2) an external solicitors, counsel, and economic experts ring (the legal eyes only or “LEO” ring); and (3) a further restricted “RLEO” ring, which was 10 named external solicitors and counsel. Google made an application to strike some of Foundem’s claims in part relying on evidence related to search algorithms designated as confidential, LEO, or RLEO. In order to review and evaluate these specially designated exhibits, Foundem requested that its search engine optimization (“SEO”) expert Mr. Klöckner, who was already part of the outer confidentiality ring, be added to the LEO and RLEO rings. Google pushed back, claiming that how it ranks search results should be kept confidential or its value would be lost and that it was unlikely that Mr. Klöckner could keep the knowledge he gained from his role in the proceedings separated from his independent work as an SEO consultant. Infederation Limited v Google LLC & Ors [2020] EWHC 657 (Ch) [24-26].
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Scientist Pleads Guilty to $1 Billion in Trade Secret Theft
Chinese national and materials scientist Hongjin Tan has pled guilty to stealing from his former employer Phillips 66 (“Phillips”) more than $1 billion in trade secrets related to next generation battery technology.
DOJ announced Tan’s guilty plea this week which revealed that he copied substantial research and development files that he knew contained protected company
Dueling Claims: Trade Secret Theft or Antitrust Threat?
On November 5, 2019, Black Knight Inc. brought suit in Florida state court against PennyMac Loan Services LLC (“PennyMac”) alleging breach of contract and trade secret misappropriation under the Florida Uniform Trade Secrets Act. PennyMac allegedly used its access to Black Knight’s trade secrets and other confidential information relating to its proprietary mortgage servicing software